SWOT ANALYSIS FOR PEARSON PLC, 2013
STRENGTH
OPPORTUNITIES
O1.The increasing popularity
of E-books.
O2. E-books are reducing
majority of production cost.
O3. The usage of Electronics
Art would attract teachers
and professors.
O4. Technological advances
could help students in finding
their desired information in
the system.
O5. A lot still value
traditional hard cover books
THREATS
T1. McGraw Hills is the
largest competitors with
relatively high net income
T2. The cost of production
would increase as natural
resources is decreasing
T3. Imitation of the
counterfeit for the Pearson’s
learning materials.
T4. Emerging competitors
that provide learning
materials at lower price.
T5. E-books could be shared
online and less people would
buy it.
WEAKNESS
S1.Pearson is the largest and
most profitable book
publisher.
S2.Pearson provides
textbooks and digital
technologies to teachers and
students across ages.
S3.Pearson generates about
60% of its education sales in
North America but operates
in more than 70 countries.
S4.Books written by best
authors
S5.Provides subsidized
publication in developing
countries.
SO STRATEGIES
SO1. Market penetration
Increase the sales of e-book
by 100% by 2015 (S1,01)
SO2. Market penetration
Twofold sales of traditional
books in Asia and Latin
America by 2018 (S3,O5)
ST STRATEGIES
ST1.
Offer increase of incentives
for professors and student to
change to electronic books.
ST2.
Start a yearly reuse for all
reading material
W1.Pearson had 2012
revenue declines in three
regions, but sales were up in
USA slightly
W2.Pearson earning per
share is lower than McGraw-
Hill and John Wiley
W3.Late involved in digital
E-book and Blackboard
market.
W4.A few products have
high market share while most
of the products have low
market share
W5.Pearson has no clearly
stated vision or mission
statement
WO STRATEGIES
WO1. Market penetration
Penetrate the market in Asia
and Latin America by 2018
(W1,O5)
WO2. Market development
Introduce new system for
people to find information
online (W3,O4)
WT STRATEGIES
WT1.Forward integration
Develop a strong vision and
mission statement (W5,T1)
WT2. Product development
Produce quality and rare
products to challenge
competitor at the market.
(W2,T3)
 STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX

Internal Strategic Position External Strategic Position

Financial Position (FP) Stability Position (SP)
Liquidity 5 Increase in cost of production -4

Inventory turnover 4 Governmental regulations -2

Return on equity 7 High competition from competitors -7

Net income 3 Price range of competing products -3

Revenue 5 Barriers to entry into market -4

Financial position average 4.8 Stability position average -4

Competitive Position (CP) Industry Position (IP)

Quality of product -2 Ease of entry into market 5

Customer loyalty -2 Profit potential 4

Market share -2 Increasing popularity of E-books 4

Technological use -3 Potential of growth 5

Price competitiveness -3 Utilization of resources 4

Competitive position average -2.4 Industry position average 4.4

X-axis : 4.8 + (-4)

= 0.8

Y-axis : -2.4 + 4.4

=2
PEARSON PLC, 2013 is located at AGGRESSIVE STRATEGIES

The strategies used by Pearson PLC :

1) Backward, Forward, Horizontal Integration

2) Market Penetration
3) Market Development
4) Product Development
5) Diversification

FP

Conservative 5 Aggressive

CP -7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7 IP

-1

-2

-3

-4

Defensive -5 Competitive

-6

-7

SP
BCG MATRIX

RELATIVE MARKET SHARE POSITION

High medium Low

1.0 0.5 0.0

STAR QUESTION MARKS

+20

NORTH AMERICAN FINANCIAL TIMES GROUP

EDUCATION

INTERNATIONAL EDUCATION PROFESSIONAL

EDUCATION

-20
CASH COWS DOGS

The BCG Portfolio Matrix, Pearson PLC 2013

The Boston Consulting Group (BCG) matrix is enhancing a multidivisional firm’s efforts to
formulate strategies. This matrix allows a multidivisional organization to manage its portfolio
of businesses by examining the relative market share position and the industry growth rate
each division relative to all other division in the organization. The BCG Matrix, consists of
four divisions which is Question Marks, Star, Cash Cows and Dogs.

Star division :

Star division represent the organizations best long run opportunities for growth and
profitability. The North American Education grouping was located in the star division. This is
because Pearson’s education brands in North America generates about 60 percent of its
education sales in North America but operates more than 70 countries. Since The North
American Education grouping was their best source of income, Pearson need to penetrate the
market more by twofold the sales of their textbooks and digital technologies in Asia and
Latin America, in order to continuously gaining high market share and industry growth rate.
Besides that, Pearson can maintain and strengthen their dominant position in order to
maintain and increase their profitability too.

Question Mark division :

Financial Times Group belongs to this division as they have a low market share position,
yet they compete in a high-growth industry. As the Financial Times Group provides business
and financial news, they compete with more established ones such as The Wall Street Journal
which is one of the largest newspapers in the United States and is notable for its award-
winning news coverage. Generally product under question mark their need for cash is higher,
but the cash generation are lower. Pearson should continue to expand the electronic edition of
the Financial Times and produce quality and rare products to challenge the competitors.

Cash cow division :

Cash cow division is the division for products that have a high relative market share
position but compete in low-growth industry. Internal education considered in this quadrant
because they generate cash in excess of their needs and they need less investment. Pearson
did well in 2012 with its TutorVista program and in Mexico with the launch of UTEL, a new
university enabling to enrol in business courses. In order to maintain strong position in the
industry, Pearson should try to offer increases in incentives for professors and student to
change to electronic books. However, if a cash cow division becomes weak, retrenchment or
divestiture can become more appropriate.

Dogs division :

Professional Education is considered as in dogs division because it has a low relative

market position and competes in slow or market-growth industry. Professional Education is
considered dogs in Pearson portfolio because of their weak internal and external position. So,
diversification can be the best strategy to pursue because many dogs have bounced back after
strenuous assets and cost reduction to become viable, profitable product.