HONGKONG ECONOMIC DIFFERENTIATION SYNOPSIS

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DIVERSIFICATION

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A daily financial newspaper The Hong Kong Economic times founded in 1988 has grown in to a diversified media group known as the Hong Kong Economic Times Holdings Limited. It was successfully listed in the Hong Kong stock exchange in 2005 consistently striving over the years on creating sustainable diversified business portfolios and attaining the market leader position in every sector it entered. The study talks about the entrepreneurial spirit of the founders and professional lives before their paths crossed in the 1980s during the period of the Hong Kong economic boom. The blue ocean that HKET exploited was the sole focus on business news, clear-cut sections and unique editorial policy. Further it talks about Hong Kongs Newspaper Industry focusing on the reader preferences. It also enlists the pro-Beijing, mass-market and elite newspapers enjoying high credibility ratings. In 2002 Metro International launched the free paper concept generating revenue only from advertisements. The competitors followed suit but the high end market remained unaffected. Next came the IT revolution which led to alternatives to the newspapers, as a result of which advertising share in newspapers fell. But in spite of all this there was a year on year growth in advertising revenue in newspapers. HKET realized the vision to become a diversified media group and one of the preeminent financial and business information and services providers in Greater China. The Management Structure of HKET and differentiation policies has been discussed followed the achievements and results. To inspire business creativity Fung used the Four Guiding Principles, Identified rising stars to head projects and the three stage process for converting the Business Idea to a Business Launch. Important aim of HKETs every diversification and differentiation program was to be the Number one in every sector they enter. Key Issues Growth of HKET from a daily newspaper to a diversified media group. Entrepreneurial spirit of the founders. Blue ocean strategy implementation by HKET during the founding years of the newspaper.

Hong Kongs newspaper industry. Free papers and Online Media Concept. HKETs management structure. HKET growth policy o Four guiding principles of diversification o Rising Stars concept o Business idea to business launch phase wise process Focus on differentiating to be number one in the sector it enters. ANSWERS Q.1. Briefly identify external factors that have impacted newspaper industry in the past 20 years. How have diversification and differentiation strategies sustained business growth for the HKET group? The external factors that have impacted newspaper industry were: 1. Competition For a small population of 7Million there were 49 newspaper and 752 periodicals with different content and patterns, and the industry for newspaper alone was not growing. 2. Online Media The advent of internet, mobile phones and PDAs and availability of e-newspaper and online news affected the user segment of 18-35 age as they wanted new on the go and this concept became very popular with them.Hence the print media bore the brunt as major advertisers went for advertisement through online media. 3. Alternatives Few newspapers came up with the concept of Free Newspaper which ate in to the advertising revenue of the paid- for newspaper as free newspaper gained more popularity and got a major share of advertising spend of various industries and corporates. 4. Readers Criticism Hong Kongs citizens lost respect for the media as they believed that they were accentuating violence and pornography in their news .They accused the media of intruding into privacy and following paparazzi style instead of core and true news for the readers.

5. Economic Downturn The recession combined with the bursting internet bubble led to low spending in advertisements which was the main source of revenue for the newspapers 6. Pressure to diversify and be differentiated With increasing affluence and changing interests of the people ,the newspaper had to broaden its horizons and change at a faster pace like providing glossy newspaper with news from luxury fashion and celebrities , provide news from neighbourhood community and bring online news with education for readers. Right from its inception , HKETs followed its core principles of listening humbly to the customers , focussing on critical resources of each business unit and striving to excel in overall market .Its directors believed that diversification without differentiation would not yield anything and it followed four principles where every employee was precious and so were their ideas ,the ideas were were judged and assessed and allotted to a team to commit itself to its success by growing it to become the master in its vertical. Its diversification and differentiation initiatives are as follows 1. ETBC -To provide financial education and earn money from sponsorships and enrolments. 2. EPRC To cater to growing Property market with all the details and knowledge 3. ET Press HKET ventured into book publishing initially for investment, finance and business topics and later catered to the youth with WHY publishing for new ideas. 4. ET Net It had three components to cater to customers in Hong Kong and China and t a) HK Quotation business b) Mainland China quotation business c) Web business To provide financial news through online platform 5. Career Times To provide news about jobs and recruitment 6. HKET Advertisements Limited To provide advertising services to its mainland customers through its publications They ventured into number of business with the need of customers.

Q.2) Evaluate the HKET Groups business growth using Kim and Mauborgnes Blue Ocean Strategy The HKET group entered the newspaper industry solely focusing on the financial news of the industry. They came up with a newspaper which had factual and quality data catering to an elite class of readers who wanted less of the spectacular content. Also it being a neutral newspaper the readers were able to read content which was unbiased and not favoring the government. The guiding principle in its growth strategy had been to differentiate each new product to ensure a sustainable diversified business portfolio. The Blue Ocean Strategy was implemented as follows in the journey of the group Eliminate 1) It eliminated the need to follow the concept of mass market newspapers trying to lure in wider audience by providing irrelevant content. 2) It eliminated the need to lower its rates when the free newspaper concept was booming. 3) It did not follow the industry trend and offer free news online. Reduce: 1) It reduced on general content by providing only financial news. 2) It made clear-cut paginations to avoid excess irrelevant content. 3) The idea generation policy was such that ideas were filtered on predefined policies which reduced the ideas to vital few which had the made the difference. Raise: 1) All of HKETs business units had a predefined aim to become market leaders in the sector they enter thus raising the groups image as a whole. 2) The content provided by HKET was always above industry standards in terms of quality and facts. Create: 1) Chinese language equivalent of the Financial Times.

2) Only newspaper to focus solely on business news, there was no point of reference for this new product. 3) In terms of layout, Hong Kong Economic Times was the first local newspaper to provide clear cut section paginations 4) Proved that a daily newspaper company could even become a media group comprising of functions including publishing and multimedia services, financial news agency, information and solution services, recruitment advertising and training.