Situation Analysis And Problem Statement: Harrison-Keyes, Inc.

Situation Analysis and Problem Statement: Harrison-Keyes, Inc.

University of Phoenix

May 8, 2006

Situation Analysis and Problem Statement

Over a century old, Harrison-Keyes was founded in 1899 and made its early money publishing the works of literary giants. Throughout the years, the company's focus shifted to meet demand and by the mid-1950s, it was regarded as a leading publisher of business, scientific and technical information. (University of Phoenix, n.d., Scenario Harrison-Keyes, p. 1).

Harrison-Keyes has taken

Situation Background

Harrison-Keyes Inc. is a global publisher of print products specializing in scientific, technical, and business books and journals, professional and consumer books, textbooks and other educational materials for all levels of study. The company publishes about 2000 titles each year and holds about 22,700 active titles. With about 3,500 employees worldwide, Harrison-Keyes has operations in the United States with sales offices in Europe, Asia, and Latin America. Approximately 40% of the company's revenues are generated outside the United States.

Harrison-Keyes has suffered the woes plaguing the entire industry. As competition from low-cost retailers eats into profits, publishing companies are finding success -- or even survival -- a challenge. Technology is making print content more accessible to customers worldwide and is adding value for them by delivering it in interactive and/or fully searchable formats. Harrison-Keyes has recently fired CEO Meg McGill in favor of new CEO, William Guardo. William is the complete opposite of the recently fired Meg, who strongly support e-publishing. Though he has been in publishing for more than 30 years -- most recently as the President of a competing publisher -- he favors traditional publishing, has little high-tech experience and is not a big fan of e-books. However, William is open to the idea of e-publishing and he has put it in the hands of Jan Peters, Senior Vice President, Business Development and Head of the Implementation Team to whip things into shape and prove him wrong.

Issue Identification

Harrison-Keyes in an effort to remain competitive has decided to adopt a new business strategy of e-book publishing. Technology is making print content more accessible to customers worldwide and is adding value for them by delivering it in interactive and/or fully searchable formats. Harrison-Keyes' major competitors have already jumped on this bandwagon. This new strategy has brought about many challenges for the company, its vendors, and authors.

The Leadership Team has decided to outsource production overseas to cut some costs. The Global Strategy Team, headed by Dharma Joyce, has handpicked Asia Digital Publishing (ADP). Their primary role is to do the technical formatting for the e-books, which means laying them out in terms of font, style and graphics, as we would for print books, but also adding what's needed for digital books. The new problem is that massive coastal floods have claimed a significant portion of the region's burgeoning business community, including ADP. In effect, Asia Digital is out of business for the near future. As a result, some critical deadlines were missed and they are off schedule by about four weeks. Harrison-Keyes does not have a contingency plan for an alternative digital publishing company.

The current marketing campaign for e-books was very professional and very targeted. This may have caused the group's original projections for half-year sales around $16 million to bring in only $3 million. Pearce and Robinson (2004) state "Every strategy is based on certain planning premises--assumptions or predictions. Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid. The leadership team is not sure if the marketing campaign was on target or if initial market research on customer adoption of the e-publishing model was wrong. The leadership team could use some premise control, if a vital premise is no longer valid, the strategy may have to be changed. The sooner an invalid premise can be recognized and rejected, the better are the chances that an acceptable shift in the strategy can be devised (Pearce & Robinson, 2004).

The devastation that has caused ADP to go out of business might have been a blessing in disguise. Many of the employees at H-K felt their editorial jobs were in danger of also being outsourced. The use of this company was causing all sorts of morale problems at a time when employee morale is already at an all-time low. Hays Michaels, Senior Vice President, Editorial has stated that several employees can "see the handwriting on the wall for editorial." (Harrison-Keyes, Scenario, email to Jan). Evidently, quite a few of the major trade magazines are doing this so the employees are getting a bit scared for their jobs. Several employees have already left H-K for jobs with the competitor.

Finally, because of the lack of a thorough implementation plan and the omissions of oversight planning and disaster planning, Harrison-Keyes is paying the price. Ordinarily, a good deal of time elapses between the initial implementation of a strategy and achievement of its intended results. During that time, changes are taking place in both the environmental situation and the firm's internal situation. Strategic controls are necessary to steer the firm through these events. They must provide the basis for adapting the firm's strategic actions and directions in response to these developments and changes. The four basic types of strategic control are (a) premise control (b) special alert control (c) strategic surveillance and (d) implementation control (Pearce and Robinson, 2004). The leadership team failed to implement these controls in order to steer H-K away from such situations internally and externally.

Opportunity Identification

There are several opportunities that exist for Harrison-Keyes, but none larger then the opportunity to increase sales and therefore increasing profits. They have already conducted a survey of the industry-wide growth rates of e-book sales. Between April and May, worldwide sales of e-books rose by five percent, while revenue from sales grew by 23% compared with the same time last year, according to the Open e-Book Forum. The figures were even better for the first quarter of this year, leaping by 46%. (University of Phoenix, n.d., Scenario Harrison-Keyes ¶ 2).

The ability to reach and establish a new customer