This paper analyses the corporate and business strategies of Reed Elsevier, one of FTSE 100 companies that has a conspicuous global presence. Reed Elsevier is an information and publishing establishment that deals with science, legal, risk, medical and business sectors. Through creating strong brands, the company has created a loyal customer base that is imperative in ensuring growth.
This has been achieved by investing in sources of new information that differentiate and widen the services and products offered, thus expanding in new geographic regions and market segments. The paper further evaluates challenges facing the organization which include slow global economic growth and growing competition. In addition, the paper offer recommendations on the sections of corporate strategy that needs to be improved.
Reed Elsevier is one of the best performing global organisations. It is ranked at 64 among the FTSE 100 companies and has a market capitalisation of 6.34 billion. As an information and publishing entity it deals with science, legal, risk, medical and business sectors. It comprises of Reed Elsevier NV and Reed Elsevier PLC, making it a dual listed company. Reed Elsevier has a global presence and its purpose is to provide data, analysis, and information to consumers globally. The company is internet based and provides information mainly to its subscribers. The organisation has strong corporate and business strategies that satisfy the needs of customers, thus making it a commercial and academic organisation. Challenges facing the company are the fear of its shares plummeting and stiff competition.
The company aims at offering customers high quality content and services to fulfill their needs. In addition, the organisation has a large article database making it accessible to numerous customers. Through strong brands, the company has created a loyal customer base that is imperative in ensuring growth (Norton-Taylor, 2005). This has been achieved by investing in sources of new information that differentiate and widen the services and products offered, thus expanding in new geographic regions and market segments. Through mergers and acquisition, the organisation has managed to increase its size and customer base, attracted new customers, and formulated new products that suit the current trends in the market. The company’s corporate strategy is aimed at delivering innovative and authoritative solutions that are engrained in the customer’s workflow, thus making them valued partners (Edward, 2010). Through technology, skills and collective experience, the organisation has enhanced cost efficiency measures that
have reduced waste and improved profitability. Through adept cost accounting measures, the organization has managed labor, time and resources to its advantages (Brian, 2009).
Strengthening and reshaping of portfolio has assisted the company in allocating resources and costs through selective acquisition and internal investment thus accelerating business growth. The major acquisitions undertaken by the organisation are acquisition of choice point in 2008 at a price of $4.1 billion and purchase of U.S online data business from investcorp for $530 million (Edward, 2010).
Managing corporate finance portfolio has played a key role in building revenue momentum, high cash generation, good margin improvement, growth adjusted earnings per share and growth in return on capital. Elsevier strengths include sustaining a large global market by increasing demand for academic information, providing high quality and authoritative content, generating large amount of revenue through subscription and other revenue generating avenues such as advertisements. Nonetheless, Elsevier puts more emphasis on operational efficiency that enables it to fund investment in new products, and recruiting skilled and talented human resources (Edward, 2010). Although the corporate strategy has ensured its tremendous growth, the organization has several drawbacks that include high prices for services and its journals and its advertisements that favor arms culture. Other challenges are slow global economic growth and growing competition(Brian, 2009).
Currently, the company has a presence in 200 locations globally and this has played a key role in ensuring its increased annual revenue and capitalisation. The largest percentage of revenues generated by the organization is from subscription of its titles and services. It has around 30,000 employees who include editorial teams, marketers, IT specialists, and sales and customer care
staff. To ensure that the organisation focuses on the needs of customers, the company has five major divisions that include; Elsevier, LexisNexis Risk Solutions, LexisNexis Legal & Professional, Reed Exhibitions and Reed Business Information all dealing in different products and services with a global reach. An essential component of business strategy employed by the company is its values, which guide the behavioral patterns of its people towards providing right services and products, to enable the company to achieve tremendous growth. These values also affect the strategies that it develops for external and internal stakeholders. It focuses at responding to the needs of the customers by developing innovating services and products.
Strategy that need to be improved
Given the fact that internet has become a global issue, any organization whose products are based on the internet experience high level innovation, technology and competition. As such, Reed Elsevier needs to improve its corporate strategy in order to maintain a large niche in the market. The company faces several challenges that include slow global economic growth and rivalry (Norton-Taylor, 2005). The global economic growth parameter is beyond the control of the company but Reed Elsevier needs to tackle the ever growing competition. Competition can be tackled by constantly developing new products that fit all sectors of the market, reducing its subscription price to enhance sales, introducing free online journals to direct traffic to its site, and partnering with other sites that would be essential for its business. In addition, the organization should emphasize on its merger and acquisition strategy to promote growth in business, obtain new technology and skilled staff and develop user friendly systems.
Reed Elsevier is one of the greatest companies in terms of capitalisation that has managed to tap a large base of customers. In order to continue expanding and attract more customers, it should continue developing new brands and enhance its technological innovation to be above the standards of its competitors.