SUMMARY

'The news corporation'

At 30 June 2000 TNC was the third largest media business in the world, after Time Warner and Disney. TNC was the leader
in the business because of its global reach, its sweeping ambition and the extend to which it was the creation of one man.

Early years and growth to 1980.

The origin of TNC was the establishment of a local newspaper in 1923. In 1980 TNC was the only national newspaper of
Australia; furthermore they had two national magazines and over twenty provincial newspapers. The Murdoch family had
nearly 45 per cent interest in the company. The rest of the interest was acquired in book publishing, television broadcasting,
film making, record production, farming and transport interests.

The profitability of this Australian base was the springboard to multinational status.
In 1968 TNC purchased the important UK-based News of the World Organisation. In 1981 the acquisition of Times
Newspapers Ltd. took place. From 1973 TNC also operated in the United States with the purchase of the Express publishing
Company. In 1970 expansion here occurred in the areas of local newspaper publishing and in magazine publishing.

Television and film making.

In 1980 TNC accelerate its real growth and development. However, 1984 saw the beginnings of a US based major
geographical and product shift, which aimed to transform TNC into a vertically integrated global media group that had a
place in all parts of the media industry.

After some acquisitions TNC became restructured into three principal operating groups:
* Fox Television Stations (1986) owned and operated six independent television stations.
* (FBC) Fox Broadcasting Company (1986), distributed programming by satellite to independent affiliated television
stations.
* Twentieth Century Fox Film, financed, produced and distributed television programmes and motion pictures throughout
the world to cinemas, television broadcasters and on video.
Implications for TNC where that revenues and operating profits increased but so too did debt levels.

Rupert Murdoch - The wizard of Oz.

TNC is an organisation that is keenly linked to its chief executive. In the late 1980's the headquarters of TNC employed
barely 60 people. The management structure of TNC was very informal with no defined responsibilities. At the same time
the management style was supplemented by an extremely efficient reporting system. They had a weekly document named
the 'Flash' for which each operating unit a summary of its operating results provided.

Maintaining control was also achieved by detailed telephone briefings and unannounced visits to check in person the details
of a business's activities and management. Furthermore R. Murdoch looked outside of the business to the regulatory
environment that might constrain his activities. Many commentators have also suggested that his political friendship have
bought him influence in this area. Today, R. Murdoch and family control 30 per cent of TNC, but for practical purposes
Murdoch is the company.

Towards the 1990s - The sky is the limit?

During the 1980s TNC continued to expand and develop its traditional product and market areas. TNC made several
significant acquisitions, with this their debt increased. In 1988 R. Murdoch was obligated to commit TNC to a significant
debt reduction programme. TNC launched in 1989 Sky Television, a direct-to-home satellite broadcasting television
network. Satellite broadcasting represented a new approach to the distribution of programme material.

TNC took a controlling interest in Satellite Television plc which distributed English-language television programming by
satellite to cable systems in Europe. By 1988 the company broadcast four channels, Sky Channel, Sky News, Sky Movies
and Sky sports. In 1988 TNC launched a new four-channel Sky service transmitted trough a new satellite system called
Astra. For this they brought in managerial talent from across TNC. The launch target was met, but it had been a rush.

Individual satellite receiving dishes became available at a price and size that made them affordable and usable by millions
of households across Europe. Because of this they had the possibility to distribute to the customer direct-to-home and
moving from free-to-air to a subscription based service. Because of fewer subscriptions than expected, Sky television had
lots of losses that where influencing TNC. In 1990, Sky television merged with BSB.
In 1990 other severe problems materialised TNC, for example a protected strike, invests in new printing presses and a
slowing of the economy. These problems resulted in a gap and TNC's market value fell while borrowings rose. In 1990
TNC began negotiations for the refinancing of its dept divided over a total of 146 banks. In February 1991, TNC entered
into a three-year, near A$9 billion debt reduction and A$700 million bridging loan agreement.

On the rebound
After raising cash through asset sales, announcing plans for flotation and paying all the debt due in 1992, TNC's important
issues lay with business directions. Rupert Murdoch set out his view of TNC's long term future which concentrates on the
principles including further strengthening the company's balance sheet, improving and expanding existing businesses,
building new businesses, fostering creative process and strategic planning.
IN August 1995, the second largest US long distance telecommunications operator had paid 2 billion to have 13,5 percent
stake in TNC. This resulted in the decrease of Murdoch family holding to over 30 percent. However, MCI had only a
maximum of 20 percent investment in TNC and was obliged to vote with the majority

Due to upgrading printing facilities, existing newspaper businesses in Australia and the UK benefited from the reduced
production costs. In 1995, over half of TNC's profit was generated from the printed world of newspaper and magazines.
However, profits were gained from the screen, from films and from television increasingly.

Content is King
Through BSkyB, TNC introduced the subscription based broadcasters which was seen important especially for sports. The
subscription based broadcaster could help control the content that was received by the consumer to ensure receipt of all
revenues due. This required the development of set top decoder boxes and encryption technology which makes BSkyB a
channel "gatekeeper". Due to this competitive advantage, BSkyB now distributes the programme channels of other media
companies through joint ventures. The company could increase its revenue through subscription. The strategy of sports-led
programming was viewed by Murdoch as his "battering ram" for entry into new markets and was exported to other areas.
However, the central battle for media giants is to buy television rights to the most popular sports events, therefore many
media companies involved in joint ventures. Besides sport and film, it was found that news and animation are potential to
get audiences.

During the 1990s, the economics of broadcasting in the US changes dramatically with regard to the increase in the demand
for content which become expensive to produce or to purchase.
In 1998, TNC restructured its US media interests into a new entity namely Fox Entertainment Group Inc (FEG). This aims
at creating a clean new vehicle for investors who wanted to buy into the US entertainment industry without having to master
the complexities of TNC. By June 200 TNC owned 83 percent of FEG which operates in five segments including filmed
entertainment, television stations; television broadcast network, other television businesses and cable network
programming. From the restructuring, for the year to June 200, turnover at FEG reached 8,6 US billion and operating profit
was over 650 US million.

...And Global Is Good

According to Rupert Murdoch his corporation did not had a detailed strategic plan, because of the rapidly changes in the
media business. Three key answers regarding the globalisation of the media were answered positively by this media-
tycoon, which are "Is a global communications network a reality?", "Are there really going to be worldwide networks?" and
"Is it really going to be possible for an advertiser to achieve, in practice, a single order with the media of his choice around
the world?". The globalisation tends to go into one direction, which was heading for the American model, which was about
"producing strong demand for American style films and television programmes". TNC was able to distribute its television
content, halfway the year 2000, to 75% of the worldwide population. The world's largest pay- television operator, which
was BSkyB, was extending its position throughout Europe, by acquiring stake of Kirch (largest pay television operator of
Germany) and Stream (an Italian pay television operator). Not only Europe was subject of acquisition activities, also Asia,
and specifically Hong Kong became part of the globalisation of TNC. In 1993 STAR TV became part of the business,
which was quite special, since this satellite company only broadcasted free-to-air programs to almost two-thirds of the
world's population. Since STAR remained unprofitable, Rupert Murdoch changed the strategy into a "be global, act local".

