Table of content

Topic Page No.

Introduction 2

Competition analysis 3-8

Ratio analysis 8-15

Problem statements 16-17

Recommendations 18-23

Conclusion 24

Introduction

The Hindustan Times newspaper was formally inaugurated in 1924. In 1927, it was

reborn as Hindustan Times Ltd., a limited liability company. In 1936, The Hindi

daily Hindustan was launched. It also publishes two magazines in Hindi,

Kadambini a literary magazine established in 1960 and Nandan a children's

magazine, started in 1964. In 2003 the company incorporated all of its media

business under HT media limited in 2004. HT media Ltd was listed as a public

company and attracted external funding. It moving to Mumbai in 2005 with a new

product and content mix in 2006, fever 104 fm as launched, in technical collaboration

ith the virgin group. In 2007 Mint, the business paper in partnership with the wall

street journal was launched at Delhi and Mumbai. The Indian entertainment and

media industry is one of the fastest growing sectors in India. It is growing on the back

of India’s economic boom and rising income levels that the country has experienced

in past few years. An added factor to the boom of the entertainment and media

industry in India because of increased consumer spending due to rising disposable

incomes over the last decade by the young generation coming to the education and

employment markets.

Competitor Analysis

2

HT Media is India’s second largest print media company in terms of circulation of

daily newspapers. Their flagship brand “Hindustan Times” is one of India’s most well

recognized media brands. “Hindustan Times” was started in 1924 and it has over 80-

year history as one of India’s leading newspapers.

The competitor analysis of HT Media is done using SWOT analysis and Porter’s 5

forces model. The SWOT analysis of HT Media is below:

3

Porters 5 Forces Model in the HT Media

4

The competition in the news media industry can be explained by applying the Porters

5 forces model. Michael Porter in 1979 developed a framework to analyze and

structure an industry. It is a theoretical tool to elaborate the potential threats but also

the chances of a particular industry. Porter mentions five forces that have an impact

on an industry; suppliers, buyers, potential entrant, substitutes and the rivalry among

existing firms. It is a framework that classifies and analyzes the most important

forces affecting the intensity of competition in an industry and its profitability level.

Bargaining Power of Suppliers

If a firm’s suppliers have bargaining power they will:

Exercise that power

Sell their products at a higher price

Squeeze industry profits

5

If the supplier forces up the price paid for inputs, profits will be reduced. It follows

that the more powerful the customer (buyer), the lower the price that can be

achieved by buying from them.

In case of HT media, the supplier for news needs to be authentic and main source of

their business success. There are only a few large suppliers of news. On the other

hand, the internet made the supplier of news very affordable now-a-days. As a

result, the other competitors of HT media also are getting their access to the news

supplier of HT media. For reliable sources, the HT media needs to pay more.

Bargaining Power of Buyers

Powerful buyers are able to exert pressure to drive down prices, or increase the

required quality for the same price, and therefore reduce profits in an industry.

The scope for HT media in this particular industry is the growing population in India.

The number of potential customers is increasing day by day, as the number of new

media is also emerging. The buyer can bargain much than before. The bargaining

power of the buyer is increased and resulted in low profit generation of the industry.

Now free internet also gives chance to the buyers to get free access to news and

other media.

Threat of Substitute Products

A substitute product can be regarded as something that meets the same need.

Substitute products are produced in a different industry –but crucially satisfy the

same customer need.  If there are many credible substitutes to a firm’s product, they

will limit the price that can be charged and will reduce industry profits.

6

The print media faces great challenge present days due to huge technological

changes. The technology drives the potential customers to internet and other TV

mediums of news. So newspaper is less appealing to the others. The FM radios also

get a piece of the customer for their relentless news airing.

Degree of Competitive Rivalry

If there is intense rivalry in an industry, it will encourage businesses to engage in

Price wars (competitive price reductions),

Investment in innovation & new products

Intensive promotion (sales promotion and higher spending on advertising)

Bennett Coleman group (Times of India Group) holds the first position while HT

media holds the second position in this industry. HT media has continuously

introduced new products in its newspaper segment, radio and internet division ahead

of its competitors.

Threat of New Entrants to an Industry

If new entrants move into an industry they will gain market share & rivalry will

intensify

The position of existing firms is stronger if there are barriers to entering the

market

If barriers to entry are low then the threat of new entrants will be high, and

vice versa

7

In the last couple of years many major competitors entered this industry. Reliance

entered radio and film production, Tata group, through its subsidiary VSNL, coupled

up with Thomson group. There are many more companies are entering this industry

and make it difficult for HT media to hold its current market share.

Ratio Analysis

Profitability ratio : (rs in crs)

Gross profit margin

2005 = = = 0.99=99%

Gross profit margin tells how much profit is earned on your products without

considering indirect costs. Small changes in gross margin can significantly affect

profitability.

