The New York Times Company's response to digital disruption and credibility challenges

New York Times

Over the last several years, the New York Times has been facing a number of different challenges. Part of the reason for this, is because of a shift that is occurring in the publishing industry, with more people turning to the Internet to receive their news. At the same time, they have had high profile scandals (i.e. Jason Blair) where he was fabricating a number of different stories. ("The Future of the New York Times," 2005) These two factors have meant that a change has occurred in the underlying demand of circulation, which has been having an adverse impact on the company's overall bottom line. To fully understand what is occurring requires examining the strategic plan and conducting an analysis of the company itself. This will be accomplished through: evaluating the current state of the corporation and the planning approach they could utilize to deal with these issues. Once this takes place, it will provide the greatest insights as to the underlying challenges facing the company, the risks involved and how they can possibly overcome them in the future.

Analysis

Currently, the New York Times has been facing a loss of market share and readership due to more people using the Internet for reading the latest news. This has caused the company to see a loss in advertisers and circulation. Once occurred, it meant that the company has been seeing and a decline in their underlying profit margins. To understand the overall scope of these problems we will look at several different aspects of the business itself to include: the organization's value chain / design, their competitive strategies, the competitive context of the business and the financial position of the corporation.

Organizational value chain & design

When you look at the value chain and design of the New York Times, it is clear that the editors and management have lost focus on what is most important to the readers. Where, they are no longer finding stories that are most compelling and they are failing to integrate their business model with the Internet. The reason why this is occurring is because: they are lacking consistency, flexibility, accountability and synergy. These different factors have meant that they are unprepared to adjust to shifts have been taking place inside the industry. At which point, they have been continually losing market share to the Internet and other forms of media. (Keidel, 2010, pp. 77)

Institutional, corporate, & business (competitive) strategies

The issues that have been affecting the value chain, as this has meant that the company is allowing employees to be unsupervised. This is an indication that the business has been seeing damage to their underlying reputation. For years, this was the foundation that New York Times was known for: building their brand and image. Once this begins to take place, it means that the organization call fall into a state of dysfunctionalism that contributes to a steady loss of control. This is a similar kind of situation that happened at Enron and Tyco. ((Keidel, 2010, pp. 80) The only difference is that the New York Times had a stronger brand image.

Competitive context (5-force analysis, technology & product life cycles)

To illustrate this, we utilize Porter's Five Force analysis (rivalries, the threat of substitutes, buyer power, supplier power along with the threat of new entrants). As, this is showing how: the company failed to understand and adapt to the underlying changes that were occurring within the industry itself. As far as rivalries are concerned, the company has been dealing with a host of challenges that have been impacting the corporation. In this case, other newspaper such as: the New York Daily News and the Wall Street Journal have been slowly eating away at the organization. Where, the parent company of both publications (News Corp) was integrating responsible journalism with an interactive platform using the Internet. This led to a transformation in these publications by giving them the ability to increase their readership. While at the same time, maintaining a balance in the quality of stories they were producing. (Bender, 2011) This situation, is illustrating how the threat of substitutes is causing a shift in the way they are able to take market share from the New York Times. The reason why, is because they can offer a more interactive and entertaining format. This helps to increase their readership and the number of advertisers they are working with in comparison with other organizations. The use of buyer power is an indication that consumers have choice in the way they are receiving the news. This means that organizations such as the New York Times have less influence over readers, as they can chose what format makes most sense for them. Supplier power has been significantly reduced, because there are ways of receiving information that is not directly tied to creating various products. As, the underlying cost basis to produce and deliver the news has been dramatically lowered. The threat of new entrants is illustrating how web sites such as Google News can provide real time information about what is taking place in the world. This has led to shift in the industry, as more people are focused on receiving timely information vs. The traditional printed format. As a result, technology has transformed the way information is being processed and it has shortened the product life cycle to a few hours. These different elements are important, because they are highlighting how the New York Times is facing a number of strategic disadvantages that are having an adverse impact on their organization. ("Porter's Five Forces Model," 2011) (Christensen, 2001)

Planning (for the future using a time frame of your choice)

To plan for the future the New York Times, needs to be focusing on the medium and long-term objectives. This means that the need to have a horizon of ten years, with a dramatic shift taking place during that time. To determine this we will examine three possible strategies that can be utilized to achieve this objective to include: three possible strategic directions, specific recommendations and organizational concerns / suggestions.

Recommended strategic direction (what), and rationale (why)

The most logical strategic direction for the New York Times is to utilize a strategy of integrating the print model with the online version. The reason why, is because this approach will allow consumers to be able to receive a real time version of the paper on their mobile devices such as: Kindle and smart phones. They could sell subscriptions for a fraction of the cost of the print edition. This is a similar kind of approach that is being taken by the News Corp with the Wall Street Journal. (Manekar, 2011)

Organizational / implementation concerns & recommendations (how)

To integrate this strategy there needs to be change in the focus of management at the New York Times. Where, there must be an improvement in the journalistic integrity of the organization. This is because many issues (i.e. Jason Blair) have made the paper look as if they are bias. To deal with these challenges, the company needs write from a more neutral standpoint and conduct effective fact checking. At the same time, the must have managers who will lead the organization by focusing on: new transformations in technology. If this kind of approach can be taken, it will help the New York Times to be able to make the shift to a digital media organization.