Reader's Digest Case Study

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READER’S DIGEST CASE ANALYSIS

By
Bobby Renner

March 6, 2013

Overview:

This case analysis is about Readers Digest’s recent struggle to succeed in business. Reader’s digest was the number one consumer of magazines in the US and has struggle in the passed decade after the invention of Internet. They have recently hired a new CEO Mary Burner to help restructure RDA.

Issues:

* INTERNET- The internet is RDA’s biggest competitor. It offers information of all kinds free of charge to everyone. * Advertising- Advertising is most magazines biggest revenue producer. Advertisements also have a negative effect on readers because they take away from the entertainment provided by RDA. * Net income has been in the negative in 2009, 2008, and 2007. * Revenues have decreased from 2,101.6 million in 2009 to 1,714.0 million in 2010. * DEBT! RDA has too much debt!

Analysis:

5 Steps of Strategic Management-

Vision- “We are a global multi-brand and marketing company that educates, entertains, and connects audiences around the world. We are dedicated to providing our customers with the inspiration, ideas, and tools that simplify and enrich their lives.”‬‬‬‬‬‬

Objectives-
* Increase Advertising
* Using Infomercials
* Redesign Magazine and their logos to help rebrand them. * Continue expanding to global markets
* Increase there ever decreasing profits.

Strategy-
* Use advertising to increase revenues and profits.
* Acquire other companies (buyout) to help minimize competition and increase revenues. * Reduce costs by minimizing work force and increasing online subscribers. * Focusing on top seller magazines, making sure consumers renew subscriptions. * Customer Service, allowing customers to return products at any time.

Implement & Execute:
* Reduced work force by 280 employees, 8% of their workforce. Increased performance of human resources. * Rebranding there magazine
* Increased Customer Services, allowing mailed products to be returned for a full refund. * Acquisition of infomercials (Ab circle),
* Created Allrecipes.com
* Community Oriented content available to increase customer service. * Two-way dialogue online offered for free to increase customer satisfaction as well as hopefully increase subscriptions. * Sold off divisions of RDA to subsidies Debt. This is extremely important because RDA’s debt is a huge issue!

Evaluate and Correlate:
* Check revenues and profits on income statement and compare them to the past few years. * Balance Sheet, checking to make sure debt is decreasing and assets, especially cash is not diminished. * Customer feedback on product and customer satisfaction.

SWOT Analysis:

Strengths-
* Brand Name- Reader’s digest has a history of customers. They are the number one magazine seller in the United States. * International- Reader’s Digest Provides to customers in more than 70 countries worldwide. They have separated there products through multiple sectors * CEO and Acquisitions- CEO Mary Burner has an advanced history in media content and has helped RDA make some good purchases to the increase revenues.

Weaknesses:
* Pricing- any cost for informational entertainment difficult to deal with in today’s society. Between twitter, facebook, and a million other websites, paying for news entertainment is a difficult industry to succeed in.

Opportunities:
* I believe the music industry still has opportunity. With Itunes charging a dollar per song, there could be some ways that RDA can get into the music industry. * Allrecipes.com This has website has been the number one visited food site. If they can increase viewers, they will be able to make a bunch of money on advertisements. * Not all of reader’s digest brands are offered on the computer, print, mobile, and in e-commerce. It is the CEO’s goal to have most products in each form....
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