Fisher 1 Applied Project A Review of the Canadian Printing Industry Rael D. Fisher APRJ-699 AP Coordinator: Dr. Teresa Rose January-7-2013 15,763 Words Fisher 2 Table of Contents Introduction ................................................................................................................. 3 Purpose ............................................................................................................ 3 Statement of the Problem ................................................................................. 4 The Sub-Problems ............................................................................................ 4 The Prediction ................................................................................................... 4 The Delimitations and Limitations ..................................................................... 5 The Definition of the Key Terms ........................................................................ 5 The Assumptions .............................................................................................. 6 The Significance of the Study ........................................................................... 6 Review of the Related Literature ................................................................................. 7 Industry Analysis ............................................................................................... 7 Scenario Planning Methodologies ..................................................................... 9 Methodology ............................................................................................................. 12 Research Site - Canadian Printing Industry Overview .................................... 12 Research Design ............................................................................................ 14 Results ...................................................................................................................... 15 Industry Analysis - Application of PEST Methodology .................................... 15 Industry Analysis - Application of Porter’s 5 Forces Methodology ................... 27 Scenario Planning Analysis ............................................................................ 36 Industry SWOT Analysis ................................................................................. 41 Conclusion ................................................................................................................ 43 Strategic Recommendations ..................................................................................... 45 References ............................................................................................................... 47 Appendices – Supporting Data ................................................................................. 52 Appendix A – Shipments by Region (2011) .................................................... 52 Appendix B – Printing Establishments ............................................................ 53 Appendix C – Printing Exports ........................................................................ 54 Appendix D – Employment by Type (2001-2010) ........................................... 55 Appendix E – Sales by Product Type (2006-2013) ......................................... 56 Appendix F – Sales by Production Process (2006-2013) ................................ 57 Appendix G – PEST Analysis Model ............................................................... 58 Appendix H – Key Technological Advancements ............................................ 59 Appendix I – Porter’s Five Forces Model ........................................................ 60 Appendix J – Canada’s Top Printers ............................................................... 61 Appendix K – Employment by Size and Category (2011) ............................... 62 Appendix L – Canadian Printing Industry SWOT ............................................ 63 Fisher 3 Introduction Purpose According to the Canadian Printing Industries Association (CPIA, 2012), the Canadian printing industry is the nation’s oldest information technology-based manufacturing platform, accounting for about 8% of all manufacturing output. CPIA also notes that in 2011 the industry included 6,724 locations across the country. Unfortunately, the industry has been in a significant state of economic decline for many years. Total manufacturing revenue has dropped from $CDN 11.7 B in 2001, to 9.2 B in 2010, an average decline of 2.7% a year (Industry Canada, 2012). It seems likely that this trend is permanent, with the industry continuing to be impacted by multiple environmental forces, the advent of digital technology arguably being the most disruptive of all. Despite the overall decline, many organizations operating within this industry are thriving, while others have failed, or are heading in that direction. As is often the case in markets typified by a high degree of change, sustainability in this segment is highly contingent on developing and executing the right strategy. With the foregoing in mind, the purpose of this research effort has been to complete an in-depth industry analysis to fully understand the dynamics which underscore the current market position, and to leverage that research along with informed opinion to develop possible future state scenarios and supporting business strategies. From an academic perspective, this research study primarily fits into the Strategic Management domain, but also incorporates information from other academic areas such as Economics, Statistics, Marketing, and Information Technology. This research paper will begin with a review of academic literature relevant to the analysis of the Canadian printing industry. Then, based upon appropriate identified academic models, a methodology to review the industry will be selected, and a review process will be outlined. The industry review will provide insight to historical trends, and future possible outcomes using appropriate analytical tools. The main findings of this paper will be summarized in a concluding section, followed by the presentation of strategic options for consideration of companies operating within this key segment of the Canadian industrial market. Fisher 4 Statement of the Problem The focus of this research study is to comprehensively determine the historical impact of digital technology on the Canadian printing industry (the “industry”) to better understand the future direction and trends of this segment. Arguably, the advent of digital technology has been, and will continue to be, the single most disruptive environmental factor impacting the nature and attractiveness of this segment. While much has been written on this subject, the available data seems to be fragmented, and does not provide a comprehensive view of the subject. The researcher will first analyze the industry in general to determine past and current trends. The researcher will then determine the key uncertainties facing the industry, and will develop several future state scenarios based on those uncertainties. Considering the most likely scenario, the researcher will then provide recommended strategies to best drive sustainability in the industry. The Sub-Problems To ultimately answer the overarching research question regarding future industry trends and direction, this study will strive to answer several key sub-problems. For a start, there’s a need to develop an overall industry analysis using one or more well established academic models. Then, key trends affecting the industry must be identified, along with key uncertainties facing companies in the industry. With the key uncertainties in mind, several future state scenarios will then be created that provide possible ways in which the industry will continue to evolve in the upcoming 3-5 year period. An appropriate scenario evaluation matrix will then need to be developed to determine which scenarios are more or less likely to occur. Lastly, based on the most likely case scenario, a series of recommendations must be provided to possibly assist printing organizations with future strategic direction, considering the need to remain relevant in the market, and to develop or maintain a sustainable financial model. The Prediction The researcher expects to obtain data supporting a determination that the past and current key industry trends, especially in relation to overall industry economics, structure, and the impact of digital technology, can reasonably be expected to have a similar and further impact on the industry in the future. Fisher 5 The Delimitations and Limitations This research project is delimitated to the Canadian printing industry, as is further defined below. The overall industry analysis will attempt to encompass all industry sub-segments. However, due to available data and time, certain aspects of the research will either be limited to, or will exclude specific industry sub-segments, as will be further detailed in the data collection and analysis associated with each sub- problem. The impact of globalization on the Printing Industry, and more specifically on the Canadian market, is generally beyond the scope of this study, although a high level review of the domestic trade balance will likely be incorporated in the study. Lastly, this study is focussed on the industry in general, and will avoid reference to, or review of, any specific organization within this segment. The Definition of the Key Terms Canadian Printing Industry: