McGraw-Hill’s Internal and External Analysis

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Table of Contents

Introduction and Overview
Mission, Goals and Current Strategies
Internal Analysis
External Analysis
Conclusion

Introduction and Overview

McGraw-Hill is a global firm that diversifies in many activities, though it majorly engages in publication of educational materials. The headquarters of the company is in New York City. McGraw-Hill is restructuring, following the sale of its TV unit and Business Week operations. The restructuring is likely to cause the divestiture of some of McGraw-Hill’s units.

The company has four Strategic Business Units (SBUs): McGraw-Hill Information and Media, McGraw-Hill Education, McGraw-Hill Financial, and Standard and Poor. The McGraw-Hill is in the growth stage of the organizational lifecycle. This is because the company is in the process making adjustments and devising better ways of running its activities.

Mission, Goals and Current Strategies

The mission of McGraw-Hill involves the provision of vital information and knowledge that assists societies, market, and individuals in producing excellent outcomes. McGraw-Hill’s goal is to meet three needs: capital, business information and transparency, and knowledge, education and training.

The strategies of McGraw-Hill involve responsible operation of business and improvement of environmental, social, and economic well-being of the communities.

Internal Analysis

The IFEM score for McGraw-Hill is 2.6. Most of the company’s factors are favorable. There are some weaknesses within the management that the company should address in order to achieve its goals.

Management

A major strength is the ability to adjust quickly to the changing economic conditions. This weighs.04. The four SBUs have effective structures that meet the different goals of the company.
A minor weakness is the complexity of contact with higher management. This weighs.06. There is a likelihood of internal tension because of complex access to external and internal sources of funding.

Finance

Finance is a minor strength, with a weight of.05. The management needs to take steps to ensure that the company’s finance is more sustainable and healthier.
Current Ratio (2010): Total Current Assets (Balance Sheet) divided by Total Current Liabilities (Balance Sheet): $3,294,611/$2,680,874= 1.2. This shows that the company’s liabilities are relatively equal to assets. The company is capable of settling its short term debts. It cannot totally become liquid in a rapid way.
Return on Assets Ratio (2010): Net Income (Income Statement) divided by Total Assets (Balance Sheet): $851,869/$7,046,561=0.1. The low return on assets means that the company is not managing its assets properly.

Marketing and Service

A major strength is that McGraw-Hill commands a wide market across the globe. The weight for this is.04. It is currently shifting to mass customization in order to meet unique needs of its customers.
A minor weakness is the large amounts of money required to reach out to a wide target audience. This weighs.05. The company should work on acquiring financial resources.

Production and Operations

A major strength is the production and operational flexibility that the company enjoys through the specialized units. This weighs.04. The company should keep pace with technology in order to promote low cost production.
Customization is a minor weakness. This weighs.06. The company may experience pressure in production and forecasting schedules. It must do extensive research before fully shifting to mass customization.

Human Resource Development

This is a major weakness. This weighs.12. The company fails to mention its staff members in the mission statement. McGraw-Hill should show its commitment to the safety, professional development, and respectable treatment of employees.

Research and Development

A major strength is the company’s consistent innovation of better ways of serving its customers. This weighs.04. Its shift to mass customization will be a better way of catering for individual customer needs.
A minor weakness is that the major focus is on the educational unit. This weighs.06. The company should put equal effort on all its sectors.

Other Relevant Internal Factors

Distribution is a major strength. This weighs.04. The company has reliable channels of distribution.

External Analysis

The EFEM score of McGraw-Hill is 2.99. The external factors are quite favorable to the company. The threats to the company are avoidable. The company should act promptly to utilize the opportunities while avoiding the threats.

Competition and Industry

A minor threat is tight competition from other global companies such as Pearson, Houghton Mifflin Harcourt Publishing Company, and Reed Elsevier Group. This weighs.06. The company should closely monitor the activities of its rivals.
A major opportunity is the expansion of McGraw-Hill’s operations in Asia and Europe. This weighs.04. The company should create entry barriers into the market.

Economic and Cultural

The recession and tightening educational budgets are a major economic threat. This weighs.08.

Social and Cultural

A major cultural opportunity is the shifting perspectives across different cultures with so many people realizing the significance of changing careers. This weighs.04.

Demographic

A major opportunity is the growing population of people seeking for educational services. This weighs.04. The company should take into account the changing buying patterns and consumer lifestyles in order to take full advantage of the market.

Other Relevant External Factors

A major political threat is the policy restriction of McGraw-Hill’s attempts to downgrade the U.S. credit rating. This weighs.08. The company should keep pace with the US budget policy.
Environmental concern is a minor threat. This weighs.04. The company’s adoption of the net-metered solar project that produces renewable energy is a sure way of reducing global carbon emissions.

Conclusion

McGraw-Hill has a quite favorable internal environment. The company has good management. Its financial position is not very healthy. The company should try to cut on costs and increase its means of cash flow so as to boost its marketing and service, production and operations, human resource development, and research and development strategies.

The company’s external environment is more favorable than the internal environment. The company is in a higher position than most of its competitors, though it must act quickly to create entry barriers to potential competitors. The company should also keep pace with the changing cultural and social perspectives where more people are embracing education.

McGraw-Hill should also keep abreast with emergent policy issues in different states so that it may not create liability. The company is making efforts regarding its corporate responsibility by ensuring reduction of carbon emissions. There are high chances of McGraw-Hill making a big name for itself worldwide.

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