Operating profit margin❷

2006 = = = 0.10=10.97%

2005 = = = 0.089=8.94%

8

This ratio is the measure of the operating income generated by each dollar of sales.

In 2006 the operating income under 1 dollar is .10 dollar and in 2005 it was .089

dollar. So in 2006 it was better

❸ Net profit margin

2006 = = = 0.00028=0.028%

2005 = = = 0.00037=0.037%

This ration says that how much money are you making per every $ of sales. This

ratio measures your ability to cover all operating costs including indirect costs. After

analyzing the net profit margin of 2006 and 2005 we can say that the result is not so

differ. It is almost same.

Return on total asset ❹

2006 = = = 0.016=1.68%

2005 = = = 0.012=1.29%

9

It is the ratio to measures your ability to turn assets into profit. This is a very useful

measure of comparison within an industry. The return on total asset of Ht media in

2006 is better than 2005

❺ Return on stockholder’s equity

2006 = = = 0.00043=0.043%

2005 = = = 0.00076=0.076%

Rate of return on investment by shareholders. This is one of the most important

ratios to investors. This ratio tells how to make enough profit to compensate for the

risk of being in business. The ROE of HT media in 2005 is better than 2006.

10

❻ Return on invested capital

2006 = = =0.0014 = 0.14%

2005 = = =0.0011 =0.11 %

This ratio measures the income earned on the invested capital. Here the return on

invested capital of roger in 2006 is better than 2005.

Liquidity Ratio :

❶ Current ratio

2006 = = = 3.05

2005 = = = 1.67

11

This ratio reveal HT media ability to pay off its shortterms debts obligations.

Although, having a current ratio over 1 is normally acceptable, however, current ratio

would overestimate a company's shortterm financial strength.This ratio tells how

much dollar you have to pay per dollar debt.So here the ability to pay its liabilities in

2006 is better than 2005.

❷ Quick ratio

2006 = = = 3.00

2005 = = = 1.60

Quick ratio that excludes inventories has been calculated. It tells us that most part of

the assumed liquidity of Rogers’ belongs to inventory. As we know, most of times it is

difficult to turn inventories to cash. Here 2006 was better than 2005.

Leverage Ratio:

❶ Debt to asset ratio

2006 = = = 0.195

12

2005 = = = 0.296

Debt to asset ratio provides information about the company's ability to absorb asset

reductions arising from losses without jeopardizing the interest of creditors. This ratio

also provides information about how much debt against per dollar. So after

calculating this ratio the roger was in better position in 2005 compared to 2006.

❷ Long term debt to capital ratio

2006 = = = 32%

2005 = = =39.16%

This ratio indicates long-term debt usage. This ratio in 2006 and 2005 are almost

same.

❸ Debt to equity ratio

2006 = = = 0.245

13

2005 = = = 0.421

This ratio Compares capital invested by owners/funders (including grants) and funds

provided by lenders.IN this situation we can say that roger was in better situation in

2005.

Long term Debt to equity ratio❹

2006 = = = 0.1794

2005 = = = 0.2951

This ratio Indicates how well creditors are protected in case of the company's

insolvency.Here Rogers were also in better possition in 2005.

❺ Times-Interest earned ratio

2006 = = = 7.97

14

2005 = = = 10.23

This ratio indicates a company’s ability to meet the interest payment on its debt.In

2006 the company is earing 7.97 times the amount it is required to pay its lenders for

interest. And in 2005 it was 10.23 times.

Activity Ratio:

❶ Days of Inventory

2006 = = = = days

2005 = = = 670.71=670 days

This ratio measures the number of days a company takes to sell its average balance

of inventory

❷ Inventory turn over

2005 = = = 0.579

15

Inventory turnover ratio is used to measure the inventory management efficiency of a

business. In general, a higher value of inventory turnover indicates better

performance and lower value means inefficiency in controlling inventory levels.The

Inventory turnover of Roger in 2006 and 2005 are almost same.

❸ Average collection period

2006 = = = 3.41 =3 days

2005 = = = 3.70=3 days

The Average Collection Period (ACP) is another litmus test for the quality of your

receivables business; giving you the average length of the collection period. In this

situation HT media had better ability in 2006.

❹ Total asset turnover

2006 = = = 1.09

2005 = = = 1.35

16

2004== = = 0.98

This ratio tells how efficiently your business generates sales on each dollar of

assets. An increasing ratio indicates you are using your assets more productively.

The total asset turnover of Rogers chocolate in 2006 and 2005 are almost same and

2004 is 0.98.

Problem Statement

The Problem we found on this case study is discussed on the below:

Strategic Glitch: With the fast moving market, Media industry have adapted to the

changes the market demanded. Quite often the companies had bought in major

strategic changes in their policy to remain competitive. HT Media did not respond to

the market demand and chose to target only a selected market segment. They

continued to operate following the Focused differentiation strategy by targeting only

a niche market. This limited their market reach with a small customer base.