Therefore the largest movie library of China had been acquired and several agreements were made with local producing
companies. Developing a pay based structure for the Asian market remained quite difficult. Another problem that occurred
were the political leaders. In the year 1993 Rupert Murdoch claimed that "advances in the technology of
telecommunications have proved an unambiguous threat to totalitarian regimes everywhere", as a result within one month
China prohibited the legal individual ownership of satellite dishes. The authorities were given the opportunity to control the
programs by using TNC's decoding technology. During the years they acquired more satellite companies in Japan, Australia
and New Zealand. In Latin America they were operating together with other partners in a joint venture. Sky Global would
be the new entity that deals with the satellite business. The reason for this restructuring project was the believe that the
successes of BSkyB could be used for the other businesses.

The Superhighway
The technological development resulted in competitive changes (and will result in the future). From aerial to satellite and
cable systems, other changes that influence the competition are political decisions which have been made in the past.
Liberalisation and deregulation of national broadcasting companies had a huge impact on the formerly typical monopolies
or oligopolies. One of the developments which is the digital compression technology, created a whole new opportunity for
the businesses. More data could be transferred by using existing distribution roads.

Three effects are being described by Johnson and Scholes, which is firstly an increase of programme channels, secondly the
availability of new services, which allows the viewer to decide what to see and thirdly products could be developed on the
basis of Internet via television.

BSkyB stopped the analogue transmissions in 2001, in order to satisfy the existing and also new subscribers it offers a free
digital package. Given the fact that this investment will cost a lot of money, they decided to suspend the dividend payments
of 1999.
The introduction of a PVR (personal video recorder) in the UK (in cooperation with TIVO) was the next step in a series of
set top boxes.

Investor's expectations of the use of broadband reach very high heights. Home shopping is the magic word that should result
in high revenues. Since the signal uses the existing lines, traditional television distributors should be aware of the
opportunity to distribute products by using broadband. This means they will become an ISP(Internet Service Provider) or
will have to cooperate with such a company.

As a result ISP's become aware of the new opportunity to become media distributors and purchase the content themselves.
Also other companies become increasingly aware of the technology development by investing money into producing
companies in order to distribute the content by using their own methods.

A worldwide project of Rupert Murdoch is the World Box. Three boxes are being developed, which can decode multi
channel television, enabling interactive services, harddisk for recording programmes. The third box (for the next generation)
will have multi-functional options.

And into the millennium

The issue of successor came to a main point of TNC, though Murdoch has a senior management team. However, Murdoch
preferred to do things himself in the near future when he was asked about the successor. John Malone was supposed to be a
possible person who can take over TNC.
However, in the future Murdoch still would be a focus character in TNC.

CHAPTER 2: MAIN QUESTIONS OR PROBLEMS IDENTIFIED AND STATED.

After reading, rereading and analyzing the News Corporation case, there are principal questions that need an answer. The
principal questions are found out on the basis of the long term goals and the mission statement of the News Corporation in
order to find out what the News Corporation should do in order to be better off in the future. The main problem as well as
principal questions are formulated as follows:

Problem statement:

How do the following factors (finance, leadership, environmental changes and expansion) influence the strategy
development in the past and how will they influence the strategy in the future?

Research questions:
What are the key stages of strategy development of TNC?
What are the environmental changes that influenceTNC?
How can strategic clock be applied to TNC?
Why is Rupert Murdoch so important to TNC?
What are the trends and development especially technology and political factors in the media industry?
What the strategic directions and methods of change can be applied for TNC?
What should be done concerning TNC's long term goals and its mission statement in order for the TNC's business to grow
and be better off in the future?

CHAPTER 3: KEY STAGES OF STRATEGIC DEVELOPMENT

News Corporation is the only vertically integrated media company on a global scale, concentrating on the production and
distribution of films, television, satellite and cable broadcasting and programming and publishing. Throughout its
development over years, there are key stages of strategic development which can be seen as turning points for the
development of the News Corporation. These turning points have marked the outstanding development of TNC in a
competitive market nowadays. The key stages of strategic development of the News Corporation include globalization,
diversification, integration, and parenting. Due to the fact that the key stages of strategic development will be done
according to a chronological order, therefore all the information for the key stages will be done together not for every stage.
The key stages of development of TNC are summarized as follows:

The origins of "The News Corporation" lie with the establishment in 1923 of a local newspaper. From 1980, TNC published
the only national newspaper, two national magazines and over twenty provincial newspapers. From then on, interests
expanded into book publishing, television broadcasting, film making, record production, farming and transport. The
profitability of the Australian based market was the springboard for TNC to move forward to multinational status.

1984 saw a major geographical and product shift which transformed TNC into a vertically integrated global media group,
with a place in all parts of the media industry from newspaper to TV, from magazine to film. Especially, in this year TNC
acquired the film company Twentieth Century Fox. The acquisition was drawn attention since it provided the company with
access to studios for making films and television programmes, to a film library and to a distribution platform which created
opportunities for TNC develop and expand its businesses to a multinational, multimedia company at the forefront of global
marketing. From then on, TNC became a citizen of the global village.

On Feb 5th 1989 TNC launched Sky Television in the UK, a direct-to-home (DTH) satellite broadcasting television
network. Satellite broadcasting provided the opportunity for broadcaster to increase the footprint (distribution) of any
channel, allowing the distribution of programs to more than one country for the first time. It was seen of great importance
for the media industry in term of distribution channel.

In the 1990's the economy was slowing down and banks worldwide experienced a
liquidity crisis. TNC experienced a bad performance from Ansett Airlines and Twentieth Century Fox. The investment of
new printing equipment for the UK resulted in a financial gap. Due to that fact, it was realized that the company needed
restructuring to repay all loans. There were a number of key issues with regard to recovering the company:
Strengthening the company's balance sheet
Improving and expanding existing businesses
Building new businesses
Nurturing and guiding of company's products
Strategic planning, examining opportunities around the world

After experiencing bad performance in its business and restructuring of the company, TNC has endlessly expanded its
business throughout the world and notably as early as 1993,TNC moved into Asia with the acquisition of the Hongkong-
based satellite TV company Star TV, which broadcasts free-to-air over China, India and other 51 other countries. These
markets were seen potential for TNC in a long run as they cover around 2/3 of the world's population.
1995 TNC joined with 3 other television, programming, and distribution groups to create a satellite service covering Latin
America. This showed joint venture and alliances are in strategic choices of TNC which can help the company be better off
in a long run and a beneficial for the parties involved and can offer more values for the customer.

2000 TNC restructured all its satellite interests into a new entity named Sky Global so as to enable the management team to
build on the successes of BSkyB and to migrate those to the other satellite platforms of Sky Global.
With regard to parenting, TNC was the creation of one man. Rupert Murdoch has been the chief executive since 1953. He is
the driving force and most major decisions are made by him. His management style was supplemented by an extremely
efficient reporting system. The business is built on Rupert Murdoch's Empire and his vision, ruthlessness and daring. He
maintains control of his businesses by looking outside of the business to the regulatory environment that might constrain his
activities. Besides that, Murdoch was affected by national regulatory systems and his political friendships have brought him
influence in this area. In addition, his personal politics are right wing that means he does not support only right wing leader
but winners and he supports people who are going to promote his business interests. From the parenting, it can be seen that
the leadership style of TNC is very outstanding and unique; especially it can contribute to the prosperous development for
TNC in a long run.

Through the key stages of strategic development, it can be seen that TNC has been on the way to prosperous development in
such a globally competitive market. Until now, TNC still has a leading position in media industry beside its major
competitive rivals such as Time Warner, Walt Disney, Viacom, Vivendi Universal, Sony Corp.

