Executive Summary: Company Strategy and Goals
Reuters Group provides intelligence and information to professionals in the fiscal services and media sectors. They besides provide electronic platforms to enable the finance professional to present information and dealing services to their clients. The company is planetary, although this study will concentrate on the UK operations of the company.
From the company study “Reuters end is to be the information company our clients value most, by offering indispensable content, advanced trading services and great client service.” They aim to make this by utilizing three phases:
Fix It – This has been called the ‘Fast Forward’ programme which aims to supply the best service to the client, yet cut downing overall costs to do the company more efficient.
Strengthen It – Reuters purposes to supply the best continuity, resiliency, and back up in their systems for the client. This 2nd phase besides aims to develop the merchandise in new markets, for illustration the company has late implemented trading platforms for foreign exchange and fixed income merchandises. They are besides increasing the offering for hazard direction forces.
Turn It – This involves look intoing and set uping ways into new markets, such as their recent investing into China. The company seem to recognize that in the cyberspace and nomadic phones are an of all time increasing manner of obtaining information ; they are hence puting into this growing country.
PESTEL Analysis ( Based on the UK market ) :
Reuters is a planetary administration with operations in 91 states, although it is chiefly a UK company. The political environment in these states is hence really of import to the nucleus of the concern ; any uncertainness will hold an consequence on the UK operational base.
Any political uncertainnesss within the UK may bring forth a subsequent economic recoil, which may impact the company’s operations. Media and printing such as Reuters need ‘spare’ hard currency within the economic system in order to run. In the event of a downswing in economic rhythm advertisement, media, and first-class systems tend to be the first to be withdrawn from the budget. Since Reuters primary base is the fiscal services industry so the ultimate factor must be the stock market.
Financial Services houses make money when the stock market is active, hence in times when planetary stock markets are on a downward bend fiscal services footings tend to harness in their bag strings a small, and the marketing/systems budget can be one of the first to travel. In the event of this occurring, Reuters would endure. This is hence one of the primary factors which can impact the public presentation of the company. Further inside informations of this can be explained by the portion monetary value between 2000 and 2003, compared to the FTSE 100, and besides the media sectors as a whole compared with the overall FTSE All-Share. You can quite clearly see the disagreement in public presentation of media companies, compared to other houses in the UK market.
Interest Rates – In present times the UK has a relatively low degree of involvement rates. This facilitates the ability for UK companies to spread out their houses and bring forth higher quality fiscal trading and intelligence systems. Around the universe we are seeing other states increasing their involvement rates, which may do jobs for abroad operations ; which will finally impact their UK base.
Oil – The present degree of oil is the highest it has been for some clip. This once more affects the ability for purchasers of Reuters merchandises to ease any enlargement in their package needs. A high oil monetary value suggests increased running costs and later a lessening in the budget for higher quality systems. This issue has a higher consequence in topographic points such as Asia, China, and India, places where Reuters are spread outing their operations.
Bird Flu – If Bird Flu turns into an epidemic this would hold terrible effects for the fiscal markets. Any downswing in fiscal markets exposes Reuters, due to a lessening in net incomes make by fiscal services houses.
Gross Domestic Product ( GDP ) – At current degrees GDP in the UK remains comparatively strong. Consumers are passing, although non every bit much as in old old ages. If GDP grows weaker so the house may endure due to a lessening in public disbursement.
In the modern age all companies must pay attending to societal and environmental issues in order to retain a successful presence in their market. In this instance of Reuters Plc the media market has no existent issues in this regard as their merchandises and operations cause no existent menace to society or the environment. Nevertheless Reuters do promote staff to partake in charity work and contribute to the environment around them, which increases their corporate profile.
This is one of the largest factors impacting the media industry. There are many houses both within and outside the industry who must maintain up with the latest engineering in order to retain their competitory advantage.
Technology grows at an dismaying fast rate and it seems that one time something new has come to the market, something else supersedes it. In this market media companies rely really much on the ability of the systems to non merely work but besides to be the fastest and most resilient systems in the environment.
In add-on, in the current fiscal services industry where alterations occur on a regular basis, things such as Straight-Through-Processing ( UT ) and a more efficient manner of treating Unit Trusts is an country where the IT companies are concentrating their attendings. Of class this involves the fiscal professionals ; nevertheless media houses who can offer minutess at a quicker clip and a better monetary value than their rivals will hold a strong advantage over the remainder. This is something that Fiscal Firms would pay more for, merely because it gives them a competitory advantage in their industry, thereby bring forthing more net income for themselves.
The menace of legal action is rife in the fiscal media industry. The enlargement of the Financial Services Authority ( FSA ) has enforced houses to be really careful when airing generic statements sing investings. Some of the extremely celebrated newspapers, such as the Daily Mail, have been fined for supplying deceptive information and transgressing the FSA Financial Promotion regulations.
