Evaluate the rationale and motivation behind TNC’s diversification strategy. Pay particular attention to their decision to diversify into T. V and satellite broadcasting. The company has 2 stages in my opinion, The First stage- 1980’s. This stage is print based.
TNC diversifies in order to get into more attractive business and balance its portfolio. The portfolio logic assumes a role of the centre. These portfolio logics and the role of the centre, make assumptions about the diversity of businesses within a corporate portfolio.This diversity of business has a certain degree of understandinf in some way, and this diversity of business should inform of the role of the centre.
Therefore, the strategy that TNC follows is a Related Diversification “which is strategy development beyond current products and markets, but within the value system or industry in which the company operates”. (Strategic Management, 5th Edition, Lynch R) TNC also uses vertical backward integration by the acquisition of the printing warehouses, books publishing transport, which are concerned with the inputs into the company’s current business.TNC also uses some horizontal integration by the acquisition of other newspaper and magazine, in order words, activities that are competitive with, or complementary to, a company’s present activities.
The 2nd Stage- 1990’s. This is the time based stage. Once TNC has diversified into the different businesses, they have to find new advantages in order to improve and expand its existing businesses.
By improving its businesses, TNC gains competitive advantages.Gets stronger against its competitors. The strategy that TNC follows in this second stage is globalisation with a place in all parts of the industry from newspaper to TV, from magazine to film. TNC’s markets are homogenised and consumer’s needs and preferences are more similar.
Therefore, TNC has to diversify in order for them to gain competitive advantages. The rapid growth of News Corporation and expansion into satellite TV also brought massive loans.During a downturn in the early 90s Murdoch and his media empire had difficulty paying its bills. Many of his American magazine interests were sold to pay off some of the loans and things eventually turned around for Murdoch.
News Corporation in its operations given it straddles eight industries, has a huge competitive advantage over its competitors since it can take advantage of the synergies it produces internally, to prop up one of its subsidiaries that is going through a lean time or facing excessive strong competition.”The Chairman Rupert Murdoch has been known to use his vast resources to get what he feels is right for the organization” (Drehle 2007) its size is its main source of its competitive advantage. It is quoted in the London Stock Exchange main board, the NASDAQ and the Australian Stock Exchange. Taking news gathering and dissemination operations as an example, since it has a presence in both print and broadcast media it can use either source to get a story.