TO:
Professor Vasu Ramanujam
FROM:
Tatsunori Sasaki
SUBJ:
Analysis of Walker and om!any
"AT#:
Fe$ruary %%& %''(
Before dis)ussin* t+e stated ,uestions& - .ill analy/e t+e strate*i) issues and strate*y of Walker and om!any $y usin* frame.orks from t+e )ourse0
Balancing Organizational Tensions
1
2ro. 2ro.t+ t+ 3 !r !rofi ofit 4 )on )ontr trol ol
For Walker Walker and om!any& om!any& !rofita$ility is a main issue0 issue0 Mana*er5s eyes fo)us on !rofit0 To a)+ie6e a *oal of !rofit& t+ey need to )arefully )onsider *ro.t+ and )ontrol at t+e same time0 -n t+is )ase& em!loyees em!loyees may *i6e no attention to any as!e)ts0 reatin* *ood $ooks are likely to $e a !riority for !eo!le in a !u$lis+in* )om!any0 T+e )om!any +as to de6elo! a !erforman)e measurement and )ontrol system .+i)+ )reates stron* attentions to !rofit and *ro.t+ amon* t+e em!loyees0 1
S+or S+ort3 t3te term rm 6ers 6ersus us lon* lon*3t 3ter erm m
Ramsey5s strate*y strate*y seems s+ort3term fo)us and la)ks a lon*3term 6ision of o f t+e $usiness0 #6en t+ou*+ t+e )om!any +as t+e lon* +istory and lon*standin* em!loyees& it doesn5t mean t+at all !eo!le in t+e )om!any are doin* t+eir jo$ .it+ a )lear ima*e of t+e future0 A*ain& a !erson in in a !u$lis+in* )om!any tends to )are a$out +is7+er $ooks and readers .it+ .it+ a s+ort3term 6ie.0 6ie.0 T+e )om!any needs to de6elo! a .ay to )ommuni)ate to t+e em!loyees t+e lon*3term strate*i) *oals of t+e $usiness and .+at t+ey s+ould do no. to a)+ie6e t+ose *oals0
1
"emands of different )onstituen)ies or stake+olders
T+ere is a si*nifi)ant tension $et.een t+e o.ners 8Ramsey and +is t.o $rot+ers9 and em!loyees and )ustomers0 For t+e em!loyees and )ustomers& stron* finan)ial !erforman)e is not so im!ortant0 T+e $ankru!t)y of a !u$lis+in* )om!any is not a $i* deal for )ustomers of t+e )om!any0 T+e em!loyees don5t ne)essarily +a6e a stron* !assion to .ords like RO-& ROA& and *ross mar*in0 T+e )om!any must translate t+ose !erforman)e measures into a!!li)a$le .ays to t+e em!loyees0 1
O!!ortunity 6ersus attention
For a small )om!any like Walker and om!any& mana*ement time and attention are etensi6ely s)are resour)es and need to $e )ontrolled )autiously0 For eam!le& 2eor*e 2i$son +as a 6ariety of tasks and s+ould mana*e $ot+ editorial and sales and marketin* !arts as President0 More fo)us on finan)ials )ould deri6e +is time and attention from editorial efforts0 2i6en t+at editors !ro$a$ly +a6e fe. e!erien)es in $usiness or mana*ement& to dele*ate some .orks in finan)ials to t+e editors .ould not $e a reasona$le o!tion for t+e )om!any0 Walker and om!any +as to de6elo! a sim!le !erforman)e measurement and )ontrol system to sa6e 6alua$le $ut s)ar)e resour)es of t+e $usiness0 1
Assum!tions a$out +uman moti6ation and $e+a6ior
Walker and om!any must )onsider $asi) assum!tions a$out +uman nature des)ri$ed in our tet $ook0 #s!e)ially& !eo!le in a !u$lis+in* )om!any often +a6e a stron* )ommitment to t+eir moti6ation0 - used to .ork for a small !u$lis+er .+en - .as an under*rad0 Most of !eo!le .orked at t+e )om!any $e)ause of o!!ortunities to a)+ie6e t+eir *oals to make *reat $ooks0 -t .as t+e time .+en t+e )om!any .as