17

Non-Diversified Product Line: “Survival of the fittest” – In today’s cut throat

competitive market, companies have diversified their product line in order to

maximize their market share and growth. Companies have tailored products as per

the need to the Customers. HT Media offers only specific product. It is a good

strategy only in order to target a certain market segment but to reach the mass

market it is ideal to diversify the product line.

Supply Chain Snags: Traditional Supply Chain practice is obsolete. Companies

have realized the significance of integrating the Supply Chain under one roof,

preferably be self-sufficient. HT Media have low backend integration and this adds to

increase in price of raw material and therefore the overall expense head increases.

Weak Distribution Chain: The product life of the Media Industry in usually very

short. For the daily news the product life last barely for few hours. HT Media’s

distribution channel is weak as compared to its competitors. The delivery process is

very slow which leads customers choosing their competitors’ products.

Obsolete IT Infrastructure: “Pen is mightier than a Sword” - The Media industry is

often addressed by this. They Media Industry are the only source that can reach the

people and bring upon a change and awareness in people with the spread of news

and information. With the technological developments and new deployments of

mediums, the Companies have exploited the recent technological developments and

have tried to reach their customers in all always possible way and provide the best

possible experience. HT Media is yet to benefit from the technological advancement

as they are yet to exploit it to the fullest. HT Media does not have the latest IT facility

to broadcast on TV and other electronic media as compared to its competitors.

18

Recommendations

Here we give some recommendations for solving the problem of HT Media.

Strategic Recommendation:

In the problem statements we try to focus on some core problematic issues that HT

media actually faces. We, here try to provide some possible and feasible strategic

recommendations based on the problems and given situation by conducting the

analysis of competitors and ratio of financial condition. In this recommendation part

we sought out how the business can cope with present situation by taking corrective

measures in their several faulty activities.

19

Here we divide our strategic recommendation into 2 parts. We first try to focus on its

main problems' strategic recommendations from a general view after that we will

describe the recommendations for other problems from other factors or problems

generated from the value chain or implementation of strategy etc.

Major Problems' Recommendation:

1. HT media is now following the basic “Focused differentiation" strategy. But to

be a market leader as it is their aim, they have to focus on the "Broad

Differentiation" strategy. Because it will be broaden the customer base. The

company should focus on only high quality content with differentiated price among

various rivals by using differentiated operation to attract as many readers or viewers

as possible. Because when the number of the customers who are willing to pay more

for differentiated products is high that means the profit margin is also high.

2. The company is focusing only a few products. To survive in the competitive

market and to compete with the market leader the company needs to implement the

combination of strategic approaches. In this situation they have to think beyond the

adoption of only the basic strategy. The company has to integrate “Diversification

strategy or Multi-Platform Strategy”.

3. The company has also faced problems in their Value Chain. They are facing

problems in both in primary and supportive functions in the value chain.

A) In the primary function the company has low backward integration which

increases the raw materials cost. Sustainable and proper backward integration will

helps to lowering the materials cost.

20

B) The company has inefficient distribution. In case of the News, the shelf life of the

products exists for few hours. So the content should be viable, reliable and more

importantly faster reaching towards the customers.

C) As supportive function the infrastructure and technology in the value chain plays a

vital role for these types of company. The competitors have more efficient technology

to broadcast their products. But the company has no infrastructure and technology to

broadcast. So they have to implement necessary steps to install modern technology

in the TV media and internet services sectors.

4. The company needs to make the right blend of 3 Cs. They are- Classifieds,

Content and Communities. All of them help to gain a formidable platform in attracting

more and customers and driving higher margin of revenue and profit.

Associated and others problems’ recommendations:

The above strategic recommendations only provide from the general perception.

Now we try to describe it more specifically and also to provide recommendations for

the other problems generated from the other important factors which can make the

company more vulnerable in future. Now in the quest of the implementation of

recommendations their raises some questions as the above recommendations only

comes from general view such as-

A) How to attract more customers to adopt Broad Differentiation Strategy?

B) In which product the company should be diversified?

C) How the company can be more efficient in backward integration?

D) How the distribution channel will be more effective in the term of faster reaching?

21

E) In which ways the company should expand? Etc.

So here we try to provide more specific recommendations:

1. The company should focus on more in changing customers’ preference. As they

prefer more they virtual integration of all news or medium so that the news on paper

becomes less attractive. They need to make presence in TV media. In this way the

company will be able to gain more customers.

2. The company should also focus on web based service to provide instantaneous

news which will also help to reduce the major production and distribution cost of daily

newspaper with the support of global news resources. Moreover, the customer base

will be broaden as they distribution of the products in the media industry through

internet is faster and in India the number of internet user and mobile user are now

increasing significantly.

