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Reader’s Digest

Reader’s Digest. Group five. Key Term. Mission “we are a global multi-brand and marketing company that educates, entertains and connects audiences around the world. We are dedicated to providing our customers with the inspiration, ideas and tools that simplify and enrich their lives”

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Reader’s Digest

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  1. Reader’s Digest Group five

  2. Key Term • Mission “we are a global multi-brand and marketing company that educates, entertains and connects audiences around the world. We are dedicated to providing our customers with the inspiration, ideas and tools that simplify and enrich their lives” • -Vision “create the world’s largest multiplatform communities based on branded content” • -Primary activity: produce monthly subscription magazine filled with meaningful stories that are not necessarily news-worthy but memorable • -support activities: maintain a web presence in order to attract younger consumer, control and seek advertisement revenue

  3. financial analysis • 2007 & 2008 liquidity and solvency ratios of RDA • Current ratio = current assets/current liabilities 2007: .86 2008: .83 • Quick ratio = (current assets - inventory)/current liabilities 2007: .65 2008: .63 • Debt-to-equity ratio = total debt/total equity 2007: 2.91 2008: 8.3 • Debt-to-assets ratio = total debt/total assets 2007: .45 2008: .53

  4. external analysis • Bargaining power of suppliers: low • Low uniqueness in the services • Threat of new entrants: high • Costs to enter are little on time and money • Little protection for key technologies • Low product differentiation • Bargaining newer of buyers: high • Low switching cost • High number of buyers, but they are concentrated into very few categories • Big importance of the each buyer categories • Threat of Substitute Products: high • Intensity of rivalry among competitors in the industry: high • Numerous of equally balanced competitors • Slow industry growth • Lack of differentiation or switching costs

  5. External analysis • Stage of industry • Decline stage • no assurances that Reader’s Digest will generate sufficient cash flows from operations to fund day-to-day • may result in bankruptcy or liquidation

  6. External analysis • Demographic • Aging population • 53 median • Unable to increase advertising revenue: 18-35 not reached • Socioculture • Greater concern for health and diet • Greater concern for the environment • Political/Legal • Committee of Advertising Code • UK dealing with abusing advertising

  7. External analysis • Technological • Emergence of internet technology • Wireless technology • Economic • Print is “dead” • Global • Emergence in economies all over the world • Philippines, Malaysia, Canada, Argentina, etc.. Reader’s Digest Korea

  8. VRIO Analysis • Value: brand value, readers’ foundation • Rarity: one of the most popular magazine around the world • Imitation: long history • Organization: how to organize reader’s digest’s advantages?

  9. SWOT Analysis

  10. Reader’s Digest VS competitors • Reader’s Digest strategy • Divesting business • Reconfiguring the RDA web presence • Redesigning the flagship magazine • Continuing global expansion • Launch new magazines • Launch growth initiatives, reduce costs and transform company culture worked in opposite ways with reduced consumer spending and a drop in magazine advertising worldwide • Customer-centered approach • Less advertising money for Reader’s Digest • Horizontal diversification • Related business • Geographic diversification

  11. Reader’s Digest VS competitors

  12. Firm Analysis • Divestitures • Sold QSP, Inc. • Fundraising business • Taste of Home Entertaining • Books are Fun • Gareth Stevens • World Almanac Education Library • Joint ventures • ChangeOne, online weight loss program • Everyday with Rachel Ray • Acquisitions • In 2000, Reiman Publications • Reduced sweepstakes and magazine sales • Allrecipes.com Music and Videos Readers Digest Int. Food and Gift Business Growth Rate Reader’s Digest US Relative position (market share)

  13. Strategic Recommendations • Minimize Reader’s Digest US, Focus on Reader’s Digest International • Increase web presence • PDF version of magazine • Interactive web activities for younger generations • Separate the variety of subjects in Reader’s Digest to different magazine • Health and wellness • Food and entertainment • Personal stories • Increase revenue through advertising is a must

  14. Thank you for your patience! Group five

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