Introduction and Overview
The history of McGraw-Hill dates back to 1917 when James H. McGraw and John A. Hill decided to merge their companies. In 1995, it was re-branded from McGraw-Hill Publishing Company to McGraw-Hill Companies to reflect its diversity. The current CEO, president, and chairman of this New York City-based company is Harold McGraw III.
Mission, Goals, and Current Strategies
McGraw-Hill’s mission is to create a smarter and better world where everybody can achieve knowledge by cheaper means. Also, its mission is to offer its clients essential information that will promote their potential. The current strategy of McGraw-Hill, which develops according to three major branches (publishing, marketing research, and broadcasting) is oriented to re-structuring and division.
Internal Analysis
According to the Internal Factor Evaluation Matrix (IFEM) score of 2.7, McGraw-Hill’s position about the combination of internal factors can be discussed as strong.
Management
- A major strength that ensures there are no delays in making decisions in the company is that the management is structured as vertical-horizontal, and the company has one CEO that performs the functions as the chairman and president of the company. This was weighted.09, a moderate sense of urgency, because CEO regulates the work of all the departments.
- A minor weakness that can affect decision making is that the president, chairman, and CEO Harold McGraw III has numerous responsibilities. This was weighted.11, a moderate sense of urgency. The company should consider the decentralization of the roles of the president to reduce risks that occur because of relying on an individual to make decisions for others.
Finance
- McGraw-Hill has a lot of capital that enables it to acquire other businesses and expand their operations. The total assets of this company are valued at $ 7.047 billion. This large capital base is a major strength. This was weighted.12, a high sense of urgency because the company manages inflation and has adequate funds to invest in new ventures.
- Financial metrics: The total assets for 2010 are of $7,046,561; the total liabilities for 2010 are of $4,755,170; thus, the total liabilities and equity for 2010 are of $7,046,561 in comparison with $6,475,250 of 2009.
Marketing and Service
The company markets its products through various ways that ensure the information reaches the audience. This is a major strength that promotes the products and services offered by this company. This is weighted.12, a high sense of urgency, because such a marketing strategy increases the company’s profits.
Production and Operations
McGraw-Hill is a multinational company. Its subsidiaries use similar managerial, operational, and production techniques to ensure that everything they produce is of high quality. Also, the company diversified its production to spread risks, and this is a major strength weighted.12, a high sense of urgency, that promotes the safety and financial security of this company.
Human Resource Management
The company diversified its human resource department to ensure its employees are proportionally compensated according to their qualifications. However, this approach is very expensive compared to hiring workers from a central position, and this is a major weakness weighted.12, a high sense of urgency, that leads to unnecessary losses.
Research and Development
McGraw-Hill’s Standard & Poor’s business unit offers marketing research and analysis services to its clients. This means that it uses this department to research its products and services, and this assures that the company will get credible results.
Also, it does not need to hire experts to conduct its research since it has an in-house department to do so. This is a major strength that ensures it reduces operation costs and achieves credible results. It is weighted.11, a moderate sense of urgency.
Moreover, its diverse network of employees is located in different branches, but a surprising aspect of their behavior is that they work as a team. This is a minor strength that ensures the company achieves its objectives without struggling. It is weighted.10, a moderate sense of urgency.
Other Relevant Internal Factors
Recently, the company launched various projects, including the solar system plant that can ensure the company has a constant supply of electricity for its nearby branches. This will reduce its expenses and ensure all operations continue despite having power shortages.
The company uses modern technology in various aspects, and this is a major strength. It is weighted.12, a high sense of urgency. This approach promotes efficiency and the production of high-quality services and goods.
The accounting and transition departments are very efficient. Thus, the company knows its financial position and market trends within specified periods. Managers can develop strategic plans depending on the data provided by its accounting department, and this helps them foresee and manage future economic challenges.
This is a major strength that ensures the company enjoys the advantages of efficiency in accounting and transitioning from one activity to another. It is weighted.14, a high sense of urgency.