CHAPTER 4: GATHERING AND ANALYSING THE FACTS

4.1 50 RELEVANT FACTS ORDERED:

1.The origin of TNC was the establishment of a local newspaper in 1923.

2.Rupert Murdoch has been chief executive since 1953.
3.The major competitors of TNC are Time Warner, Walt Disney, Viacom, Vivendi Universal and Sony Corp.
4.The retirement of Rupert Murdoch is inevitable; who will be the next chief executive is unclear.
5.The Murdoch family always had a lot of interest in the company.
6.The rest of the interest was acquired in book publishing, television broadcasting, film making, record production, farming
and transport interests.
7.Today, R. Murdoch and family control 30 per cent of TNC.
8.According to Rupert Murdoch his corporation did not had a detailed strategic plan, because of the rapidly changes in the
media business.
9.In 1968 TNC purchased the important UK-based News of the World Organisation.
10.In 1981 the acquisition of Times Newspapers Ltd. took place.
11.From 1973 TNC also operated in the United States with the purchase of the Express publishing Company.
12.In 1970 expansion here occurred in the areas of local newspaper publishing and in magazine publishing.
13.In 1980 TNC accelerate its real growth and development.
14.In 1984 TNC transformed into a vertically integrated global media group that had a place in all parts of the media
industry.
15.After some acquisitions TNC became restructured into three principal operating groups: Fox Television, (FBC) Fox
Broadcasting Company, and Twentieth Century Fox Film.
16.TNC's revenues and operating profits increased but so too did debt levels.
17.The management structure of TNC is very informal with no defined responsibilities. Supplemented by an extremely
efficient reporting system, named the 'Flash'.
18.During the 1980s TNC continued to expand and develop its traditional product and market areas.
19.In 1988 R. Murdoch was obligated to commit TNC to a significant debt reduction programme.
20.TNC launched in 1989 Sky Television, a direct-to-home satellite broadcasting television network.
21.By 1988 the company broadcast four channels, Sky Channel, Sky News, Sky Movies and Sky sports.
22.In 1988 TNC launched a new four-channel Sky service transmitted trough a new satellite system called Astra.
23.In 1990, Sky television merged with BSB.
24.In 1990 severe problems resulted in a gap.
25.In 1990 as a result of this gap TNC's market value fell while borrowings rose.
26.In February 1991, TNC entered into a three-year, near A$9 billion debt reduction and A$700 million bridging loan
agreement.
27.TNC was the leader in the business because of its global reach, its sweeping ambition and the extend to which it was the
creation of one man.
28.In 1992 Rupert Murdoch set out his view of TNC's long term future which concentrates on the principles including
further strengthening the company's balance sheet, improving and expanding existing businesses, building new businesses,
fostering creative process and strategic planning.
29.Through BSkyB, TNC introduced the subscription based broadcasters. \par30.A worldwide project of Rupert Murdoch is
the World Box.
31.The subscription based broadcasters required the development of set top decoder boxes and encryption technology which
makes BSkyB a channel "gatekeeper".
32.The strategy of sports-led programming was viewed by Murdoch as his "battering ram" for entry into new markets and
was exported to other areas.
33.During the 1990s, the economics of broadcasting in the US changes dramatically with regard to the increase in the
demand for content which become expensive to produce or to purchase.
34.In 1998, TNC restructured its US media interests into a new entity namely Fox Entertainment Group Inc (FEG).
35.FEG operates in five segments including filmed entertainment, television stations; television broadcast network, other
television businesses and cable network programming.
36.By June 200 TNC owned 83 percent of FEG.
37.In June 200, turnover at FEG reached 8,6 US billion and operating profit was over 650 US million.
38.TNC was able to distribute its television content, halfway the year 2000, to 75% of the worldwide population.
39.The world's largest pay- television operator, which was BSkyB, was extending its position throughout Europe, by
acquiring stake of Kirch (largest pay television operator of Germany) and Stream (an Italian pay television operator).
40.Europe was subject of acquisition activities.
41.Asia, and specifically Hong Kong became part of the globalisation of TNC.
42.During the years TNC acquired more satellite companies in Japan, Australia and New Zealand.
43.In Latin America they were operating together with other partners in a joint venture.
44.In 1993 STAR TV became part of the business, which was quite special, since this satellite company only broadcasted
free-to-air programs to almost two-thirds of the world's population.
45.In the year 1993 Rupert Murdoch claimed that "advances in the technology of telecommunications have proved an
unambiguous threat to totalitarian regimes everywhere", as a result within one month China prohibited the legal individual
ownership of satellite dishes.
46.By 1995 they started with satellite broadcasting services in the US, which resulted in fifteen million subscribers within 5
years.
47.Together with MCI, TNC set up BSkyB (Satellite Company) in 1996.
48.In 2000 Sky Global to merged with Direct TV.
49.BSkyB stopped the analogue transmissions in 2001, in order to satisfy the existing and also new subscribers it offers a
free digital package.
50.The introduction of a Personal Video Recorder in the UK was the next step in a series of set top boxes.

4.2 25 IRRELEVANT FACTS

1.Village choice was acquired in 1977.

2.Fox Television Stations was formed in March.
3.The Fox Broadcasting Company was launched in May.
4.The movie 'Aliens' is produced by TNC.
5.Gary Davey is a creative programmer.
6.Crossfire is a political debate show.
7.The copy of ABC's nightlife is called Newsline.
8.BSkyB owns 25 per cent of the Paramount Channel
9.Fox used an alternative strategy to that of Disney's ESPN channel.
10.Tele-Communications Inc. is the leading US cable operator.
11.Fox owns and operates 23 TV stations in October 2000.
12.R. Murdoch gave a speech to the International Institute of communications in September 1988.
13.BSkyB could also be watched with ONdigital.
14.By June 2000 STAR was operating in 53 countries.
15.Kirch is Germany's largest subscription television operator.
16.STAR TV was a Hong Kong-based satellite television.
17.By June 2000 TNC owned 10 per cent of SkyperfectTV.
18.Fox was a late entrant to cable.
19.Hughes'Electronics is a subsidiary of General Motors.
20.The PVR is closer to a computer than a conventional video cassette recorder.
21.Internet consumer business is called e-commerce.
22.BSkyB is already a partner in Open.
23.Murdoch's vision for a worldwide project is code named World Box.
24.In 1996 R. Murdoch was aged 65.
25.Andrew Nail is a former editor of the Sunday Times.

