Fairfax Media Industrial Environmental Analysis

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Table of Contents

Threat of new entrants
Bargaining power of suppliers
Bargaining power of buyers
Power of substitutes
Intensity of industry rivalry
Conclusion
References

Companies are affected by internal and external factors; the Australian media industry is undergoing numerous transformations. Companies in the media industry need to be vigilant and updated with the transformations taking place if they have to remain competitive. Porter’s five forces are external environment analysing tools used to gauge company’s competitiveness and market position (Fred, 2008). This paper undertakes an industrial environment analysis of Fairfax media.

Threat of new entrants

The media industry is undergoing fast developments with new way giving information being invented. The way newspapers, magazines, radios and digital media are produced has accelerated competition in the industry. When trying to adopt new forms of information disbursing, Fairfax faces numerous challenges which include patent rights, copy rights, and trademarks acquisition challenges.

When the rights are granted, they come with a cost to the company; there has been challenges of print media from free press media in Australia thus Fairfax faces the challenge to handle the situation (Fred, 2008).

Bargaining power of suppliers

In contemporary media industry there are national and international suppliers; they include suppliers information and physical materials used in the production.

Fairfax media has numerous journalists mandated with the task of collecting information and supplying it to the company in good time, the challenge facing the company is fast development and adoption of Internet where its journalists seem to get unauthenticated information. In current moves to conserve the environment, the company is having a challenge getting printing papers; they are found at high cost forcing it to pass the cost to its customers (Hitt, Hoskisson and Ireland, 2003).

Bargaining power of buyers

Bargaining power of buyers is the ability to influence prices or the products made. Australia youthful population is influencing the nature and style that media houses are doing their businesses. Generation Y and the millennium generation are repelling against the print media; they are more interested in free press media that is cheap, and fast (Haberbeg and Rieple, 2001).

Generation Y is fulfilling their surveillance needs in the most efficient manner in terms of access, costs, and availability; with the above characteristics, free news media has seen a niche market where it can sell its products and services. Fairfax is finding its business being pushed to the production of free news articles that are less profitable to the company (Blackhurst, 2003).

Power of substitutes

The main substitute that Fairfax is getting comes from the free news media; free news media offers news in simplified form that is formatted to attract the attention of its target market. Australian youthful generation is more willing to use free news Medias’.

Companies in the print industry are finding it hard to compete with free news media houses. On the other hand, Fairfax media has maintained the conventional news presentation format that seems to give preference to national and international news on different matters, the nature of the news fails to meet the needs of the people (Bakker, 2002).

Intensity of industry rivalry

The media industry is highly influenced by emergence of technology; the Internet has enabled free and fast flow of information. Although Fairfax Media has accomplished significant growth in market capitalization, the rate is slow compared to the potential that the industry has. The main hindrance to fast growth is competition from free news media that have news targeting the youth. Apparently the youth are the majority in Australia favouring the free news media (Hitt, Hoskisson and Ireland, 2003).

Table 4.1 Evaluation of Porters Five Forces

Force	Threat to profit
Threat of new entrants	Low
Power of supplier	Low
Power of buyers	Medium (its growing)
Power of substitution	Low High
Intensity of industry rivalry	Medium to Low

Conclusion

To remain competitive in contemporary business environments, Fairfax Media management team have to enact policies and strategies that respond to current changes in the industry. The company’s best strategies should enable it take advantage of opportunities in the market and control any business risk associated with the globalizing market.

The Australian media industry is undergoing a series of transformation thus Fairfax research and development team have the challenge of establishing the right channels that the company should follow to be competitive. Some of the policies that the company should embrace include total quality management, Six-sigma, customer relation management, integrated supply chain management, strategic human resources management and use of business intelligence tools when making decisions.

References

Blackhurst, R., 2003. The freeloading generation. British Journalism Review, 163(9), pp. 53-59.

Bakker, P., 2002. Free Daily Newspapers-Business Models and Strategies. The International Journal on Media Management, 4(3), pp. 180-187.

Fred, D. ,2008. Strategic Management: Concepts and Cases. New Jersey: Pearson Education

Haberbeg, A. and Rieple, A.,2001.The Strategic Management of Organisations. London: Prentice Hall.

Hitt, M., Hoskisson, R., & Ireland, K., 2003. Strategic Management: Competitiveness and Globalization. South Western: Thomson Learning.

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