External Factors
Following the External Factor Evaluation Matrix (EFEM) score of 2.8, the position of McGraw-Hill can be discussed as rather favorable.
Competition and Industry
- McGraw-Hill suffered a major blow when competitors like Pearson, Houghton Mifflin Harcourt, and Reed Elsevier Group invested in publishing. This was a major threat that forced this company to restructure its publishing unit. It is weighted.14, a high sense of urgency.
- The spread of digital communication is another major threat that makes the company record low sales. It is weighted.12, a high sense of urgency. It is necessary to invest in modern technology and improve the quality of its products to compete effectively with other companies.
- Also, the company has invested in technology to ensure it offers quality services to its clients. This is a minor opportunity that will increase sales. This factor is weighted.12, a high sense of urgency.
Economic
- Another minor threat this company is facing is that it has invested in delicate operations like shares that are usually unpredictable. This factor is weighted.09, a moderate sense of urgency.
- The company’s withdrawal from offering publishing services means that it was not prepared to invest in technology to retain its clients. It is facing a major threat because it has a tradition of not sustaining its innovations. This factor is weighted.08, a moderate sense of urgency because the company’s income can decrease insignificantly.
Social & Cultural
Moreover, the company seems not to understand the politics of the United States, and the Standard & Poor’s department has difficult times with the government. This is a major threat that may affect their client base because some people and organizations may stop seeking their services. This factor is weighted.12, a high sense of urgency.
Demographic
Most clients of this company are elderly people, students, and institutions; therefore, this is a minor threat to its success because some clients may want to try the new services offered by entrants. This factor is weighted.09, a moderate sense of urgency.
Other Relevant External Factors
- The government may enact policies that will affect the performance of this company, but this is a minor threat to the company’s performance. Thus, policies on environmental protection will not only affect this company but also the other companies that have similar or different operations within the industry. That is why this factor is weighted.09, a moderate sense of urgency.
- Technology is a major threat that may affect the performance of this company because it relies on traditional modes of production to cut its operating costs. This factor is weighted.12, a high sense of urgency.
- McGraw-Hill is very slow in transitioning from one aspect to another, and this factor may affect its ability to compete with other companies. This is a major threat weighted as.14, a high sense of urgency, because it may affect the company’s expansion and limit its ability to offer timely services.
Recommended Strategic Vision and Supporting Strategies
Referring to McGraw-Hill’s mission, it is possible to develop a definite vision for the company to contribute to its success. The company’s orientation to building a smarter and better world with references to knowledge economy should be modified to creating opportunities for combining knowledge and innovation based on technologies.
The growth grand strategy should be recommended for McGraw-Hill with references to creating more company’s units and expanding the markets to attract more customers. To attain the growth grand strategy, the company should combine the current focus on dividing subsidiaries with the focus on the creation of new units oriented to using innovation and technologies.
Functional Areas Considerations
Management: Innovation and sustainability
S – effective leadership team
S – appropriately developed marketing plan
S – the focus on information technologies
W – lack of employees’ empowerment
O – more global market opportunities
O – focus on innovation
O – the market leader
T – competition
Action Plan/Considerations – management will identify the areas for further diversifying the company’s products. The goal will be to develop an effective plan for marketing digital learning systems based on innovation technologies.
Metrics – important to monitor costs and cash flow and other financial metrics associated with developing new markets and such products as digital learning systems. It is necessary to monitor progress according to the set plan.
Conclusions
The expected results of implementing the growth grand strategy for McGraw-Hill are in attracting more customers from different age categories and in increasing the company’s profits because of operating within more market segments.
The focus on the growth grand strategy with references to the technological progress and use of the innovation is necessary to develop the company units and to diversify the company’s products more intensively while focusing on the customers’ demands and their needs in new digital learning systems.
Furthermore, the focus on creating opportunities for sustainable production is important to increase the company’s competitive advantage within the industry because it is necessary to propose new approaches for attracting clients.