4.3 SITUATION ANALYSIS

4.3.1 PESTEL FRAMEWORK

The PESTEL framework categorises environmental influences into six main types: political, economic, social,
technological, environmental and legal. PESTEL is used to look at the future impact of these factors on an organization with
regard to macro level. (Johnson and Scholes, Exploring corporate strategy, p 102)

With regard to the News Corporation case, PESTEL analysis is applied as follows:

Political:
There is no doubt that the world business is becoming globalized in a large scale. Besides that, deregulation has also major
impacts on the development of any business. A company which operates in a global scale has to fulfil all different
legislations and well as regulations at certain countries. Globalisation regulations in the media industry are important issue
for the TNC to take into consideration. Some nations have taken direct authoritarian control of media through state
ownership and the prohibition of opposition media. But most nations engage in media regulation that is non authoritarian in
nature, combining government influence with free market forces. (Croteau and Hoynes, Media Society, Third edition, p 87).
Many governments ban a totally ownership of a media company by a foreign investor. US law prevents foreign citizens
from holding more than 20 percent of any company with a broadcasting licence. The Australian government amended the
rules in respect of the foreign ownership of television stations, from a requirement that an owner be resident in Australia to
one requiring only that an owner be an Australian citizen. UK media regulations prohibited national newspaper proprietors
from owning more than 20 per cent of a television company. In addition, in most European countries, the organization and
broadcasting services were under government's control while programming was largely run independently. It is found that
the control of government aimed at ensuring that broadcasting could deliver quality programming that might be of public
interest. Since 1988s, governments have reduced regulations with regard to the structure and financing of broadcasting. It
creates more open competition between public broadcasters and commercial stations in the media industry. (Croteau and
Hoynes, Media Society, Third edition, p 87)

Socio cultural:
Globalisation and the endlessly technological development especially in the media industry and information technology
influence on people's lifestyle, and especially their attitude towards work and leisure. Television also is rapidly coming to
play the same sort of dominant cultural role in Europe, Asia, and worldwide that it has played in the United States for two or
three generations. After reviewing the most recent research, one observer noted in early 1998: 'Europe hasn't caught up to
American TV consumption levels, but Europeans are spending more time than ever watching television.'
(http://www.wacc.org.uk/modules.php?name=News&file=print&sid=487).
People nowadays have more free time for leisure activities especially for media comparing to the past. It is found that
people who worked full time spent most of their free time watching television or videos or listening to the radio.
Furthermore, the increasing level of education and social mobility impacts especially the media sector. The media industry
interferes the culture and influences on the personal communication. In several countries, the authority establishes
protection towards their local industry. For example, France favors the usage of its own language and especially in Asian
countries as well. Therefore, TNC has to investigate further for each particular location, since local environments can
influence the success or failure of a business.

Environmental
There is no factor that is applicable for The News Corporation business with regard to environmental factors.

Economic factors
As the main TNC's activities are concentrated in Europe, USA, Australia and Asia, therefore the economy of those markets
does influence on TNC's business. The economic conditions have been changing rapidly. Globalization and deregulation
have created opportunities for further expansion and diversification. The economic situation of the EU is improving
especially the stability of the value of euro. The EU's growth rate for 2004 is now estimated to reach 2.0 per cent. Moreover,
UNICE expects stronger and more homogeneous growth in 2004 than in 2003 with a declining inflation rate and better price
stability. Enlargement is expected to have a positive impact on the EU's economy, as it will bring more competition and
growth opportunities. The US economy has displayed remarkable resilience. A recovery in the US economic activity is
underway, making the recent recession one of the mildest on record. Besides, the impacts after China entered the WTO may
intensify competition in the Asia region.

Technological
Technological development and advancement has been developing endlessly with a large number of technological
revolutions. This has been influencing the media industry to a large extent. Technological developments have driven many
of the competitive changes into the twenty first century. The current development in communication technology is the
digital compression technology. This technology allows for the distribution of significantly more data. Digital technology
has a number of significant effects for distributors. Besides that, there appears a new trend which is the combination of
television and Internet. The computer would replace the television. The PC as an entertainment hub is fast becoming a
reality with increased processing power combined with a fast broadband connection, connectivity to a variety of displays,
and increases in the compression/decompression of high-end audio and video.
In addition, the deregulation of telecommunication markets in many countries has influenced the media industry including
lowering long distance communication costs and especially the cost of accessing and processing information from
anywhere. In addition, deregulation of the telecommunication markets in many countries has also meant increased
competition.

Legal
As the TNC is operating in a global scale, therefore different part of laws and regulations with regard to monopoly or
oligopoly, employment law, and health and safety regulations have to be taken into considerations.

4.3.2 FIVE FORCES FRAMEWORK

According to Johnson and Scholes (p 112) the five forces framework helps identify the sources of competition in an
industry or sector. The five forces framework also helps get an insight into competitive market over competitors. It involves
a relationship between competitors within an industry, potential competitors, suppliers, buyers, and substitutes. A strategic
manager has to seek to develop proper strategy over rival firms to better understand the industry context in which its
business is operating. The five forces framework includes the threat of entry, the threat of substitutes, the power of buyers
and suppliers and the competitive rivalry.

(http://www.brs-inc.com/porter.asp)

With regard to the News Corporation case, the five forces framework is applied as follows:

Threat of New Entrants

In respect of the News Corporation, the threat of entrant is low because in order to run business in the media industry it
requires enormous investment. Especially when operating a global scale, it is very hard to obtain a broadcasting license. For
example, US law prevented foreign citizens from holding more than 25% of any company with a broadcasting license.
Government regulations are sometimes major barriers for new entrants. TNC has been operating in the market for such a
long time and gain much more experiences. They can obtain customer and supplier loyalty. Therefore, it is very difficult for
a competitor to break into the market. TNC has also invested in new technology which may pose threats for competitors to
enter the industry. TNC has used set top decoder boxes and encryption technology to securely scramble and decode the
satellite signal controlled by its subsidiary namely NDS. In addition, the control of encryption technology makes BSkyB a
channel "gatekeeper". This can show TNC's robustness in its operation. Besides, TNC has upgraded its printing facilities
which can help existing newspaper businesses in Australia and the UK benefit the reduced production costs. In Australia,
the company was at the forefront of the introduction of color printing; therefore it also poses threats to new entrants.

Power of Buyers
The buyers in view of the customers in the market have high power as the media market is highly competitive. There are
many media operators in the market with alternative sources of supply. Therefore, buyers have choice to switch to different
types of media which they feel satisfied with. With regard to considering TNC as a buyer, it is seen that TNC has also high
power because of fierce competition in the supply side and TNC is seen as group in its global business. When wanting to
buy something, TNC can go to different suppliers in order to get optimal choice which can suit the company the best.

Power of Suppliers
Media companies usually buy products from third parties such as films, movies, music, shows, news, etc. In the case of
News Corporation, the company tries to lessen the impact of suppliers through acquisitions. Acquisitions help provide the
company with access to studios, for making films and television programs, to a film libraries of more than 2000 titles and to
a distribution platform for that content. Besides, in the UK, NDS, a subsidiary of TNC controlled the encryption technology
which makes BSkyB a channel "gatekeeper". Therefore, the power of suppliers with regard to the case of News Corporation
is not very high. But concerning the suppliers of high technology in the market, the power of those suppliers is very high
because there are few companies can produce such high technology such as satellite or advanced technologies.

Threat of Substitute
The potential of a substitute product in the market place depends on whether a substitute provides higher perceived benefits
or value, the buyer's motivation to substitute, the price of the substitute and the level of switching costs. New technological
advancements have been born endlessly which can bring more substitutes in the media industry in the future. People can
read newspaper on the internet or television instead of traditional paper. Or the newspaper will not be sent to their home
anymore, instead they can print the newspaper from their computer via subscription on the internet. This can prove that the
need of customers has been changed overtime. In addition, the advent of broadband which has been developed by the
telecommunications industry under the acronym ADSL, offers high speed video, voice, and data transmission over existing
telephone lines. This will allow data to be sent in the form of television pictures and internet access along with music,
games and videos on demand from anywhere in the world. Besides, the combination of television and Internet is also
promising.

