Steep Analysis
Social Analysis
Australian society is experiencing major changes in the sociological trends regarding book and literature reading. The ever increasing literacy rate and people’s love for book reading are increasing the demand for the production of quality literature and reading material. But this does not mean that the industry’s environment is publisher friendly. This is due to the entrance of e-publishing in the industry and the online availability of pirated books over the internet. People now prefer to read books online, as it is more facilitating and less costly for them (Scardino 2010). To save the endangered book industry in Australia, the Australian government has set up a fund of USD 1.5 billion (Steger 2010).
Technological Analysis
The arrival of digital reading has had an impact on publishers’ interest around the globe. Giants, like Apple, has launched applications with their iPad that facilitate consumers’ digital reading experience. Due to these applications, consumers’ demand for digital reading is on boost.
Economic Analysis
The book publishing industry is contributing approximately USD 1.8 billion to the Australian economy. The expected growth rate for the industry is predicted to be 2.8% by the end of 2012, which makes the contribution of this industry about USD 2.2 billion. Revenues have also grown at 3.3% per year (Baker 2007).
Environmental Analysis
The book publishing industry does not perform any activities that prove to be harmful to the environment. Besides, the overall image of Pearson in particular, and the industry as a whole, is environment friendly.
Political Analysis
The government of Australia is eager to assist and develop the book publishing industry, as we have already discussed, that it is going to provide a fund or USD 1.5 billion to support this industry as it currently faces greater threats from the rapid increase in online readership.
Porter’s Five Forces Model Analysis
Inter Rivalry Competitors
Till the end of 2007, the competition in the Australian publishing industry was not favorable for Pearson Australia, as its market share was only 11% as compared to the industry’s leader Sensis’ 31%. To reduce this gap, Pearson has to adopt a business strategy that differentiates them from Sensis and the second-ranked Reed Elsevier Australia (Baker 2007).
Bargaining Power of Suppliers
Due to its diversified business strategies and a strong network of subsidiaries around the globe, suppliers find it difficult to conduct business with Pearson Australia, on their terms. Pearson is a prestigious name in the world of book publishing, and due to this prestige, suppliers accept whatever Pearson offers to them.
Bargaining Power of Buyers
Due to the arrival of digital publishing and the availability of books over the internet, buyers have gained the power to bargain with book publishers. Buyers know that they have better alternatives available to read books online instead of buying the printed versions, so the publishers have to design and sell the products on buyer’s terms and conditions.
Threat of Substitute
The main threat to Pearson in particular, and the book publishing industry as a whole, is from Apple’s iPad and electronic book publishing over the internet. People are now turning towards these electronic sources to read books rather than buying them from stores. Book publishers have found it difficult to prove printed books as a better option against electronic sources of book reading because it is more facilitating and low costly as compared to traditional book reading (Scardino 2010).
Threat Of New Entrants
As far as the Australian book publishing industry is concerned, the market conditions are not favorable for new entrants. This is due to the reason that giants of publishing around the world are already in the market. In the presence of these giants, it will be difficult for a new entrant to mark its place in the heart of customers. Also, these giants themselves are facing intense competition from electronic sources of book reading, so it will be difficult for a new player to establish itself in the industry.
Competitor’s Assessment
Immediate Competitors
Pearson’s main competitions come from the industry leader, Sensis, whose market share is 31% in the Australian book publishing market. Besides Sensis, Reed Elsevier Australia is the major competitor for Pearson to consider as it holds 13% of the market share, only 2% higher as compared to Pearson (Baker 2007).
Impending Competitors
New Australia Holdings and Wolters Kluwer Australia showed significant improvement in their business practices and they narrowed down the competition by the end of the year 2010 (Baker, 2007). Besides these competitors, the entry of Apple’s iPad has added more difficulty to the book publishers, as it is more facilitating and less costly.
Invisible Competitors
The historic shift in economic powers is attracting organizations to diversify their businesses, either within the industry or outside the industry in which they are already conducting business. There is a chance that a competitor or player in the publishing industry, would switch to electronic book publishing instead of sticking to traditional book publishing. In this way, that competitor will take advantage of Pearson, as people now a day prefer to read books online rather than buying them.
List of References
Baker, J., 2007. Book Industry faces Its Next Chapter. Web.
Scardino, M., 2010. Pearson’s Strategy. Web.
Steger, J., 2010. Focus on Book Industry. Web.