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Random_House[1] - – Large fixed costs – Almost zero...

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Case questions Five-forces analysis of the industry: Is it a profitable industry? How is value distributed among the players in the value chain? Analysis of Random’s corporate advantage: What is Random House’s strategy? What distinctive advantages do they have? What costs do they incur due to their strategy? Sustainability of Random’s corporate advantage: What are the major threats facing Random? How serious are they?
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Case Takeaways Publishing industry has challenging economics Creative industry: Star authors and best-sellers are critical High level of “clutter”, competition for readers’ attention
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Unformatted text preview: – Large fixed costs – Almost zero growth • Random House’s corporate advantage: – Back-end integration reduces fixed costs – Front-end separation builds relationships with authors and increases scalability • Major threats include: – Saturation and increased competition – Retailers (e.g. B&N) integrating backward – Electronic publishing and e-books • But Random (and other publishers) will maintain position as long as their main resources are intact: – Discovery and search of authors – Editorial design, layout of books – Marketing, advertising, reducing “clutter”...
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