Strategic Analysis of Reader's Digest

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With the impact of the new information technological trend, it has definitely changed the way in which business operates these days. As supported by the studies of Sadler (2003, p.28), “the new information and communication technologies … are simultaneously restructuring global markets and the whole industry sectors, challenging conventional economic thinking and redefining how business is done.” Technology has greatly improved the buyers’ awareness and individuals can retrieve information on the Internet effortlessly at low marginal cost nowadays. With the enhanced information flow, the buyers are more well-informed and knowledgeable than ever, hence they are more able to bargain over prices and products more effectively. The power of the buyers are high as they will be more empowered to exert additional pressure on Reader’s Digest to publish interesting issues and tend to be more demanding towards the products and delivery services rendered. Furthermore, with the widespread use of the Internet, it greatly lowers the cost of new entries into the magazine industry. It creates more market spaces for young entrepreneurs and they can simply advertise and market their magazines online because the cost is generally much lower as compared to advertising their magazines worldwide. Unlike the old days where Reader’s Digest can leverage on their reputation and brand loyalty to create a high barrier of entry to potential entrants, the Internet has enabled young entrepreneurs to seek out useful information such as the existing cheapest suppliers and the latest marketing strategies and use this information to their advantage. These new rivalries will create more intense competition in the magazine industry when they bring in their business online and eventually threaten the profitability of Reader’s Digest. To make matters worse, the threat of substitutes is also high for Reader’s Digest because the switching cost for magazines is low. As supported by the research of Lasher...
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