Strategic Analysis of Danik Bhaskar Group

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Cost of newsprint: The price of newspaper has not increased significantly in the last 10 years, whereas the cost of newsprint has increased dramatically.

Political influence: Many cities, such as Manharashtra, have a rich history. The political and government influence may affect the newspaper’s quality.

Readers’ inclination toward social media and digital technology: (no need to extra comments☺)

2. Five Forces analysis:

Newspaper industry in India

Threat of new entrants:

low

Threat of substitutes:

high

Bargaining power of buyers:

high (advertiser), high (reader)

Bargaining power of suppliers:

low (journalists), low (supplier)

Intensity of competitive rivalry:

high

Due to the flourish of digital media, the whole newspaper industry is shrinking, thus not many new entrants still want to tap into this area. Also, because of the prosperity of digital media, newspaper bears a huge risk of being substituted. As of the newspaper industry in India, according to exhibit 7, the top 20 publications of India have a quite close readership and the market is very competitive. Also, because of the high competition, the bargaining power of buyers (both advertiser and reader) appears to be extremely high. For example, DBG obtains 83 per cent of its revenues from advertising and 17 per cent from subscription. Although the subscription accounts for a small portion in general revenues, it still imposes huge influence in newspaper’s popularity which determines the volume of advertising income. The bargaining power of suppliers, though, is pretty low (both journalists and supplier) as more journalistic newbie spring up and make the journalistic market into saturation.

3. VRIO analysis:

Launch process of DBG

Valuable

Yes

Rare

Yes (but not very much)

Costly to imitate

Yes

Company organized

Yes

DBG’s launch process is a source of both differentiation and cost advantages. Before launching the newspaper, DBG goes through a complex process, such as identification of market, three rounds of survey, data analysis and feedback incorporation, mass media campaign and creating subscription scheme. It is hard for competitors to copy this process as it is both time-costly and money-costly. For example, it takes money to hire the surveyors and a long period of time to design the questionnaire and train the surveyors. Also, DBG is of course organized to capture the value of this capability. For instance, marketer and HR people need to work together to complete the hire and training of surveyors, as well as the designing of questionnaire. IT people need to provide data analysis result to maximize the value of the analysis.