Competitive rivalry
The competitive rivalry within the media industry is very high since TNC has to compete with major competitors in the
market place such as Time Warner, Walt Disney, Viacom, Vivendi Universal and Sony Corp. TNC has to invest a lot in
new developments and technological advancements. TNC has joined, merged and acquired with other companies in order to
obtain enough resources to cover all the activities. Besides that, through merger or acquisition or alliances the company can
get competitive advantage in order to remain competitive and gain benefits. The further development of digital media
technology will tighten the market, drive those firms which are less competitive out of the market and ensure profitability
for competitive firms.

4.3.3 SWOT
A SWOT analysis summarises the key issues from the business environment and strategic capability of an organization that
influence on strategy development. (Johnson and Scholes, Exploring corporate strategy, p 134). Strengths and weaknesses
are internal factors of organizations while opportunities and threats are external environmental factors in the business
environment, internal and external factors do have a great impact on the development of a business' strategy.
A SWOT analysis is applied for the News Corporation as follows:

Strengths
TNC is the third largest media business in the world. It is a multi national and multi media company at the forefront of
global marketing.
TNC has a strong competitive position in the market place.
TNK has a good leader, Rupert Murdoch, who is the driving force of the corporation. His management style and political
friendship have brought him influence greatly on the business.
TNC has done major acquisitions to expand and develop its traditional products and market areas.
TNC has followed continuous innovation and steady improvement and development with innovative and creative products
and services.
TNC has advantage for a strategic move into satellite broadcasting at an early stage in the development of the media
industry.
TNC was at the forefront of the introduction of colour printing in Australia.
TNC has invested in advance digital technology which allows for the distribution of significantly more data and it has a
number of significant effects for distributors.
TNC has control of encryption technology which makes the business a channel gatekeeper.
TNC has exclusive broadcasting rights to offer newest movies and attractive sport events to the customers.
TNC provides services that satisfy the needs of customers, since customers have chances to approach latest technologies.
This is seen of great interest to them.

Weaknesses
Decision making process is centralized.
Company's businesses are all over the world which is seen as a complicated market position.
Lowest share price comparing to all major competitors such as Time Warner, Walt Disney, Viacom, Vivendi and Sony.

Opportunities
Globalization and deregulation have created opportunities for TNC to expand and develop its market segment.
New technology advancements are endlessly born which offer more opportunities for media industry especially for
distribution channels.
Asia is becoming a potential market to be targeted, as the region is developing prosperously.

Threats
Markets have been changing rapidly.
New technologies has been born and developed endlessly.
New technologies require high investment.
Fierce competition in the market place.
Culture and local language will be barrier to content creators and technology providers especially for company which
operates in a global scale.

4.3.4 STRATEGIC LENSES

Strategic lenses according to Johnson and Scholes (p 37) are the ways of thinking about how strategies develop, particularly
the strategy development can be seen in terms of rational, analytic design, the adaptation of prior strategy basing on
experiences, taken for granted assumption, ways of doing things and the strategy which emerges from the variety and
diversity of ideas in and around the organization. The strategic lenses are respectively design lens, experience lens and ideas
lens.
The design lens views strategy development as the deliberate positioning of the organization through a rational, analytic,
structured and directive process.
The experience lens views strategy development as the outcome gained from individual experience, taken for granted
assumptions and ways of doing things.
The ideas lens views strategy as the emergence of order and innovation through variety and diversity in and around the
organization.

With regard to the case of News Corporation, it is found that the ideas lens applies for the strategy development of the
corporation. The strategy development of the company concentrates on the emerge of order and innovation through variety
and diversity in and around the organization. The strategy development of TNC has been innovative through its operational
performance. TNC has complex systems of variety and diversity since its businesses are operated in a global scale. TNC is
an innovative company. The company has been introduced innovation in its business in which new products and new
services are always brought into the market. Besides, existing products have been improved or upgraded with new
technologies and methods. The company uses the newest technology in broadcasting television programs as well as in the
printing media area. TNC has abilities to compete in the market since they have high innovative usage of newest technology
which can assure that the company can stay in the business. The supply of decoders, the use of encryption technology
through the subsidiary NDS, the introduction of digital technology and its combination with internet proves the usage of
modern and innovative technology which makes the company maintain competitive advantage and a leading position in the
market. Besides, the leader of TNC is a coach, creators of context and champion of ideas. TNC is built on Robert Murdoch's
vision, ruthlessness and daring which proves that the leader of TNC always stimulates new ideas and innovation in his
business for prosperous development and a leading position in the market through his "ruthlessness and daring"
management style.

4.3.5 STRATEGIC CAPABILITY

Strategic capability has to do with the resources and competences of the organisation. What performance level is required to
be successful? They should provide products or services to customers that have or will have a certain value (in the future).
This can only be done if the organisation understands and has got the resources and competences to provide the products/
services that meets the customer requirements (Johnson and Scholes, Exploring corporate strategy, p 145-147)

TNC started as a small publishing company and expanded quite rapidly by acquisition other newspapers. Their core
business was till the eighties publishing newspapers and magazines. This all changed in the eighties by the acquisition of a
film company and a broadcasting company. Their product range diversified
Critical Success Factors
What do customers value? If this question can be answered properly, then the organization is on the right track and to get to
know the customer and explore the strategic capability of its organization. If some features of the company distinguishes
them from other companies and they are specifically valued by a group of customers, then the organization should excel to
outperform competition. These features are called the Critical Success Factors. In the case of TNC these could be the
following features:

-Innovation, which is an important aspect of the company, since technology developments are quite rapidly. TNC is
developing new set top boxes, which will meet the future demand of for example net casting.
-Gatekeeper, which means they are able to control the content and the distribution chain of their content. This is quite
positive, since they are able to respond quickly on changes of customer expectations.
-Content; TNC has build up a huge library of movies, which can be showed through their own pay-TV channels. Another
important factor is the thematic channels like sports, for which TNC bought the exclusive rights, which other channels don't
have.

Resources
The resources are necessary to perform activities that underline the company's strategy. We can distinguish 4 types of
resources, namely physical, human, financial resources and intellectual capital.

Physical resources
-Movie studios
-Broadcasting studios
-Satellites
-Distribution infrastructure (cabletelevision, phone lines DSL (net casting))
-Publishing and printing studios

Human resources
-Rupert Murdoch
-John Malone
-Family
-Peter Chernin
-Chase Carey
-Managers

Financial resources
-Fixed assets
-Current assets
-Current Liabilities
-Long term debt
-Shareholders funds

Intellectual Capital
-Movie database
-Gatekeeper (because of an acquisition)
-Set top boxes
-Thematic channels

Threshold resources
"Threshold resources are needed to exist as a provider to any market segment" (Johnson and Scholes, Exploring corporate
strategy, p 153)
In the case of TNC, they will need to have a set top box in order to be able to sell their content to customers. The
distribution of the content, which is done by written paper, cable and or satellite, will remain, but new developments are on
its way, so they will have to be aware of the fact that changes will occur. Improving the resources will be necessary in order
to be competitive.

Unique resources
According to Johnson and Scholes unique resources can be described as "those, which critically underpin competitive
advantage" (Johnson and Scholes, Exploring corporate strategy, p 153)
Rupert Murdoch and its vision about TNC is a unique resource. Another unique resource might be the complete chain of
distribution, starting with producing, followed by broadcasting and the set top box technology inside the customer's home
which are all controlled by TNC.

