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Managing Media Supply Chains in European Publishing Companies: Strategic Issues, Values and Partnerships J ÖNKÖPING I NTERNATIONAL B USINESS S CHOOL Jönköping University Managing Media Supply Chains in European Publishing Companies: Strategic Issues, Values and Partnerships submitted by Sajal Kabiraj Under the Guidance of Prof. Dr. Susanne Hertz Dr. Cinzia Dal Zotto For the award of the degree of Master of Science (International Logistics and Supply Chain Management) Media Management and Transformation Center (MMTC) Jonkoping International Business School (Jonkoping University) Jonkoping 551 11, Sweden December 2006 i J ÖNKÖPING I NTERNATIONAL B USINESS S CHOOL Jönköping University Certificate This is to certify that the thesis titled “Managing Media Supply Chains in European Publishing Companies: Strategic Issues, Values and Partnerships” being submitted by Sajal Kabiraj to Jonkoping International Business School, Jonkoping University, Jonkoping, Sweden, for the award of the degree of Master of Science, is a record of the bonafide research work carried out by him under our supervision and guidance. The results contained in this thesis have not been submitted to any other university or Institute for the award of any degree or diploma. (Prof. Dr. Susanne Hertz) (Dr. Cinzia Dal Zotto) Jonkopoing International Business School (Jonkoping University) Jonkoping 551 11 SWEDEN ii ACKNOWLEDGEMENTS I love my family without reservation. My mom, Sukriti, 60 years old, and my dad, Nikhil, 65 years old, who have always been there for me and love me unconditionally as I do them; my uncle Subhash, a brilliant and wonderful uncle is a personal and business inspiration to me all the time. I would earnestly like to thank my research supervisors Prof. Dr. Susanne Hertz, Deputy CEO and Professor of Logistics and Supply Chain Management, Jonkoping International Business School (JIBS), Jonkoping University, Jonkoping, Sweden and Dr. Cinzia Dal Zotto, Research Director, Media Management and Transformation Center (MMTC), Jonkoping University, Jonkoping, Sweden. Not only have both of them had to put up with me, but throughout my research but also constantly motivated me and inspired me to complete my work faster and helped me refine it with a never-flagging spirit, indomitable courage, remarkable intellect, emotional power and fabulous determination that I could not have asked anything better for in my life. I can only dedicate something earthly and bound, but what I feel is celestial and unbound. Prof. Dr. Robert G. Picard, Director and Hamrin Professor of Media Economics, Media Management and Transformation Center (MMTC), Jonkoping University, Jonkoping, Sweden is like a father figure to me and he has always been a constant source of motivation and encouragement to me. I profusely thank him for being associated with him in the research projects at Media Management and Transformation Center (MMTC), which is now the Europe’s Premier Center for Media Business Studies under his leadership. I feel privileged to get an opportunity to work with him and Dr. Cinzia Dal Zotto during my tenure in Sweden from Aug 21, 2005 till Dec 31, 2006. I would like to express my heartfelt gratitude to the various European publishing companies and their corporate executives who spared their valuable time in answering and replying to my questionnaires. I would also like to express my thanks to Astrid Lofdahl, Lecturer , Center for Logistics and Supply Chain Management (CeLS), Jonkoping International Business School (JIBS), Jonkoping University, Jonkoping, Sweden for her constant guidance and help throughout the Masters’ program in Sweden. My friends Suraj Nair, Philips Research, Eindhoven, The Netherlands and Raj Thilak, School of Engineering, Jonkoping University, Sweden were more like family to me during my time spent at Sweden. Lastly, I also earnestly thank all those who lended me their co-operation and spared their valuable time for making this thesis work complete in all respects and my journey through the Masters’ program fascinating, memorable and enjoyable. With these words, I dedicate my thesis to my guides Prof. Dr. Susanne Hertz and Dr. Cinzia Dal Zotto and once again thank them for everything. Sajal Kabiraj Media Management and Transformation Center (MMTC) Jonkoping International Business School, Jonkoping University, Jonkoping 551 11, Sweden. iii Contents Abstract Chapter No. Particular Page No(s) Chapter-1 Overview of Strategic Demand Chain Management 1.1 Introduction 11 1.2 Changing Landscape of Business Environment 13 1.3 Problem Definition 14 1.4 Research Objectives 20 1.5 Scope of the Research 21 1.6 Motivation for the Study 22 1.7 Limitations of the Thesis 23 1.8 Scope of the Thesis 23 Chapter-2 Literature Survey 2.1 Introduction 25 2.2 Value Chain Management: Meaning and Concept 27 2.3 Demand