Continental Media Group Case Analysis Business Highlights Strategy As part of the larger Continental Media Group, Business

Highlights strategy was to leverage Continental Media Groups national scale in printing and advertising while tailoring each of its nine weekly newspapers to local and regional news. By tailoring its newspapers to regional news (but also incorporating the same national and international news across the newspapers), readers would be attracted by the relevant articles and choose to subscribe. As a result, the high circulation rates would be attractive to advertisers as they would be able to reach large targeted audiences. Consequently, Business Highlights enjoyed economies of scale and could offer high quality print services such as color ads at competitive prices that other regional newspapers could not. While Business Highlights competitors were daily newspapers with prominent business sections (e.g. New York Times, Chicago Tribune), Business Highlights differentiated itself by being able to employ the resources of a large company while focusing on the needs of regional markets. Furthermore, as a weekly journal, Business Highlight was able to be selective in what it published, ensuring that the content was focused and of good quality, further supporting a strong readership base. However, while Business Highlights strategy allowed it to become very popular and to grow its subscription base, this same strategy made advertisers wary of purchasing ads in a narrowly focused journal. Business Highlights strategy assumed that its high circulation rates would attract large national advertisers who could take advantage of Highlights ability to print cover-to-cover 4-color ads. Since ad sales accounted for 50% of total revenue, Highlights profitability depended on it. As managers or owners, we would be concerned with whether the

strategy of seeking out large national advertisers could ever work, and how exposed we are to the changing economic conditions given our focus solely on business. We would suffer many sleepless nights if our ad sales continued to remain volatile and we had no strategy or mechanism to cope with change and to increase ad sales.

The Problem Continental Medias management was surprised by four key changes in the business, creating strategic uncertainties that tested Continentals interactive control system. The chart below identifies the surprises, the reports that allowed the surprises to surface, and the proposed solutions. Surprise Historically large customers from the financial industry were spending significantly less on advertisement. Difficulty in attracting new midsize customers. Salespeople didnt have the time and energy to make one-ad sales calls just for the Special editions, resulting in lower Special Edition sales. Raising revenues internally.

Report New Business Report

Solution Target more mid-size companies who were willing to increase ad spending.

New Business Report

Weekly Advertising/Flash Reports

Offer first time discounts and potentially free future ads. Incentives need to also benefit existing customers. Set up long term agendas for sales people so they focus not only on short-term goals, but long-term as well. Utilize circulation team to assist with ad selling to companies the sales team currently does not visit.

Competitive Analysis/Weekly Advertising Report

By religiously studying Friday reports, Patricia Harkins and Cathleen Greene enacted a form of interactive control that was primarily focused on bench marking the performance of current strategy. However, they were also able to stimulate emergent strategies, albeit at a very
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slow pace. According to the case, these early warning reports can be used to focus on the positives instead of the negatives. Even though the reports often showed lagging sales, it provided the management team with insight as to whether their strategy was effective or not, and what new strategies could be taken (e.g. targeting mid-size businesses). While Continental Media Group had an interactive control system that yielded positive results, it still was not perfect. For example, new bookings failed to report when the ads were scheduled to print, or the information only reported changes (increases or decreases), but not the reason behind such changes. The nature of these reports fostered a slow reaction in a fast moving market instead of a proactive long-term resolution. Another drawback of the reports was the lack of revising budgetary expectations based on new information, which had the danger of exceeding or failing to meet expectation due to factors completely out of managers control. Continentals current reporting system also failed at being used in multiple levels of the organization. The Friday Packets were mainly distributed to the executives within Continental (VP of Marketing, COO, VP of Finance, etc.) who only attempted to create long-term solutions at the annual off-site retreat. Although the New Business Report was shared with all sales managers, they didnt have enough information or empowerment to innovate solutions for their customers needs. As a result, top management resolved the problems by examining the cause of the problem and developing an action plan that was implemented much later. This process was probably much longer than the time it would take a salesperson who better understood the customer. Fundamentally, communication was inefficient resulting in the sales force being misaligned with the companys long-term strategy.