Competences
Competence is created when the resources are 'deployed' into the separate activities of the organization and into the
processes through which these activities are linked together.
TNC's competence is the ability to fulfill and control the chain of producing its productions and distribute them by using
their own infrastructure. They are able to meet the needs and any changes of these needs of customers rapidly, since they are
in control of the starting point of creating the content and delivering the product to the customer. If we look at our resources
we will see that producing a news show in a television studio, broadcasting the show by the television station via cable
bringing the signal to the set top box above the television in the homes of the customer. All resources are being linked
together.

Core competences.
The "activities or processes that critically underpin an organization's competitive advantage" (Johnson and Scholes,
Exploring corporate strategy, p 156)
are the core competences. These create the ability to meet the critical success factors of certain customer groups better than
the competitors. The core competence of TNC might be the ability to control the distribution of news through several
distribution channels.

Performing better than competitors

In order to perform better, the organization should meet and beat the performance of its competitor. Therefore the
organization needs to understand what the existing performance standards are and as a consequence what are the poor and
good performances. According to Johnson and Scholes three ways of benchmarking can be used, which are historical
comparison, industry norms/ standards and best in class benchmarking.

Historical comparison
This method looks at performances in the past and identifies any significant changes.
TNC has established growth by doing lots of acquisitions. Most important change is the diversification of the company.
Nowadays the company owns not only newspapers and magazines, but also movie- companies and television stations.

Industry norms/standards
This method makes a comparison of "the performance of organizations in the same industry/ sector against a set of agreed
performance indicators" ((Johnson and Scholes, Exploring corporate strategy, p 172)

In the case of TNC, it is difficult to make a good comparison, since there are almost none details available. The only figures
given are the market capitalization in which TNC is the fifth company in a row out of seven (from one company there are no
specific details given). The share price is the lowest in comparison with the competitors and the change per year is the
biggest with almost 75%.

Best in class benchmarking

This method compares the company with the best performance that can be found. For instance a comparison between the
best in class for broadcasting and cable programming and distribution CBS (Viacom) would give more insight.

Robustness
To what extend are the core competences robust. This means the difficulty of imitating competitors. There four several
reasons for this.

Rarity
In the case of TNC being in control of the whole chain of producing and distributing their product.

Complexity
The complexity between linkages within the internal and the external organization. But also the complexity of the linked
technologies. An external linkage might be the vertical integration and thus the ownership of activities in the supply/
distribution chain.

Casual ambiguity
The difficulty to diagnose the cause and effect that underpins an organization's advantage. Rupert Murdoch would be such
factor. The company has grown with Rupert Murdoch and what will happen to the company if Rupert is not there anymore.

Culture
Managers within an organization do not explicitly understand the cause-and-effect themselves. This has been caused by the
embedding of the knowledge in the culture of the organization and which is not explicit. Within TNC the managers there
had always been a flat structure with Rupert Murdoch above everyone. This resulted in less communication between the
managers. Since they were delivering reports to Rupert and he will work things out.

4.3.6 STAKEHOLDERS' EXPECTATIONS AND POWER OF SHAREHOLDERS

Stakeholder mapping: the power/interest matrix

LEVEL OF INTEREST

POWER

Stakeholders

1) Rupert Murdoch
2) Murdoch sons and daughters
3) John Malone
4) Bank(s)
5) Cable operators
6) Microsoft
7) British Telecom
8) Employees
Rupert Murdoch who builds this company from a small newspaper up to a global media company. His interests and power
are high.

Murdoch sons and daughters

His sons and daughters are quite important for the continuation of TNC. They are interested and willing to invest in the
company. Eventually one of them might become the successor of Rupert Murdoch. The power they have can be stated as
relatively high, since they're the children of Rupert Murdoch.

John Malone
He is the chairman of Liberty Media (formerly known as TCI). This company has the largest amount of shares after
Murdoch its family. As a result he might be seen as a possible successor of John Malone. His interests are high, and the
power is less high, although Liberty Media has a 20% non-voting stake.

Bank(s)
The banks had a huge influence on the strategy of TNC. If TNC wants to have loans, they will have to negotiate with banks,
in order to receive the necessary amount of capital. The interest of banks are not high, but also not low, since their business
is to make profits out of loans. So that puts them in a mid-high interest position. The power of banks is quite high, since
TNC needs to have loans in order to raise money and make any acquisitions. So they rely on the banks.

Cable Operators
These stakeholders do have some interest and power. Firstly because of their existing network. According to the case, they
threatened TNC for entering the satellite market. In order to overcome this problem, TNC found a solution, which had to do
with an exchange of shares between AskyB and PrimeStar. As a result the power of the cable operators became relatively
low. Secondly cable operators and TNC became well aware of the necessity to have joint ventures, because of high prices of
certain (sports) events.

Microsoft
Since TNC is developing a world box and they like to use the software of Microsoft, the interest of Microsoft will be quite
high. The power lies between small and high, since TNC can choose out of more options, than only Microsoft, only Rupert
Murdoch likes to see a windows controlled system inside the box.

British Telecom
This company could be part of a joint venture with BskyB in which BT will provide the infrastructure that is necessary to
spread out the content of BskyB. BT will be quite interested, since this joint venture will result in new customers, more
revenue, etc. The power is not that low, since they own the existing telephone lines, and will develop the next generation
telephone lines that are suitable for the new media.

Employees are rather important to the company. Rupert Murdoch feels that they are important. Since they make the
company a success. The employees are quite interested in working at a company like TNC, although their power is quite
low.

4.3.7 CULTURAL CONTEXT

Within the cultural context, four different types of cultural frames can be distinguished, which are national or regional,
organisational field, functional/ divisional and the organizational.

National and regional cultures

The national and regional cultures have a direct influence on the expectations of the stakeholders. Two issues are important,
values change in society change during time and he second one is that organizations operate more internationally.
In the case of TCN they are a global media and entertainment company that operates internationally. That means they will
have to deal with the differences within the countries. Especially during acquisitions it is important to recognize the
differences. Asian countries have completely different characteristics than countries in South- America. That means
stakeholders expectations will also vary in these countries.

Organizational field
"An organisational field is a community of organisations that partake of a common meaning system and whose participants
interact more frequently with one and another than with those outside the field." (Johnson and Scholes, Exploring corporate
strategy, p 223)
In the case of TCN all activities that are necessary to deliver a product to the homes of the customer. The complete supply
and distribution chain, in which different roles lies, can be seen as an organization field (producing, broadcasting,
distributing)

Organizational culture
The culture of an organization consists of three layers, which are values, beliefs and taken for granted assumptions.
Values are statements about the organization's mission, objectives or strategies.
Beliefs are issues which people can surface and talk about.
Taken for granted assumptions are aspects of organization life which people find difficult to identify and explain. It is
evidenced by the way people in an organization actually behave.

Within TNC it is the company that is completely based on the person of Rupert Murdoch. Delivering a media and or
entertainment product to the customer, creating new products and creating a certain demand. Their culture could be
described as an entrepreneurial spirit according to Rupert Murdoch.

Functional and divisional cultures

There are important sub cultures that also have influence on an organization. These sub cultures may appear in a number of
ways such as unions or professions, or the structure of the organization. Different divisions may be pursuing different types
of strategy and different market positioning requires different cultures. Notably, combining strategic positioning and
organizational culture is a critical feature of successful organizations.

