Chapter 6: How To Make Money In Newspaper Advertising

Chapter 6: How To Make Money In Newspaper Advertising

What advantages do traditional print newspapers have for entering the online news business? What disadvantages do they have?

The advantages that print newspapers have for entering online news are that it is relatively cheaper, there is access to a larger pool of consumers, enables more interaction with consumers and ease of update. Posting news online is less expensive because of the reduced costs of printing and logistics. This allows funds to be redirected into more essential sectors, such as research and development. Due to the proliferation of mobile devices, most people find it easy to access the internet anywhere and at any time. Therefore, through the internet, online news has the capability of reaching a more significant number of readers internationally. Websites have sections where readers can give their views on various news articles, and this provides instant feedback for the company. News posted on the internet can be updated or retracted as need be, without running any costs.

The disadvantages of print newspapers entering the online news are that there is a lot of competition, low levels of loyalty, and risk of neglecting its print customers. Online news is available from several sites and even social media. Therefore, consumers might find it challenging to pay for access to the press when it is freely available elsewhere. This also affects the loyalty of consumers. When consumers have access to a variety of sources, then they will navigate through different sources easily. Different consumers have different needs. Therefore, consumers such as laggards who will not have adopted technology will be neglected when a print newspaper cuts down on print and focuses on online news, leading to a loss of revenue from this market.

What do you think determines whether people will use print, online, or both sources for their news?

Factors that determine the preferences of consumers include price, availability, demographic, technical abilities of consumers, and convenience. Consumers tend to compare prices. Therefore, they will compare the costs of the sources and choose the one or combination that will be cheaper. Availability is also essential, as a customer will prefer a source that is always available and reliable. The age of a consumer dictated their preferences. More often than not, younger people find it easier to use the internet for news. When a consumer is tech-savvy, they will prefer online news as compared to print.

When a print newspaper initiates an online version of its publication, what are the possible outcomes for its current display advertisers? Are they likely to prefer one channel over the other to reach their customers, or are they likely to select both? If both, are they likely to expect a discount for a bundle of print and online advertising? How do these outcomes affect the newspaper’s bargaining power?

Several outcomes can occur when a print newspaper goes online, depending on the target group of the advertising companies, price, and competitors. If the target group is small and local, a company may prefer print over online to reach their customers. If the target group is diverse and situation I different places, then advertising online will be preferred due to its reach. A diverse target group can also mean a company uses both online and print advertising to access all current and potential consumers. Companies will also base their decision on competitive advantage. If advertising online offers a competitive advantage compared to competitors, then a business will advertise online. Generally, a company will prefer one form of advertising to the other. The newspaper’s bargaining power will increase as they offer more value to the advertisers.

How do you think the cost structure of online advertising compares to the cost structure of print advertising?

I think the cost structure of online advertising is different from that of print advertising, as the use of the internet eliminates some of the costs in print. Online advertising does not incorporate the cost of printing or logistics. The use of the internet is cheaper as computers are shared, and several advertisements can be posted at the same time, creating a cost advantage. This thus makes online advertising relatively cheaper than print advertising.

Which print newspapers do you think will fare the best as online news continues to expand? Why?

I think newspapers that focus on local news will fare the best, as online news does not offer a localized experience. As online news expand, a niche of consumers whose needs are local news emerges, and this will lead to the growth of localized newspapers.

Chapter 8: Ford’s Global Strategy

Why do you think that Ford historically made different cars in different regions? What are

the advantages of Ford’s historic strategy? What are the drawbacks?

Ford made different cars in different regions to take advantage of the benefits that accrue from localization. Moreover, they were not experiencing any cost pressure from competitors. A difference in consumers’ tastes and preferences prompts a company to implement the localization strategy for them to gain a share in the different markets. Customization of the Ford Focus to the market in Europe enabled Ford to increase the value it offered to its market. This then significantly increased its local demand.