Chain Management 28 2.3.1 Present Status of Distribution in Marketing Mix 30 2.3.2 Functions of Marketing Intermediaries 31 2.3.3 Distribution Channel Structure 33 2.3.4 Partnering Channel Relationships 39 2.4 Strategy and Supply Chain Management 44 Chapter-3 Research Methodology 3.1 Introduction 47 3.2 Research Design 47 3.3 Research Instrument 48 3.4 Respondents’ Characteristics, Sample Planning and Data Collection 48 3.4.1 Sample Planning 48 3.4.2 Data Collection 49 3.4.3 Validity and Reliability 50 3.5 Data Analysis Tools & Techniques 52 3.6 Suppression Variable Analysis 54 3.7 Predictive Modeling 54 3.8 Period of Study 54 iv Chapter-4 Present Status of Distribution in Marketing Mix 4.1 Introduction 55 4.2 Distribution in the New Environment 56 4.3 Analyses and Results 59 4.4 Strategic Implications 63 4.5 Chapter Summary 68 Chapter-5 IT Enabled Distribution Systems 5.1 Introduction 70 5.2 Distribution Systems in Digital Environment 70 5.3 Scope of various IT Enabled Distribution Systems 76 5.4 Analyses and Results 82 5.5 Strategic Implications 87 5.6 Chapter Summary 93 Chapter-6 IT Enabled Demand Chain Management Model 6.1 Introduction 97 6.2 IT Enabled Demand Chain Management Model 97 6.2.1 Economics of the proposed Demand Chain Management Model 98 6.2.2 IT Enabled Demand Chain System 104 6.3 Information Flow across the Demand Chain 107 6.4 Key Relationship Factors and IT Enabled Demand Chain Model 112 6.5 IT for new Demand Chain Management Model 114 6.6 Roadmap for Successful Implementation 122 6.7 Performance Scorecard for Evaluation and Control 134 6.8 Chapter Summary 136 Chapter-7 Conclusions and Scope for Further Research 139 References 148 Appendices • Questionnnaire-1 (for corporate executives of publishing companies) 157 • Questionnnaire-2 (for consumers) 161 • Brief profile of the Researcher 163 v Master’s Thesis in ‘Master of International Logistics and Supply Chain Management’ Title : Managing Media Supply Chains in European Publishing Companies: Strategic Issues, Values and Partnerships Author : Sajal Kabiraj Tutor(s) : Prof. Dr. Susanne Hertz and Dr. Cinzia Dal Zotto Date : 2006-11-28 Abstract European publishing companies are quickly digitizing their businesses to achieve cost savings, and increased market reach and penetration. IT is increasingly affecting the ways in which the whole value chain operates. Interaction and collaboration costs have been slashed. Physical assets are no longer the cornerstone of competitive success and value propositions. This situation became more critical mainly due to continuous increase in consumer expectations, longer demand chain, conventional mechanism for information flow resulting into poor information visibility, and use of traditional demand forecasting methods. All above issues increase marketing and distribution costs significantly resulting into under performance of firms in the hyper-competitive scenario. Electronic markets are still far from reaching a state of maturity resulting in a difficult task to safely predict the possible transformation in the distribution system structure in the IT environment. This research is an attempt to develop a strategic IT enabled demand chain management model for European publishing companies to enhance efficiency for long- term performance and gaining sustainable competitive advantage. Major results of the study are as follow: • Brand management is the most important function of marketing for the present followed by distribution channel management, advertising, sales promotion, logistics, sales administration and management, and demand forecasting and management. • Main objectives behind the growing importance of distribution are higher growth and long-term performance of business, greater market dominance and coverage, sustainable competitive advantage, cost containment, and partnering channel 6 relationships. It is because of the fact that product, price and promotion no more bring long-term competitive advantage. Distribution channel strategy is always a well- structured system, meant for long-term and based on the philosophy of relationships, which is very difficult to copy by competitors. • Traditionally, advertising was used for brand building and management. But in the prevailing new emerging environment, emphasis is more on sales promotion and trade promotion instead of advertising. In other words, focus of promotion is more on point-of-sale brand building and management. • Information technology (IT) further complicates the whole gamut of distribution. It provides an additional channel of distribution as well as increases the magnitude of competition. It is also a new and powerful information medium for producers, wholesalers and retailers to conduct business among each other enhancing interactivity, productivity, transaction efficiency, and relationships
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