Pearson Publishing
Industry
Natalia Amaya
Diana Bottaro
Philip Devine
Arturo Esayag
Thomas McNichols
4/5/2010
Company Overview
Pearson is a world leading publishing company. It is divided into various segments:
Pearson Education, Financial Times and Penguin Group. Pearson is a publicly traded company,
currently listed in the New York Stock Exchange (NYSE Ticker: PSO) and the London Stock
Exchange (UK: PSON). Pearson’s main goal is to be a leader in education. The Pearson
Education Segment represents the largest business segment in terms of revenue. It accounts for
about 64% of the company’s revenues in 2008. This business segment includes educational
materials and programs for school, college, and professionals. The biggest growth opportunity is
this segment according to many analysts is online opportunities to expand the business.
The second segment is the Penguin Group which represented 19% of revenue in 2008.
This segment focuses on consumer publishing. It contains various world-known brands. The
business segment publishes fiction and non-fiction books. During the interim 2009 half-year
results presentation, Pearson noted that Penguin’s eBook sales have grown exponentially since
2004. The last business segment is The Financial Times Group. This segment represented the
remaining 17% of revenue in 2008. This segment focuses on business information, offering
printed and online services.
Mission Statement
Be the industry leader while adapting to a fast changing industry by providing
stakeholders with innovative, creative, and effective ways to conduct business while providing
customers the product of choice.
Vision Statement
Be the publisher of choice by producing high-quality, intellectual, and novel materials
that appeal to wide audiences.
Strategy
What does it mean to win?
To Pearson winning means reaming to be the publisher of choice amongst readers and
authors.
Our Strategy
Selling the most products possible to our customers in any format.
How will Pearson achieve the strategy?
Pearson will achieve its strategy through a series of actions. Pearson will continue to
invest in content, expand into new markets and investing in technology. To do this Pearson will
work really hard to increase efficiency while also finding new way to increase revenue.
Pearson will work to increase efficiency so that the company can have more financial
leverage to invest and grow the company. Pearson will try to reduce unnecessary costs and
increase our return on investment.
Pearson will invest in high quality content. The company will strive to satisfy authors by
providing them with a better return on their work. Pearson will ensure that our authors do not
sign deals directly with eReaders or find ways to reach the readers directly bypassing the
publisher. To achieve this, Pearson will leverage its marketing and outreach capacity to wide
audiences.
Pearson will also invest heavily in new ways of reaching readers—whatever format it is.
Pearson will invest in new technologies. This includes exploring new formats and licensing
agreements with eReader device manufacturers or online eBooks formats. While Pearson will
continue to market print books, the company does not want to limit the way in which readers can
access our content. Again our basic strategy is to get customers to buy our content in any format.
Pearson will continue to explore international markets and new audiences.
Generic Strategies
Generic strategies are an important concept to understand when assessing the strategic
management of a company by reducing the effects of rivalry. When evaluating the generic
strategies for a company, these rivalries include economic logic and scope of arenas. Economic
logic looks at low-cost leadership versus differentiation while the scope of arenas looks at broad
versus niche market arenas. From these two concepts, a company will fall into one or more of
four different positions. These positions include low-cost leadership, differentiation, focused
cost leadership and focused differentiation.
Having evaluated Pearson Publishing, we believe that Pearson holds an integrated
position between low-cost leadership and product differentiation. An integrated position is one
that supports elements of more than one position. By holding an integrated position, this allows
an opening for a greater share of the market.
Pearson Publishers have a goal of being low-cost leaders. They strive to offer a product
that has a lower price than that of their competitors. Although there are many factors that play
into this, it is important that Pearson hold true to offering the best price. With e-Readers
becoming so popular, it seems that it is becoming easier for an author to sell their book directly
to the e-Reader company and cut out the publisher so they can earn a higher profit. What authors
need to realize is that Pearson is such a well known publishing company worldwide and they are
a highly respected company. Without the publishers, many authors would not be able to sell
their books and have their names recognized as easily as someone who was having their book
published through a publishing company. Most of the e-Readers sell books at a standard price so
Pearson needs to find a way to keep costs low so that authors can still reap the most profits so
that they will not bypass the publishers altogether.
Another one of Pearson’s main goals is to keep their products differentiated. They
provide quality products that are going to set them apart from others. Because Pearson is such a
reputable and reliable company, consumers are more likely to buy from a well known name
rather than someone they have never heard of before. Although raising prices is a part of
differentiation, Pearson might be able to do this with hard copies of books but with e-Readers
and how competitive the market is, it is important to compete with the other prices being offered
in the market. Pearson provides quality content with all of their reading materials from
textbooks to leisure books plus more. The following chart shows the Economic logic behind
generic strategies and shows how some companies can fall into more than one of the positions
like Pearson does.
Economic Logic
Low-Cost Leadership
Broad
Cost Leadership
Differentiation
Differentiation
Integrated Position
Pearson Publishers
Scope of
Arenas
Stuck in the Middle
Narrow
Focused Cost Leadership
Focused Differentiation
Value Curve
With the rise of digital readers, the publishing industry still represents roughly 95
percent of the industry but it seems to be plummeting. Most publishers are scrambling to figure
out a strategy to stay afloat in the long-term. One of the ways we can see a bigger picture of all
of this is to take a look at our value curve and determine the material that can help us grow,
and also help our industry stay profitable and competitive. There are few categories that we
compared our published books with the books that are digital; the price, the variety of authors
and genres, the availability of the book, the quality of the book, and the portability of the book.
