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Autor: anton 23 July 2011
Words: 1077 | Pages: 5
News Corporation is a global integrated media company founded by Rupert Murdoch, with properties in film, television, cable, magazines, newspapers, publishing and others.
It emerged as a national organization in Australia and is now present in the UK, Europe, USA, and Asia.
This reports attempts to analyze the firms strategic position by critically looking at the stakeholders expectations, corporate governance, itÐ²Ð‚â„¢s environment and social responsibity. The report also analyzes the firms strategic choices centering on, Corporate and international strategy.
The report further discusses the issue of strategic leadership and itÐ²Ð‚â„¢s impact on News Corporations operations. Finally the report makes several recommendations regarding the future of the firm followed by a conclusion.
2. THE FIRMS STRATEGIC POSITION.
Stakeholder mapping identifies stakeholder expectations and power and helps in understanding political priorities (Ð²Ð‚?Johnson Scholes and WhittingtonÐ²Ð‚â„¢). It consists of making judgement based on three issues:
Ð²Ð‚Ñž How likely each stakeholder group is to impress expectations on the firm.
Ð²Ð‚Ñž Whether they have the power to do so ie power of the stakeholder group.
Ð²Ð‚Ñž The likely impact the stakeholder expectations will have on future strategies.
The power/interest matrix please see Appendix I seeks to describe the political context within which an individual strategy would be pursued (Ð²Ð‚?Johnson Scholes and WhittingtonÐ²Ð‚â„¢)
For News Corporation an analysis of the matrix reveals the following:
HIGH INTEREST Ð²Ð‚â€œ HIGH POWER ( Key Players )
Government which includes regulatory bodies as well as the political leaders of the respective countries have high power and interest in News Corporation. For example in 1979 the Australian government amended the law regarding the foreign ownership of television stations and this allowed News Corporation to quickly acquire Channel 10 in Melbourne though the owner Mr Murdoch was no longer resident in Australia.
Banks and other lending institutions
The above institutions also have high power Ð²Ð‚â€œ high interest and for as long as they a happy an organization can be rest assured of their support and they will stay in quadrant C. In the case of News Corporation their power and influence was felt when the firm had a financial crunch in the 90s which was only resolved through a complex debt restructuring exercise. These events therefore made the above stakeholders move from quadrant C to D.
The Chief Executive Officer Ð²Ð‚â€œ Mr Rupert Murdoch
Mr Murdoch being the founder is one of the key stakeholders. Mr Murdochs high influence and power can de seen from the way he deliberately forged political friendship with people like former british pime ministers Bob Hawk, Tony Blair and Margaret Thatcher which enabled the company acquire interests in SKY TV in the UK.
Due to risky acquisitions News Corporation underwent a financial crisis which was only overcome by Mr Murdoch guaranteeing his personal assets this was of course against the laws of corporate governance which is discussed in detail later.
HIGH POWER- LOW INTEREST ( Keep satisfied )
This group of stakeholders have high power low interest and are managed by satisfying them through high financial performance. They include:
This group of stakeholders interest is usually limited by the number of shares each individual owns, but as a group are able to influence the firms direction and future. News Corporation kept its stakeholders happy despite various hiccups though at one time differences arose when Mr Murdoch indicated that one of his sons James would in future become his successor.
Banks and Lending institutions.
As mentioned the above stakeholders will sit in this quadrant for long as all is well but may shift their influence when things go wrong as was the case when NewsCorp had financial difficulties.
Another class of stakeholders is the regular consumer which includes the general public who have interest in the firms product or service. News Corporation has tried to satisfy them by offering them innovative products. For example News Corporation managed to carry live the iraq war in 2003 bringing images to millions and thereby keeping them informed. The firm has also exploited the growing popularity of sports and childrenÐ²Ð‚â„¢s television.
LOW POWER- HIGH INTEREST( Keep informed )
Internal employees are part of this category of shareholders. The type of management style adopted in this organization was a top down approach and thereÐ²Ð‚â„¢s little indication that employees were well informed about the strategic direction of the company. For example Mr Murdochs idea of management was to put in a manager and put someone beside him, and not quite tell either of them what they are doing!
Another category in the quadrant are the competitors who obviously have to compete with News Corporation which is an enviable position in the market place. Currently News Corporation has to compete with Time Warner Viacom for ChildrenÐ²Ð‚â„¢s television and CNN in the cable television segment.
B. CORPORATE GOVERNANCE.
The governance framework describes whom the organization is there to serve and how purposes and priorities of the organization should decided (Ð²Ð‚?Johnson Scholes and WhittingtonÐ²Ð‚â„¢).
The Corporate governance structure of News Corporation and the specifications of the rules for making decisions was carried out by Mr Murdoch. Major decisions were made disregarding the shareholders. For example Mr Murdoch appointed his son to head BSkyB despite the boards criticism of this decision.
Another serious infringement on good corporate governance was when Mr Murdoch guaranteed part of his personal wealth when the firm run into serious financial difficulties in 1987 (there is distinct line between the company and its owner).
Also the non-disclosure of total finance for facilitating the corporate tax efficiency also plugged a hole in the firms corporate governance record as good accounting practice requires a firm to fully discloses all its sources of finance.
Serving the rights and giving equitable rights to the treatment of shoreholders is part of good corporate governance but in the case of News Corporation, when they merged with their UK satellite rival BSB, Sky executives dominated the senior management positions and so gained undue operational control of the merged firm.
The board of directors play a key role in monitoring and participating in strategic issues affecting the firm but without the consent of News Corporations shareholders and against the advice of Allan Ball the then CEO of BSkyB, a risky investment decision was made by Mr Murdoch alone which later resulted in the suspension of shareholders dividends as the deal turned out to be worthless.