Recommendations Currently, the companys control system only allows them to act reactively to strategic uncertainties. A proposed proactive control system that deals effectively with unexpected downturns must involve having a portion of the sales and circulation team gathering and analyzing qualitative market data, allowing new opportunities in the market to be captured early on while also anticipating unforeseen industry events and trends. The reliance on measuring financial and sales data only measures how well current strategy is being implemented, and doesnt necessarily facilitate emergent strategies. Higher market intelligence may also help identify current and future issues faced by customers, and Continental can use this new set of information on its scheduled meetings to further enhance the productivity of its interactive control system. The new ideas and projects will include this new information and allow them to avoid situations like the one they are currently faced with. Instead of not having enough information on potential advertisers to target for its special editions, it will identify the most attractive industries and prospective customers ahead of time and create special editions around them. Instead of recognizing the potential of mid-market customers after the crisis, the new information will help identify attractive segments before they are out of options. Finally, by getting qualitative feedback from their employees who work closely with their customers, they can better tailor their marketing strategy.

Another evidence of the lack of information across the whole company, is the misconnection between the salespeople and the Circulation staff. The last dialogue in the case suggests that the Circulation people had more information about the clients than the salespeople, given the constant interaction between the Circulation people and customers. Had the Circulation people known about the problems of the company to sell ads on the Special Editions, perhaps they could have come up with the idea of promoting the Special Editions themselves before the top management. Instead of proposing to send the complete Friday Packet to the whole organization, which could cause a lot of time spent in reading through the reports, our recommendation to Continental is to foster the communication between related departments, such as Sales and Circulation, by setting a weekly meeting between both departments to discussing important aspects of the Friday Packet.

As such, Continental Medias interactive control system was not able to handle strategic uncertainties that could derail long-term profitability.

According to Robert Simmons, the first criteria of a successful interactive control system is that it must reforecast future states based on revised current information. Continental Media must continually evaluate changes between expected and actual results and seek to understand why there is a change. The current set of management information tools provides a platform, such as the Flash Report, to capture future estimates, but is not utilized to capture budget revisions. Even though management grasps the four changes in business, their revised expectations are not captured by the control system.

The second design consideration of an interactive control system is that the information must be displayed or communicated in a simple way. The management information tool implemented by Continental Media group was contained in a Friday Packet, which included different reports and it was prepared and distributed to managers every week. The reports were simple to understand, but they were also incomplete. (Competitive analysis page 6). The fourth condition that any control system needs to fulfill in order to be considered interactive, is it must trigger revised action plans. Continental Media Groups management information tools actually allowed it to take actions based on discussion findings. For example, each of the three innovations for 2008 (fractional four-color advertising, regional tie-in advertising, and freestanding inserts) was a direct consequence of decisions made after appropriate use of the management information tools in place. Therefore, such tools work as a real interactive control system in this regard. Strategic Uncertainties: Ad revenue for the company is heavily reliant on industries exposed to economic cycles that lead to advertising cuts by customers. They realize Financial services

category continues to be a problem in meeting revenue goals (however community banks are holding up, not targeted community banks and regional lenders mid market segment is a real opportunity), special editions they dont have information on potential advertisers to target (sales people are focused on short term, day to day sales, salespeople shouldnt just wait for managers to ask about a particular project or issue, but theyre too busy), circulation people are selling (they should be doing market intelligence, sales lead and sales support) Main issue is that the systems produce reactive measures rather than proactive The control system used by Continental Media must collect and generate information that relates to the effect of strategic uncertainties on the strategy of the business. The major strategic uncertainty faced by the company is being heavily exposed to economic cycles that lead to advertising cuts by its customers; therefore, the information it gathers and uses must not only tell the story of what happened in the past, but also help them foresee changes in industry to generate new clients and adapt to the strategies and interest of its current clients.

Do patricia harkins and Cathleen Greene use the Friday packet to implement intended strategies or to stimulate emergent strategies?

(a) the teams recommended solution, (b) possible alternatives and reasons for your choice, and (c) possible consequences of proposed actions