*ro.in*0 T+en& t+e *ro.t+ sto!!ed0 -t .as a 6ery s!e)iali/ed !u$lis+er0 ;e6ert+eless& it tried to res!ond t+e situation $y fo)usin* on more s!e)ifi) areas and redu)in* t+e num$er of ne. titles0 -t )ouldn5t let em!loyees see enou*+ o!!ortunities for t+e future0 As a result& t+e )om!any lost youn*& talented !eo!le0 W+ile t+is )ould +a!!en in ot+er industries& it +as a stron* im!a)t on t+e !u$lis+in* industry in .+i)+ it is easier for !eo!le to mo6e to ot+er )om!anies0
The 4Ps of Strategy
1
Strate*y as Pers!e)ti6e
Walker and om!any must )larify its mission and 6ision first0 -f it de6elo!s strate*ies .it+out a )lear future dire)tion& it .ill end u! .it+ $ein* $ou*+t u! or *one out of $usiness soon like ot+er )om!anies in t+e same )ate*ory0 1
Strate*y as Position
As des)ri$ed in t+e )ase& !u$lis+in* is not an attra)ti6e industry: stron* !o.er of $uyers and )ustomers& many su$stitutes& lo. $arriers to entrants& and +i*+ )om!etition0 Alt+ou*+ t+ere are enou*+ su!!liers& !rintin* )om!anies .ere $e*innin* to sele)t t+eir )ustomers etensi6ely0 Also& t+e $usinesses must !ay )areful attention to t+e ,uality of la$or .+i)+ is a )riti)al fa)tor of su))ess in t+e market0 T+erefore& Walker and om!any must t+ou*+tfully eamine 6alue !ro!osition and differentiation of t+e $usiness to )om!ete in t+e market!la)e0 Ramsey Walker +o!es to lead t+e )om!any to !u$lis+ fe.er titles in fe.er se*ments0 -t )ould $e t+e strate*y of t+e $usiness0
Strate*y as Plan
Based on t+e fe.er titles in fe.er se*ments strate*y& Ramsey Walker set t+e *oals: ='> ROA and free )as+ flo. ?@''&''' in = and ?= million $y %'''0 T+ese *oals needed to $e )ommuni)ated .it+ em!loyees as a !rofit !lan0 - .ill dis)uss a$out t+e !rofit !lan later0 1
Strate*y as Pattern in A)tion
Profit Plan for Children’s Books
- des)ri$ed t+e !rofit !lan for )+ildren5s $ooks in = in A!!endi =0 -t .as de6elo!ed to a)+ie6e @'> of free )as+ flo. tar*et in =& i0e0 ?%@'&'''0 -t is an am$itious !lan0 *ro.t+ of a6era*e sales amounts !er ne. title0 -llustrated !i)ture $ooks& !+oto essays& and $la)k
and .+ite illustrated $ooks +ad *ro.t+s of =@>& =>& and (> res!e)ti6ely from =@0 Fo)usin* on illustrated $ooks& t+e )om!any s+ould en+an)e t+e 6isi$ility of t+e !rodu)ts in t+e market0 -f it )an do it& t+e *ro.t+ tar*et is !ossi$le to $e made0 Redu)in* o!eratin* e!enses is anot+er )riti)al assum!tion of my analysis0 om!ared to lar*e !rint and adult nonfi)tion lines in #+i$it C& )+ildren5s $ook line +as a +i*+er e!enses !er)enta*e of sales0 #6en t+ou*+ t+e fied e!enses from Western line .ould $e re3allo)ated& t+e e!enses in )+ildren5s line )ould $e redu)ed $y a similar le6el to ot+er t.o !rodu)ti6e lines0 -n6entory turno6er of %0( is also )riti)al0 2i6en t+at a))ounts re)ei6a$le )ould not $e )olle)ted any faster and a))ounts !aya$le )ould not $e stret)+ed any lon*er& redu)tion in .orkin* )a!ital must $e )ome from effe)ti6e in6entory mana*ement0 Fortunately& t+ere is enou*+ room to $e mana*ed in in6entories0 om!ared to ot+er !u$lis+in* )om!anies !resented in t+e )ase& t+e tar*et is rea)+a$le0 Exhibit 1
Recent Trends in Publishing Industry: 1992 to 1997
Total
1992 16,69 8
Growth %
1993 18,61 6 11#
1994 19,69 5 6#
1995 2,!8 ! !#
Unit: Mil. $ 1996 21,"6 " !#
1997 22,6! 8 6#
Source: U.S. Deart!ent o" #o!!erce U.S. #enu &ureau 'nternational Tra(e )(!initration *'T)+.
