Walker Book: Business Analysis
Case-Study
JCNeves, ISEG, 2004
Editorial Segments n n
A medium-sized book publisher
5 editorial segments
Religious
Western
Nonfiction
Mystery
Children
@ JCNeves, ISEG, 2004
1
Competitive Dynamics n Children’s Book n n n size: $1.4 billion
Segment market share: 33%
Retailed through n n n n
department stores 18%
Book clubs 19%
On-line is increasing
Fiction and picture book segment n Share: 46%
@ JCNeves, ISEG, 2004
Drivers n n
n
n n n
Modest growth in demographics (0.3% under
18 yrs. Old)
Larger increases in disposable income and education level
More retail stores and easier access to internet sales
Literacy programs
Library customers
Prediction of growth in revenue 5.8% and
S&P predicts 3%
@ JCNeves, ISEG, 2004
2
Industry n n n n
n
n
Very competitive
Low barriers to entry
10 largest publishers accounted for 63.6% of revenues in 1996. The rest is small publishers
Superstores increase their share and negotiation power, which is unfavorable to small companies like
Walker & Co.
Price wars force publisher to spend more on advertising and offer discounts
Uncertainty of the impact of technology: production, multimedia and distribution (e.g. Amazon.com)
@ JCNeves, ISEG, 2004
Current Situation (1997) n n
Minimal profits
Negative cash flow n n n Too much diversification
Not profitable in three segments
Lack of good diagnostic control systems
@ JCNeves, ISEG, 2004
3
Details of current situation large print
adult children's nonfiction books 1990922
2361922
338380
380587
1652542
1981335
26146
55049
8831
13858
1687519
2050242
33%
40%
gross regular sales returns net regular sales special/club sales remainder sales
Total net sales
% of total sales
725425
102844
622581
37064
1307
660952
13%
regular COGS regular royalty special/club COGS remainder COGS
Total COGS
Gross Profit net subrights income adj gross profit expenses editorial mktg/sales O/h direct cost of free copies art/prod/gen edit ship/warehouse general and admn
Total expenses
% of
JCNeves, ISEG, 2004
Editorial Segments n n
A medium-sized book publisher
5 editorial segments
Religious
Western
Nonfiction
Mystery
Children
@ JCNeves, ISEG, 2004
1
Competitive Dynamics n Children’s Book n n n size: $1.4 billion
Segment market share: 33%
Retailed through n n n n
department stores 18%
Book clubs 19%
On-line is increasing
Fiction and picture book segment n Share: 46%
@ JCNeves, ISEG, 2004
Drivers n n
n
n n n
Modest growth in demographics (0.3% under
18 yrs. Old)
Larger increases in disposable income and education level
More retail stores and easier access to internet sales
Literacy programs
Library customers
Prediction of growth in revenue 5.8% and
S&P predicts 3%
@ JCNeves, ISEG, 2004
2
Industry n n n n
n
n
Very competitive
Low barriers to entry
10 largest publishers accounted for 63.6% of revenues in 1996. The rest is small publishers
Superstores increase their share and negotiation power, which is unfavorable to small companies like
Walker & Co.
Price wars force publisher to spend more on advertising and offer discounts
Uncertainty of the impact of technology: production, multimedia and distribution (e.g. Amazon.com)
@ JCNeves, ISEG, 2004
Current Situation (1997) n n
Minimal profits
Negative cash flow n n n Too much diversification
Not profitable in three segments
Lack of good diagnostic control systems
@ JCNeves, ISEG, 2004
3
Details of current situation large print
adult children's nonfiction books 1990922
2361922
338380
380587
1652542
1981335
26146
55049
8831
13858
1687519
2050242
33%
40%
gross regular sales returns net regular sales special/club sales remainder sales
Total net sales
% of total sales
725425
102844
622581
37064
1307
660952
13%
regular COGS regular royalty special/club COGS remainder COGS
Total COGS
Gross Profit net subrights income adj gross profit expenses editorial mktg/sales O/h direct cost of free copies art/prod/gen edit ship/warehouse general and admn
Total expenses
% of