CASE ANALYSIS
Random house, one of the largest book publishing companies in the world, was established
by Barnett and David with a vision Books turn people into explorers. They open the gates
to new worlds and new insights. RH had a disruptive strategy of expansion and
diversification through acquisition. Smith and Haas gave new talent to RH. Finally its
acquisition by Bertelsmann and BDD acquired gave it a new structure, lean management,
new technology and access to mass markets. RH faced with the issue of higher cost, higher
staff and poor structural management, BDD went on a massive cost cutting spree, through
reducing employees, cut manufacturing cost and finally restructure distribution network.
Market Analysis
Top five players Random house, Penguin, MH, Pearson fighting to consume the market
share. There are various substitutes available in the market like Video games, movies,
animated movies, eBooks, interactive content, blogs etc. The sales are going down due to
video games, movies and animated movies where generation today is spending most of
their leisure time. Print on demand techniques reduces the required up-front investment
in book publishing, allowing many more individuals and companies to enter the
marketplace, and allowing Niche market to be served as never before. The eBook market
is taking this one step further.
BCG matrix for AOL acquisition
Acquisition of AOL was a value trap for RH.