Exhibit 2
Recent Trends in $hildren%s &oo's: 1992 to 1997
1992
,ar(co-er Growth % aer/ac0 Growth % Total Growth %
1993 8 72
" 27
1,19 9
7 8" (1# " 78 16# 1,16 1 ("#
1994 7 51 (!# ! 19 11# 1,17 1 1#
1995 7 59 1# ! 96 18# 1,25 5 7#
Source: The &ow0er )nnual re(e-eloe( at htt:www.un(er(own.orol(tren(.ht!
1996 7 67 1# 5 16 !# 1,28 " 2#
Unit: Mil. $ 1997 78 9 "# 5! ! 5# 1,"" 2 !#
Exhibit "
Inco)e *t+te)ent by Editori+l ine -or .e+r Ended /+y "1, 1997
Total
are rint
)(ult on"iction
#hil(ren &oo0
Tot+l s+les 0including sub rights inco)e
5395774
665561
18259
21994
689168
128632
Tot+l $3*
26229
316213
866429
139869
3353
6589
51%
49%
353868
63543
3ross )+rgin #
51% 2772874
3ross 4ro-it
52% 349348
52% 9368
Mter
51% 1735
etern
48%
44%
36%
54%
65%
66%
(itorial
5%
3%
2%
6%
8%
4%
Mar0etinale o-erhea(
4%
2%
2%
7%
2%
%
1%
7%
1%
9%
16%
19%
2%
1%
1%
4%
2%
1%
4%
4%
2%
3%
7%
9%
Shiwarehoue
1%
11%
9%
1%
11%
1%
General an( a(!initrati-e
13%
16%
9%
14%
2%
22%
*$59963+
45659 *$96791 +
84931 *$21388 +
Ex4enses # o- s+les
;(irect #ot o" "ree coie
)rtro(uctionenl e(it.
Tot+l ex4enses
2616145
et 4ro-it 0loss
$156729
Exhibit !
29456 $55292
65651 $279579
1129998
$o)4+rison o- igested Inco)e *t+te)ents in 19971998
1997
1998
Tot+l s+les 0including sub rights inco)e
2,19,9!
2,292,5
'ncreae 9%
Tot+l $3*
1,"9,869
1,88,!
'ncreae 5%
3ross 4ro-it
1,7,"5
1,2!,1
'ncreae 13%
Tot+l ex4enses
1,129,998
1,77,!75
Decreae 5%
et 4ro-it 0loss
059,96"
126,625
'ncreae 311%
Performance Measures
1
Annual Sales 2ro.t+ >
Sales *ro.t+ > itself la)ks many essential fa)tors of t+e $usiness and so )annot $e t+e sin*le im!ortant !erforman)e measure0
$ook )ate*ories0 -t )an also set tar*et sales amount of ea)+ $ook $ased on desired *ro.t+ rate0 1
Profit >
A6era*e Unit Sales
As stated in t+e )ase& unit sales don5t s+o. t+e )ost0 T+e )om!any must mana*e t+e )ost of $ooks t+ou*+tfully0 -n addition& t+e $usiness s+ould monitor sales of ea)+ title not a6era*e0 -t sends a stron* messa*e to t+e em!loyees t+at ea)+ title must meet sales tar*ets of t+e year0 -t also allo.s t+e )om!any to res!ond to t+e market trends ,ui)kly0 1
Return3on3Assets
#ffe)ti6e asset mana*ement is a )riti)al su))ess fa)tor of t+e )om!any0 ROA )ould $e a *ood !erforman)e measure for t+e )om!any and to! mana*ements 82eor*e 2i$son and Ted Rosenfeld90 To earn +i*+ ROA& t+e )om!any needs to take ad6anta*e of e)onomies of s)ale $y *eneratin* su$stantial *ro.t+ $e)ause $ook !u$lis+in* is not a +i*+ mar*in $usiness0 #ffi)ient asset utili/ation and !ersistent *ro.t+ are re,uired of t+e )om!any0 1
RO-
Book !u$lis+in* is not a )a!ital intensi6e $usiness0 T+ere is no si*nifi)ant relations+i! $et.een in6estment and a su))ess of a $ook0 And so it is +ard to make
!eo!le a))ounta$le for t+eir de)ision and a)tion related .it+ in6estment0 As !resented in t+e )ase& .+at to in)lude as in6estment is un)lear0 -t mi*+t dis*uise a)tual im!a)ts on t+e $usiness0 1