The price difference is one category that is important to us because the price of the book is
important to our customers. We want to make sure that our prices fit our customer’s desires
but also stay competitive within the industry. Buying digital books is comparably cheaper but it
is impossible to read a digital version without buying the digital reader, this may be unappealing
to some customers because digital readers are almost like buying a laptop in some ways.
Part of our mission is to keep our authors and writers satisfied by selling and promoting
their books so their audience can grow and we can sell more of the product. The best thing that
can happen to us is if our authors stay on board. If our company can sell books from a variety of
authors, it is better for our customers because they can choose from a range of authors and
genres and we would profit because they are buying books from us and not from digital
readers. Our authors keep us as a company afloat and we cannot afford to lose them to the
digital companies. The availability of our books is another very important aspect, because the
digital readers have an advantage when it comes to availability, the book can be downloaded in
a matter of seconds over the web onto their device. Our books can also be purchased over the
web but must be mailed out of our warehouses. Bookstores is the reason we make revenue,
the more bookstores that are out there for the public, the more money we bring in so the
availability of our books is very important.
The quality of our books is something we want to improve upon for the future. Creating
a sustainable ink that is cheaper and clearer is something we will look into. The digital readers
don’t use ink or paper which is appealing to many customers. If we can find a way to produce
books that are sustainable we may get the attention of these same customers. Another way to
attract customers are books that are lighter and weigh less. The advantage here goes to the
digital readers because they can store their books into its memory and it only weighs as much
as the digital reader so creating ways to make our books sustainable and appealing to our
customers is vital.
Balanced Scorecard
Where fields of our business become interrelated it is highly important that strong relations are
produced and maintained through a maximization of our human capital, external and internal
resources. While our authors are our biggest assets it is importantly stressed that they are
treated fairly and in an logical manner through a well-orchestrated professional staff. It is in
Pearons’ Publishing Company’s best interest to endure long term relationships with our writers
thus a liable networking scheme through proper engagement in marketing, production and
sales can be safeguarded. Training programs need to be to implemented in order to cycle in
new employees to maintaining current appeal among writers as well acquiring new ones.
Quality is highly pertinent of our success, thus management needs to take a critical role
in activating optimal performance. Rewards can be given for employees that can improve
efficiency and/or attract newer markets streams of revenue through innovative international
relationships. While profit sharing plans can be put into place it is aware that “rewards are
designed to encourage achievement of the organizations strategic objectives, and neither
rewards nor penalties apply to performance that’s unrelated to those objectives” pg 383.
Additionally, as mentioned above, in order to compete with new advanced technology
we need “to remove all non-value added activities” (389) making the most efficient use of
scarce resources. As a part of our initiative at Pearson Publishing Company we are dedicated to
higher education and inspiring people to reach their full potential. In doing so we are targeting
to become even more environmentally friendly thru venture in efficiency and maintaining
profits through committing business expansion focused on lower income scales of economies.
Our research and development team are working at a whole dimension of how different inks
can be frugally constructed without detrimentally harming book quality. Pearson is also
recognizing savings from choosing different styles of papers used to produce our products. The
ability to reduce costs without loosing valuable book content is expected to attract a new
market as innovative strategies should be considered. It is estimated that we can lower costs
by approximately 28%. While the new profits stemmed from this productivity provide an
acceptable percentage of return on the investment and forms a basis to allow an outcome
control for internal employee compensation, the profits are minimized compared to profits off
of present relationships. However, we believe at Person publishing company this step in
providing educational and knowledgeable data is a path that will stand new ground for the
publishing industry. We are highly engaged in donation programs and Jumpstart partnerships.
We “are a proud supporter of the National Teachers Hall of Fame” (pearsoned.com) and
provide scholarships and awards that recognize contributions made by student and community
achievement. Our culture’s compassion can really be documented when events such as
hurricane Katrina occurred. Immediately helping centers focused on disease control and
prevention, Red Cross and book donations. Pearson is also dedicated to helping those in a
Tanzania and earthquakes that hit in China. We plan to expand internationally and guide
millions of new users from specific areas that will be further investigated.
Furthermore, the existence of newly introduced tools like the Amazon kindle and Sony
eReader are currently threatening our market presence, thus we plan to focus on countering
with our own constructed technology. As you are aware, Math XL is one of our products that
has been recently installed. With the ability for Pearson to attract new market revenue through
a user friendly device that provides on approximate 40% increase in grades we our pleased.
While we consider our company to be outstanding and in the portion of a mature market we
have the time, money and ability to contribute tasks and goals to these areas of business and
promotion that other companies lack.
Overarching Themes Objectives
Financial
- Reward towards
stockholder
- Overall quality of books
- Increase 5% of revenue
External
Internal
Learning
- Keep existing customers
- Find new customers
- Provide best quality
books
- Provide literature to
underprivileged
customers
- Higher good professional
staff
- Compensation
- Valuable Resource
- Environmentally friendly
- Marketing
- Technology
Measures
- Keep in touch with
technological
advances
- Reliable authors to
deliver quality books
Target
- Stockholder
- Shareholders
- Industry
- Customers
- Number of book sale
- On time
improvements, and
updates
- Deliver quality
literature
- Provide same old books
to customers
- Reach more costumers
- Help improve literacy
-
- High pay, high
commitment
Culture understanding
Contacts
Credibility
Profit sharing planNew prices
New inks
International
expansion
- Math excel
- 28% reduction
- 75% passing grades
- Growth- millions