3. The company should provide customized product and service development to

improve customer loyalty. One of the major steps in this regards can be providing

more local content. Moreover they have to maintain "high quality content to attract

readers" which means superior product with distinctive images. The content should

have reliability, appeal, entertainment value and interactivity. These steps will enable

them to keep existing customers and attract new customers who are willing to pay

more for the quality of the products.

4. The company has low backward integration. So the company has to reduce the

raw materials cost by the implementation of better purchasing power through a large

size of operation where larger amount of raw materials is needed. Another possible

22

solution can be maintaining long term good relationship with leading international

newsprint manufacturer to purchase raw material at a lower than market price.

5. The expansion is one of the most important critical factors in their way of success.

The further “Reach” can be possible through geographic reach or market

penetration.

6. The company still needs to get presence in different region such as in the east

and south India with more customized products accordingly their customer

preference. The larger size of the company through expansion will also enhance

value towards the suppliers. It also helps them to increase their revenue and also

make pressure on the suppliers.

7. HT media should expand their business operation outside of the country as their

competitors have successfully done it. In this regard they can commit with strategic

alliance or acquisition with local company outside of the India.

On the other hand, the strategic alliances and collaborative partnership or acquisition

of other companies also allow them to increase the regional presence. All this

options will allow the company to grow using the complementary strengths of its

collaborators.

8. The efficient journalist, focusing on the local and entertaining content, content

packaging from various sources and trained labor force will able the company to

send the current news which ensure the efficiency of the distribution channel in both

paper based media and in future in internet or TV media when they will enter in

these sectors.

23

9. The company should invest more on the technology and news quality to ensure

the growth in the radio market where there are a few competitors to compete. Above

all they have to invest more on IT and modern printing technology which will help to

maintain the current market position and growth in the new market.

10. The company is not investing into the TV and films and internet sectors which

are most profitable. Eventually they have no presence in this vital sector. The Indian

entertainment and media industry is one of the fastest growing sectors in India where

the rivals are resourceful and maintaining multiple medium. So to ensure the

sustainable profit margin they have to diversify the products with efficient distribution

all over the country.

11. From the financial statement analysis the firm is financing more from the equity

than debt. But the debt leverage helps an organization to reduce tax and intensify

profitability. To enjoy more financial return the company can use optimal leveraging

method in debt-equity ratio. In a secure financial strategy the debt leverage will allow

them to enjoy more profitability than others. As a market is full of customers and few

competitors so that debt equity will be their best choice under this circumstances.

12. The company current ratio is decreasing. But to gain the short-term credit to

utilize the debt to equity ratio they need to make ratio in an optimal level so that the

short-term creditor will prefer the company as their risk is reduced. So they need to

hold a certain level of current asset so that the creditor will provide the loan.

Actually, we use the term “Optimal level” not “Maximum level” as the company

also needs to attract the shareholders because they prefer lower current ratio as it

indicates the company is using the assets to grow the operation.

24

13. The selling and distribution cost is very high in the HT media because of the

marketing and promotion campaign. So to reduce the cost they can outsource

certain activities in campaigning specially in Mumbai which will allow them to gain

cost advantages.

14. HT media should be more responsive in some initiate and challenge. Both in

radio segment and newspaper business the company needs to present themselves

as a market leader. In this regards, they needs to follow such strategy which will

helps them to achieve a sustainable competitive edge. More specifically they have to

adopt offensive rather than defensive strategy in their products-line as they want to

be the market leaders. So they need to continuously introduce new and better

products which will help to build a reputation as market leader in its Radio and

Newspaper segment.

Another approach in this offensive strategy which can be created successful Broad

Differentiation strategy based on technological superiority, outstanding customers

service and rapid product innovations as their buyers are price conscious and

performance oriented.

Conclusion

The HT media has to focus on its rival and their moves. They have to come out from

the traditional products. New features and modern products will help the organization

to get more acceptances all over the market. Moreover, to retain more profit the

company has to focus on different financial ratio and the condition of their

competitors. They should implement their strategy in a way so that first they can be

the market leader. The step by step process will allow them to create a sustainable

position within the market.

25

The company has some lacking in their common strategy and collecting their raw

materials as well as in growth decision. The modernized world acceptance is faster

service from the media line in this regard the company will face dilemma while the

nature of the products and the competition as well as cost of the materials of the

products are shown as weakness for them. The new entrants will also create

obstacle in this traditional mode of business as the rivals are more resourceful. So

that company should be more conscious in the implementation of the successful

recommended broad differentiation strategy to bit the rivals and secure their position

for long term. Because only a good strategy is not enough to ensure the success the

proper execution, corrective and adaptive stages are also the vital parts to be the

most successful organization.

26