However, the localization strategy required Ford to use different parts for the different cars, different production functions, and production runs, increasing its overall production costs. It also limited its ability to implement a cost reduction strategy that is realized from the mass production of a standardized car, economies of scale. Different resources and inputs had to be used for a particular market; hence they were not efficiently utilized.

What global developments forced Ford to rethink its historic strategy?

The effects of the global financial crisis of 2008 were also felt by the automobile industry, leading to a decrease in sales. Moreover, there were many emerging automobile markets in China and India. To be able to appeal to broader markets, Allan Mulally realized that they had to reduce their production costs by standardizing the production platforms and technology.

How will the “One Ford” strategy benefit Ford? What does this strategy mean for Ford’s ability to compete in established markets like the United States and Europe, and emerging markets like China?

The “One Ford” global strategy takes advantage of economies of scale. A few platforms are used to produce a variety of car models. The production process is standardized, making production cost-efficient. This strategy will shape Ford into a global brand, reduce its costs not only from economies of scale but also learning effect. This would make the price of the cars cheaper hence more affordable to emerging markets, earning them a competitive advantage.

Using the framework outlined in this chapter and summarized in Figure 8.3, how would

you describe Ford’s global strategy?

Ford’s global strategy is based on its factor endowment and its strategy, structure, and rivalry. As a multinational company, Ford has access to adequate and quality factors of production, such as machinery. It is also able to locate different productive activities in regions that will be more efficient. Moreover, its strategy of standardization hence cost reduction will give it a competitive advantage compared to its global competitors such as Volkswagen.

Chapter 9: Outsourcing and Vertical Integration at Apple

What are the advantages and disadvantages to Apple of outsourcing its production to factories in China?

The advantages that Apple realizes from outsourcing production to China-based factories are that it can focus on its core business, able to offer enhanced differentiation of products and lower costs.  China-based factories enable enhanced differentiation as they have access to a large number of readily available skilled labor. Moreover, the labor availability and number also enable flexible changes to be implemented fast, such as when Apple had redesigned its screen of the iPhone weeks before their delivery to stores. Apart from the economies of scale, the availability of labor also contributes to the lower cost structure as the factories have access to a vast number of both manual, 8000 workers in quantity, and professional labor hence pay lower wage rates as compared to those in the United States. It is also easier for them to assemble due to the learning effect. Therefore, it saves on time. Apple is thus able to focus on producing its hardware and software; thus, the high quality it is identified with.

The disadvantages of Apple outsourcing could be a hold-up as a result of being too dependent on Foxconn Technology assembling its products. This could lead to a rise in Foxconn’s bargaining power over Apple. There is also the criticism that Apple receives, as people perceive it as not helping reduce the unemployment issue in America.

What factors influence the choice of countries to which a firm might outsource its production?

Factors that dictate the country to outsource are factor endowment and the presence of related and supporting industries. In China, there is an abundance of factors of production in terms of skilled and unskilled labor and superior technology, leading to lower costs. This is a factor that influenced Apple. Moreover, if a country has access to related industries that would supply parts or services in support of its activities, then it would be efficient to outsource to that country.

Is there anything that might cause Apple to shift production back to the United States

eventually?

The presence of a large number of readily available skilled and unskilled labor that can work round the clock could be a turning point for Apple. Moreover, government incentives that would significantly reduce the costs of assembling in America might lead to a shift in the assembly location of Apple.

Why is Apple more vertically integrated than many other computer makers?

Apple is more vertically integrated, as it is both backward vertically integrated and forward vertically integrated. It is backward vertically integrated with the production of its hardware and software and forward vertically integrated with its distribution and sale of Apple products in its stores.

What factors will help or impede Microsoft in matching the advantages Apple gains from its vertical integration strategies?

The superior quality of the final product will help Microsoft match the advantages Apple is gaining from vertical integration.

Increased cost structure and technological obsolescence will impede Microsoft from matching the Advantages Apple gains from vertical integration.