Random House

CASE ANALYSIS

Random house, one of the largest book publishing companies in the world, was established by Barnett and David with a vision “Books turn people into explorers. They open the gates to new worlds and new insights”. RH had a disruptive strategy of expansion and diversification through acquisition. Smith and Haas gave new talent to RH. Finally its acquisition by Bertelsmann and BDD acquired gave it a new structure, lean management, new technology and access to mass markets. RH faced with the issue of higher cost, higher staff and poor structural management, BDD went on a massive cost cutting spree, through reducing employees, cut manufacturing cost and finally restructure distribution network.

Market Analysis

Top five players Random house, Penguin, MH, Pearson fighting to consume the market share. There are various substitutes available in the market like Video games, movies, animated movies, eBooks, interactive content, blogs etc. The sales are going down due to video games, movies and animated movies where generation today is spending most of their leisure time. Print on demand techniques reduces the required up-front investment in book publishing, allowing many more individuals and companies to enter the marketplace, and allowing Niche market to be served as never before. The eBook market is taking this one step further.

BCG matrix for AOL acquisition

Acquisition of AOL was a value trap for RH.

Value chain for publishing industry

Value chain by 2003 saw a new tide of change, with electronic publishing. Certain authors began publishing their own works online entirely bypassing the publishers wholesalers and retailers. Digital media seemed as a immediate threat to replace print business eventually.

SWOT Analysis

* STRENGTHS: Strong market share, with a large list of bestselling authors

* WEAKNESSES: Possible perceived stigma by readers in target market associated with reading large print books

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