In the case of TCN it is not easy to recognize these. Though it is obvious that sub cultures exist within companies that have
been taken over and where the culture of the originating company still exist (although these doesn't have to be quite visible).

Cultural Web
"The cultural web is a representation of the taken for granted assumptions or paradigm of an organisation and the physical
manifestations of organisational culture". (Johnson and Scholes, Exploring corporate strategy, p 230)
This web consists of stories, symbols, rituals and routines, power structures, control systems and organizational structures,
which form all together the paradigm.

Stories
The stories which are told by members of the organization to each other, to outsiders, to new recruit, embed the present in
its organizational history and also flag up important events and personalities. They include successes, disasters, heroes,
villains and mavericks that deviate the norm. (Johnson and Scholes, Exploring corporate strategy, p 231)
The story between competing newspapers. Editors who want to have the breaking news first.

Symbols
The symbols include logos, offices, cars and titles or the type of language and terminology used (Johnson and Scholes,
Exploring corporate strategy, p 231)
Rupert Murdoch himself has become a symbol for his company.

Rituals and routines

The routine refers to ways that members of the organization behave toward each other and towards those outside the
organization. It focuses on the working of the organization, and provides a distinctive and beneficial organizational
competence. It represents a taken for granted ness about how things should happen.
The rituals are the special events through which the organization emphasizes what is particularly important and reinforces
the way of doing things. (Johnson and Scholes, Exploring corporate strategy, p 231)
This kind of rituals is special events in order to emphasize what is important. Within TNC that could be specific trainings
programs for employees.
Power structures
Power structures are likely associated with the key assumptions. The most powerful groupings within the organization are
likely to be associated with the set of core assumptions and beliefs. (Johnson and Scholes, Exploring corporate strategy, p
235)
These are also taken for granted assumptions. The assumption that only Rupert Murdoch is the leader and his beliefs are
being transferred throughout the organization.

Control systems
The control systems refer to measurements and reward systems which emphasize what it is important to monitor in the
organization and to focus attention and activity upon. (Johnson and Scholes, Exploring corporate strategy, p 235)
These are the measurement and reward systems that monitor what is important or not. The reward system could include
rewards for excellent performances, by offering shares.

Organizational structure
Organizational structure reflects power structure and creates important relationships and emphasizes what is important in
the organization. (Johnson and Scholes, Exploring corporate strategy, p 235)
TCN consists of a relatively flat level of hierarchy. Rupert Murdoch is in charge and other directors and managers are
underneath him. According to Rupert Murdoch the culture has entrepreneurial elements.

The paradigm
The paradigm of the organization encapsulates and reinforces the behaviours observed in the other elements of the cultural
web. (Johnson and Scholes, Exploring corporate strategy, p 235)
For TCN it can be said that all elements above may form a unique multi media and entertainment company, which has all
elements to entertain customers adequately and meet the future wants of them, although they may not exist this present
moment.

4.3.8 ANALYSIS OF FINANCIAL PERFORMANCE OF THE NEWS CORPORATION

The News Corporation grew till the eighties by purchasing lots of publishing companies. One of the characteristics of the
expansion was to take over companies, which had difficulties surviving in the market. In order to overcome the problems,
they changed the company into a more successful one. During the eighties not only publishing companies were being
acquired, but also film companies and broadcasting companies. These acquisitions resulted in high debts, which caused
TNC to negotiate with banks to decrease the debt. A restructuring plan had been developed and this resulted in a healthy
financial situation at the beginning of the nineties. Rupert Murdoch decided in 1992 refinance all borrowing, the short term
debt decreased from 80% till less then 10%. The profits out of the printed media were till halfway the nineties the most
important source of profits. From this point on till now the movie and especially the television division of TNC became the
largest providers of the profits.

The financing of the variety of acquisitions can be done by equity or loans. The question arises, which option is the most
profitable. If we look at the history of TNC, we will see that the short term loans, and of course the high percentage of
interest had been quite high. During the past TNC used both the loans and equity to fund its expansion activities. Though for
the long term it is important to use a profitable way of financing in order to reassure the financial basis of TNC in order to
establish growth and thus be able to expand.

How to manage the financial business? TNC is a large company, with high revenues, high costs, but it is a profitable
company with shareholders. These shareholders have invested capital into the company in order to receive dividend,
therefore it is important to have a funding strategy that deals with the expectations of the stakeholders. Managing for value
is quite important for an organisation. According to Johnson and Scholes we can distinguish three main issues, which are
funds from operations, investment in (or disposal of) assets and financing costs (Johnson and Scholes, Exploring corporate
strategy, p 502-503)
.
Funds from operations; these are major contributors to value creation (Johnson and Scholes, Exploring corporate strategy, p
503)
.
-Sales revenue; the turn over of TNC has increased from 1985 till 2000 from $2,447 million till $22,443 million, which is
an increase of more than 800%
-Production and selling costs; are not mentioned in the appendix
-Overhead or indirect costs; are not mentioned in the appendix

The total profits, which are attributable to shareholders has increased from $147 million in 1985 till $1,921 million, which is
an increase of more than 1200%.

Investment in assets; the value creation can be influenced by

-Costs of capital investment, or the disposal of redundant assets.
The management of the elements of working capital such as stock, debtors and creditors will increase or decrease
shareholder value as indicated (Johnson and Scholes, Exploring corporate strategy, p 503)

Financing costs
These depend on the mix between equity and the debt.
In the TNC case we can calculate several ratios and the cost of capital.

Current ratio
This ratio calculates the relationship between the current assets and the liabilities.
The situation has improved throughout the years.
19852000
current assets90613127

current liabilities754 9008120%146%

Debt to total assets ratio

This ratio calculates the relationship between the debt capital and the total assets and it tells us how many times the
liabilities can be paid in relation to the total assets.

total liabilities210432925

total assets3463655850,60,5
4.3.9 STRATEGIC CLOCK

According to Johnsen and Scholes (2002) a competitive strategy is the base on witch a business tries to achieve competitive
advantage. Several 'routes' can be used to achieve this advantage or enter a market. These routes are showed in the model
below.
This model is called the strategy clock. The strategy clock is a market-based model of generic strategy options rooted in the
question; what is of value in the product or service to the customer, user or provider of funding?

Strategy Clock

High 4

3 5

PERCEIVED
ADDED 2 6
VALUE

1 7

Low

LowHigh
PRICE

Price-based strategies (routes 1 and 2)

Route 1 is the 'no frills' strategy.

This route combines a low price, low perceived added value and a focus on a price-sensitive market segment. This route can
be successful if there is a market for it. This is the case when people prefer low costs of when people are not able to spend
more. TNC does not follow this route.

Route 2 is the low price strategy.

This route seeks to achieve a lower price than competitors whilst trying to maintain similar value of product or service to
that offered by competitors.
This can be done by trying to focus on a market segment that is unattractive for competitors; this is similar to route 1. They
can also do this by competition based on price.

The hybrid strategy (route 3)

Route 3 is the hybrid strategy.
This route seeks simultaneously to achieve differentiation and a price lower than that of competitors. This means they need
to understand and offer what is of value for the customer needs for low prices and they also need to think about the
differentiation. This part will be discussed even more in route 4.

Added value or differentiation strategies (route 4)

Route 4 is the differentiation strategy.
This route seeks to provide products or services unique or different from those of competitors in terms of dimensions widely
valued by buyers. With this they want to achieve higher market share than competitors.