O!eratin* #!enses
To )a!ture enou*+ amounts of net !rofits& t+e )om!any must streamline t+e o!eration and redu)e t+e e!enses $y a )ertain le6el0
Agenda
1
1
1
T+e su))ess of t+e strate*y de!ends on .+et+er t+e )om!any )an make t+e !lan day3to3 day o!erations of !u$lis+in*0 Peo!le in t+e !u$lis+in* )om!any are usually too $usy to !ay attention to finan)ial fi*ures or sim!ly +a6e no interests to t+em0 U!dated information of !erforman)e measures s+ould $e )ommuni)ated in 6arious .ays0 T+e !lan must $e reinfor)ed $y .ritten e!lanations a$out t+e strate*y0 #6en t+ou*+ t+e num$er of ne. titles .as redu)ed& t+e )larifi)ation )ould s+o. a stron* )ommitment to t+e *ro.t+ .+i)+ is essential to )reate e)itin* o!!ortunities for em!loyees0 T+e key measures are as follo.s0 1
ROA E ;et -n)ome 7 A6era*e Total Assets
1
Free as+ Flo. E ;et -n)ome 73 +an*e in ;et Workin* a!ital
1
A6era*e Sales ? !er Title
1
#!enses > of sales
1
-n6entory Turno6er E O2S 7 A6era*e -n6entory
ROA and free )as+ flo. )ould $e mana*ed as annual *oals0
TRAS!AT"
Menyeim$an*kan Gete*an*an Or*anisasi 1 Pertum$u+an 3 Ha$a 3 )ontrol Untuk Walker dan Perusa+aan& !rofita$ilitas adala+ masala+ utama0 Mata Manajer fokus !ada keuntun*an0 Untuk men)a!ai suatu tujuan dari keuntun*an& mereka +a rus +ati3+ati mem!ertim$an*kan !ertum$u+an dan kontrol !ada .aktu yan* sama0 "alam +al ini& karya.an $ole+ tiddak mem$erikan !er+atikan untuk as!ek a!a!un0 Mem$uat $uku3$uku $a*us yan* mun*kin menjadi !rioritas $a*i oran*3oran* di se$ua+ !erusa+aan !ener$itan0 Perusa+aan +arus me*em$an*kan suatu !en*ukuran kinerja dan sistem kontrol yan* men)i!takan !er+atian yan* kuat untuk keuntun*an dan !ertum$u+an di antara karya.an0
1 jan*ka !endek 6s jan*ka !anjan* Strate*i Ramsey tam!aknya fokus jan*ka !endek dan tidak memiliki 6isi jan*ka !anjan* dari $isnis0 Meski!un !erusa+aan memiliki sejara+ !anjan* dan karya.an lama& itu tidak $erarti $a+.a semua oran* di !erusa+aan yan* melakukan !ekerjaan mereka den*an se$ua+ *am$ar yan* jelas tentan* masa de!an0 Sekali la*i& seseoran* di se$ua+ !erusa+aan !ener$itan )enderun* !eduli tentan* $uku3$ukunya dan !em$a)a den*an !andan*an jan*ka !endek0 Perusa+aan !erlu men*em$an*kan )ara untuk $erkomunikasi den*an karya.an tujuan strate*is jan*ka !anjan* dari $isnis dan a!a yan* +arus mereka lakukan sekaran* untuk men)a!ai tujuan terse$ut0
1 Tuntutan konstituen yan* $er$eda dari !ara !eman*ku ke!entin*an Ada kete*an*an yan* si*nifikan antara !emilik 8Ramsey dan kedua saudaranya9 dan karya.an dan !elan**an0 Untuk karya.an dan !elan**an& kinerja keuan*an yan* kuat tidak $e*itu !entin*0 Ge$an*krutan se$ua+ !erusa+aan !ener$itan ini $ukan masala+ $esar $a*i !elan**an !erusa+aan0 Garya.an tidak selalu memiliki *aira+ yan* kuat untuk kata3kata se!erti RO-& ROA& dan 2ross Mar*in0 Perusa+aan +arus menerjema+kan ukuran kinerja ini menjadi )ara yan* $erlaku untuk karya.an0