Other issues include the possibility of bring forthing inaccurate information and studies to the market. Not merely could this do embarrassment and repute losingss for the company but it could besides take to subsequent prosecution/civil action if fiscal services houses or consumers suffer a loss as a consequence of the information.
Finally there is the menace of insider information. There is the possibility that newsmans could detect some intelligence and so cover on their ain behalf before publishing the intelligence to the market. This could take to tutelary sentences for both the newsman and the direction squad.
Porters FIVE Forces Model
Technological factors affect the ability of providers to non merely supply the most efficient platforms for trading and conveying intelligence points, but besides to bring forth them in the most cost-efficient mode. In order to derive and retain a competitory advantage over the remainder so the systems must hold some distinction over the others in the market. A differentiated system costs more ; therefore a balance should be between what the client wants and what they will pay for. As the technological industry moves frontward clients by and large expect more from their providers, hence houses such as Reuters must hold sufficient purchasing power from its technological providers in order to bring forth the ensuing superior system over the other publication houses in the market. This is a strong factor of the company’s competitory advantage and subsequent success.
Of class everyone in the industry has easy entree to these superior systems, which once more consequences in strong competition for monetary value decreases. The Information Technology ( IT ) platforms are built by generic houses in the IT industry and although they are themselves in strong competition against each other houses such as Reuters would pay a fine-looking monetary value for exchanging providers. It is hence imperative that strong relationships exist between the media house and their IT provider.
Menace of Substitutes
The media industry has noticed a fleet alteration from the written word on paper where clients could merely entree intelligence by purchasing the newspaper. In today’s market topographic point there are many ways of acquiring the information into the public sphere ; the cyberspace plays a strong portion in this regard where most people search hunt engine sites for any information they need. In add-on broadcast medium has played its portion with channels now available which broadcast 24 hr intelligence, along with teletext. IT solutions will go on to play an extended portion in airing intelligence and media houses must maintain up with the latest engineering.
The purchaser is in a privileged place due to the assortment of houses who will offer a fiscal information system straight to their computing machines. In this extremely competitory market topographic point the purchaser is really much aware of the differences in quality and monetary value and can take a position on how superior they wish their system to be. Just because one house offers the best system in the market, but at a higher cost than the others, does non intend that they will be the largest in the market. In this regard purchasers about have a monopsony, where the purchaser is in a strong place to put the monetary value of the merchandise. In add-on the purchaser is in a place to put up their ain internal systems, which is a menace to the media company.
Barriers to Entry
There are rather high barriers to entry. In order for a media house to win it must set up the necessary IT platforms, which normally require specialist input, it must besides hold a believable repute and trade name name. Since it takes clip to construct up a repute the media house must hold a strong selling section and trade name consciousness squad in topographic point in order to be successful in set uping the house.
These factors can be dearly-won and clip devouring. Of class for bing houses in the market this factor is appealing since it means fewer companies will come in and there will be less competition. Recent old ages have seen the growing of the Publishing industry with a few companies coming to the Alternative Investment Market ( AIM ) , if their selling and trade name consciousness pays off so these could be classed as considerable menaces to the bing participants.
All of this leads to a cut-throat industry. There is a high grade of competition in the media industry. Reuters are the largest company in the industry and they supply other media houses with information. The house hence has a big competitory advantage over the others, for the minute. The inflow of media houses over the past twosome of old ages, when stock markets have increased and fiscal services houses are passing more on IT and superior systems have increased and competition is rife.
The manner to increase a firm’s competitory advantage is to supply either a differentiated merchandise and/or a inexpensive monetary value. There are many houses such as Pro-Quote, Quote Terminal, Bloomberg, who offer a really similar merchandise to that of Reuters at different monetary values. Reuters hence need to be cognizant of what their rivals are making in order to out-do and retain their competitory advantage, as do the other houses about Reuters.
Kenich Ohmae’s 3C’s
Corporate Based Schemes
Reuters should be wholly on top of any new IT systems which become available. They should hold sufficient purchasing power to pull the most attractive and cost-efficient systems at the most competitory monetary values for its clients. It should offer a assortment of systems and intelligence handiness to offer a assortment of clients, from those sole-trading investors to the larger institutional client who needs more sophisticated systems. Alternatively they need to offer the most superior system in the market, albeit they charge a higher monetary value clients can non acquire better than theirs.
Customer Based Schemes
Reuters should see their clients in sections. As mentioned earlier there are many categories of clients who would utilize the merchandises which Reuters supply ; the person, little investor through to the big multi-national investing bank. Reuters could hence develop a system for each category of client, and bear down them consequently.
Competitor Based Schemes
The competition such as Bloomberg, Pro-Quote, Quote Terminal is increasing their market portion by offering similar information. Some of them offer the information at a cheaper rate to that of Reuters. Reuters should therefore supply either a diversified and superior system or at less cost to their rivals.
Fiscal Indexs of Reuters: Employee turnover, net incomes, P/E Ratio, degree of debt, portion monetary value development over the past three old ages presented in tabular arraies and graphs