This differentiation can be done in two ways;

Route 4 is a differentiation without a price premium; the perceived added value by user yielding market share benefits. This
means they add value without charging more.
Route 4 b is differentiation with price premium; the perceived added value sufficient to bear price premium. This means
they provide more service and because of these customers are prepared to pay a higher price.

Route 4 applied to TNC.

The route of TNC is route 4a they want to offer more value than their competitors but they do not want customers to pay
more.
TNC tries this to do this by being unique and / or improve their products and stay ahead of competitors all the time.

TNC does research on customer needs and they try to meet the customer needs.
An example of staying ahead is that TNC used the technological development to meet customer needs and this resulted in
competitive changes. TNC provides these services and with this they satisfy the needs of customers. This because customers
have chances to approach latest technologies and this is seen of great interest to them.
If and how these approaches are successful will be dependent on some factors;
It is important to know who the customer is, for TNC this is very difficult to know because they are a very large company
and they have a lot of customers. For example their customers are those who watch their television shows, read their
newspaper, and the people who advertise or sell things of TNC.

Furthermore it is very important to know what is valued by the customer, for TNC is for example the fact that people would
like to choose what they have on their television and that they rather only pay for what they really want to see than for the
whole package.
It is also important to know who your competitors are, for TNC these are Time Warner, Walt Disney, Viacom, Vivendi
Universal and Sony Corp.

TNC also needs constant research because they get into new markets and because of the globalisation. They for example
need to know who their competitors in the new market are and who their customers are.

TNC has change all the time. They have to do this to stay ahead of competitors and constantly meet customer needs. They
can do this by using new technology or new ideas. It is important to be different from competitors and that these differences
will be difficult to imitate.

Focused differentiation (route 5)

Route 5 is the focused differentiation strategy.
This route seeks to provide high perceived value justifying a substantial price premium, usually to a selected market
segment. They are trying to attract different sorts of customers. There are several important issues that have to be discussed
when companies use this strategy.
The choice may have to be made between broad differentiation across a market or a more focused strategy.

When an organisation chooses to follow a focus strategy it is likely they are targeting a particular market segment, managers
need to be clear about what their target market is and they have to make their decisions for this target market and because of
this they have to keep the customer needs in mind.

Focus strategies may conflict with stakeholder expectations witch can cause problems.
New ventures are often very focused in the beginning and it can be difficult to grow this way.
When companies have a focused approach they need to be aware of changes in the market situation.

Failure strategies (routes 6,7 and 8)

Companies that use these strategies are probably destined for failure. With these routes customers are likely to choose to
buy their products and / or services from other business.

Route 6 is the increased price / standard value.

This route suggests increasing price without increasing value to the customer. This means their will be higher margins if
competitors do not follow. There is a risk of losing market share with this route.

Route 7 is the increased price / low value.

This route is even worse than route 6, companies who follow this route will increase the price while lowering the value.

Route 8 is the Low value / standard price.

This route, lowering value while keeping the standard price.
(Johnsen and Scholes 2002, p. 319 - 331)

4.3.10 DESCRIPTION OF RUPERT MURDOCH AND LEADERSHIP STYLE

::: Rupert Murdoch - The News Corporation :::

Rupert Murdoch Biography :

CEO of News Corporation - Media & Entertainment Company
Famous for:
Leading the global Newscorp Media Empire
Murdoch details:
Born - Melbourne, Australia 1931
Lives - USA (became US citizen in 1985)
(http://www.woopidoo.com/biography/rupert-murdoch.htm)
(http://pssht.com/fauxnews/biomurdoch.html)

The TNC case shows how the values, aspirations and style of the dominant personality R. Murdoch, influenced this
development. R. Murdoch can be seen as a strategic leader because of this. He is an individual upon whom strategy
development and change are seen to be dependent. He also thinks this himself according to something he stated to the
Financial Times: 'For better of for worse, our company is a reflection of my thinking, my character, and my values'

In 1952 R. Murdoch his father dies and R. Murdoch inherits the Adelaide News (newspaper) at age 21. He has been chief
executive of TNC since 1953.
With R. Murdoch as chief executive the huge expansion of TNC starts. In TNC's annual report for 1980 R. Murdoch TNC
has achieved its position by first purchasing the weakest exciting publication and slowly restoring its viability. He later also
called TNC a citizen of the global village.

When looking at what kind of person R. Murdoch is an Australian financial analyst said: He's an expansion minded person,
he's wanted to buy assets, he's wanted to take over, to move around the world, to build his empire. But he also wants to
retain control.
In a speech to the International Institute of Communications in September 1988, R Murdoch confessed that he did not have
a very detailed strategy plan.

The importance of R. Murdoch to the company and that of the company to R. Murdoch also becomes clear after the
following examples.
The US law prevents foreign citizens from holding more than 25 per cent of any company with a broadcasting license and
because of this R. Murdoch became an US citizen in 1985.
R. Murdoch himself set out his view of TNC's longer-term future in his chief executive's review in 1992.
TNC also had a sports focused programming; this strategy was because R. Murdoch viewed it as his 'battering ram' for entry
in other markets.

According to the financial times today R. Murdoch and his family control only 30 per cent of TNC, though for practical
purposes R. Murdoch is the company.

Management Models
Two models from Ten Have are used to analyse the role of R. Murdoch in the development of TNC.

Adizes' PAEI management roles

According to Adizes (1979), the four key elements that make up a successful management team can be translated into four
management roles:
The producer (P)
The administrator (A)
The entrepreneur (E)
The Integrator (I)

Managers do not just fit in only one role; they have a mix of management styles and characteristics. Furthermore a team will
not always consist of four people. The success of a management team depends on how the roles are fulfilled. The way in
which the roles are important depends on situational factors, like the organization type, its size, its external environment and
its stage of development.

The model can be used for bringing the right people together and also for bringing people with different styles together.
The first role is to identify who plays what role(s).
Next the organization's stage in the corporate life should be determined.
Adizes identifies 10 stages of the corporate life cycle, these are;
1.courtship (ideas, making plans)
2.infancy (pursuing opportunity, taking risk)
3.go-go (rapid growth, sales focus)
4.adolescence (ownership versus leadership)
5.prime (balance between control and flexibility)
6.stability (control takes over)
7.aristocracy (resting on laurels)
8.recrimination (finger - pointing)
9.bureaucracy (the living dead company)
10.death (out of cash)

These stages represent a combination of organizational characteristics, and they represent opportunities for the different
management roles to have a positive influence.
From these stages also an organizational dimension follows. That is long-term versus short-term, and internal versus
external orientation.

The last step is to compare and link the organizations current and desired management roles. The model can also be used on
a micro scale.
The Adizes' PAEI model is valued because of it's capability of letting people the importance of different roles understand
and appreciate. A negative part of the model is that it is very easy to give managers just one role instead of seeing the
different roles that person has.
(Ten Have, Key management models, 2003, p. 5-8)

Applying the Adizes' PAEI management roles to TNC, it becomes clear that R. Murdoch seems to be a producer. This is for
example because he explains by doing, works hard, and he seems to think that teamwork is less efficient because a lot of
communication is needed. These are work habits that belong to the producer.

R. Murdoch is also a real control-freak; this is part of the work habit of an Administrator. The roles of Entrepreneur and
Integrator can not be applied to R. Murdoch, he may have something in his character that fits these characteristics but it is
not very likely that many people have seen that part of him.