1 Peluan* 6s !er+atian Untuk !erusa+aan ke)il se!erti Walker dan Perusa+aan& manajemen .aktu dan !er+atian yan* luas sum$er daya yan* lan*ka dan +arus dikontrol den*an +ati3+ati0 Misalnya& 2eor*e 2i$son memiliki $er$a*ai tu*as dan +arus men*elola $aik editorial dan !enjualan dan $a*ian !emasaran se$a*ai Presiden0 He$i+ fokus !ada keuan*an $isa mem!erole+ .aktu dan !er+atiannya dari u!aya editorial0 Men*in*at $a+.a editor mun*kin memiliki $e$era!a !en*alaman dalam $isnis atau manajemen& untuk mendele*asikan $e$era!a !ekerjaan dalam keuan*an den*an editor tidak akan menjadi !ili+an yan* masuk akal $a*i !erusa+aan0 Walker dan Perusa+aan +arus men*em$an*kan !en*ukuran kinerja dan sistem kontrol seder+ana untuk men*+emat sum$er daya yan* $er+ar*a teta!i lan*ka dari $isnis0
1 Asumsi tentan* moti6asi dan !erilaku manusia
Walker dan Perusa+aan +arus mem!ertim$an*kan asumsi dasar tentan* sifat manusia yan* dijelaskan dalam $uku teks kita0 Terutama& oran*3oran* di !erusa+aan !ener$itan serin* memiliki komitmen yan* kuat untuk moti6asi mereka0 Saya !erna+ $ekerja untuk se$ua+ !ener$it ke)il ketika saya adala+ seoran* under*rad0 Se$a*ian $esar oran* $ekerja di !erusa+aan karena !eluan* untuk men)a!ai tujuan mereka untuk mem$uat $uku $esar0 -tu adala+ .aktu ketika !erusa+aan $erkem$an*0 Gemudian& !ertum$u+an $er+enti0 -tu adala+ suatu !ener$it san*at k+usus0 ;amun demikian& ia men)o$a untuk meres!on situasi den*an $erfokus !ada $idan* yan* le$i+ s!esifik dan men*uran*i jumla+ judul $aru0 -ni tidak $isa mem$iarkan karya.an meli+at kesem!atan yan* )uku! untuk masa de!an0 Aki$atnya& !erusa+aan ke+ilan*an oran* muda& oran*3oran* $er$akat0 Sementara ini $isa terjadi di industri lain& ini memiliki dam!ak yan* kuat !ada industri !ener$itan di mana le$i+ muda+ $a*i oran* untuk !inda+ ke !erusa+aan lain0
IP Strate*i 1 Strate*i se$a*ai Pers!ektif Walker dan Perusa+aan +arus mem!erjelas !ertama 6isi dan misi0 Jika men*em$an*kan strate*i tan!a ara+ yan* jelas di masa de!an& itu akan $erak+ir den*an di$eli atau !er*i keluar dari $isnis se!erti !erusa+aan lain di kate*ori yan* sama0
1 Strate*i se$a*ai Posisi Se!erti dijelaskan dalam kasus ini& !ener$itan $ukanla+ industri yan* menarik: kekuatan yan* kuat dari !em$eli dan !elan**an& $anyak !en**anti& +am$atan renda+ untuk !endatan*& dan !ersain*an yan* tin**i0 Meski!un ada )uku! !emasok& !erusa+aan
!er)etakan mulai untuk memili+ !elan**an mereka se)ara luas0 Ju*a& $isnis +arus !er+atikan kualitas tena*a kerja yan* meru!akan faktor !entin* ke$er+asilan di !asar0 Ole+ karena itu& Walker dan Perusa+aan +arus serius memeriksa !ro!osisi nilai dan diferensiasi $isnis untuk $ersain* di !asar0 Ramsey Walker $er+ara! untuk memim!in !erusa+aan untuk mener$itkan judul sedikit di se*men yan* le$i+ sedikit0 -ni $isa menjadi strate*i $isnis0 ;amun& !osisi ini tidak jelas0
