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Buss 3 Essay

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Submitted By rassvetasem
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34 marks question.
Using all the information available to you, complete the following tasks:-
• Analyse the key arguments for and against Harry Gardner’s proposal
• Make a justified recommendation on whether you think that the Directors of Roberts Media plc should accept Harry Gardner’s proposal

Harry’s proposal is to achieve the objective of increasing ROCE of Roberts Media plc to at least 8% by 2014 by converting the magazine from a print to digital only format and introduce a more flexible workforce, which consist a small number of ‘core’ workers. He also believes he should move the head office to smaller and cheaper place, plus close the print works and distribution networks.

On the one hand, proposal about switching from print version to digital only format is a good idea for Roberts Media Plc, because as our world changes a lot, nowadays most people have smartphones and tablets where they can easily read news online. Roberts Media Plc’s readership is fallen by 12% and if they continue to work with print format they may struggle in future and even make a loss , as consumers are switching, plus their another research showed that the market value of the UK women's print magazine is predicted to fall from £450m in 2013 to £380m by 2015, which is another reason to move from print to digital format. Furthermore RM’s (Roberts Media) rivals already launching digital magazines in 6 months and had already started their marketing campaign and it is an example that it is not that risky, so company needs to adapt and change in order to survive and not to make a loss.

ROCE print 2013: (72/3600)*100=2%
ROCE digital 2013: (144/3200)*100=4.5%

The new ROCE shows that if they stay in digital format they will not move from 2% and therefore make an objective of achieving 8% by 2014 unrealistic. However, if they will switch to digital format, their ROCE will increase by 2.5%, plus they are planning to relocate the head office to Manchester, which is smaller and cheaper and therefore reduce costs and increase ROCE even more. It also plans to encourage employees work from home, which should also work the same. The cost savings from relocation and the closure from the print work and distribution network should enable the company to achieve the objective of increasing ROCE for at least 8% by 2014.

Harry is also changing the content of the magazine making it more appealing to wider range of women,therefore making the potential customer base even larger and he also has experienced working in such area like publications about celebrity gossips, which may hopefully benefit and help the company, due to potential contacts and strategies/tactics that he knows will work well and share with workers.

However, on the other hand, yes Harry had experience working in such area, but other employees haven’t, which leads to some struggles. For example, re-training must be required, because their skills in the print market going to be lost, due to changing markets and re-training will cost for a company a lot of money. Plus not only money will cost them a lot, but also the closure of the print works, as well as the change to a more flexible workforce, will result in many employees being made redundant, which may lead to de-motivation and stress for staff that stay, as they used to be long time friends. De-motivation and stress of employees may affect on production which can lead to delay, something that they don't want to have, as they need to be launched in less than 24 weeks’ time, in order to coincide with London fashion week.

The switch to digital format will lead to loss some customers, because not everyone able to have smartphones or simply don't want to read online, especially when their target market are 45-54 year-old women, when at this age old women are not really into technology. In this case RM will be needed more money spend on advertising, in order to attract new customers, somethings that might not be viewed before. So they need to consider this as well.

In conclusion, in my opinion, directors of Roberts Media Plc should accept Harry Gardners’s proposal, even though they will need to pay redundancy payments, which will reduce ROCE and Gross Profit margin massively, which is a major issue as profit is already low. However, the situation on print market is falling and it almost forcing them to move to digital market, as the share price and profit falling anyway. In addition, Harry has experienced in this new market and amount of subscribers going to increase which should help to increase the ROCE and achieve their objective of increasing ROCE to at least 8% by 2014. Plus company going to charge £5 which will increase sales revenue and therefore GP margin and hopefully proposal will be successful.

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