Professional Documents
Culture Documents
Before discussing the stated questions, I will analyze the strategic issues and strategy of
For Walker and Company, profitability is a main issue. Managers eyes focus on
profit. To achieve a goal of profit, they need to carefully consider growth and control
at the same time. In this case, employees may give no attention to any aspects.
Creating good books are likely to be a priority for people in a publishing company.
The company has to develop a performance measurement and control system which
Ramseys strategy seems short-term focus and lacks a long-term vision of the
business. Even though the company has the long history and longstanding
employees, it doesnt mean that all people in the company are doing their job with a
clear image of the future. Again, a person in a publishing company tends to care
about his/her books and readers with a short-term view. The company needs to
develop a way to communicate to the employees the long-term strategic goals of the
There is a significant tension between the owners (Ramsey and his two brothers) and
employees and customers. For the employees and customers, strong financial
big deal for customers of the company. The employees dont necessarily have a
strong passion to words like ROI, ROA, and gross margin. The company must
For a small company like Walker and Company, management time and attention are
George Gibson has a variety of tasks and should manage both editorial and sales and
marketing parts as President. More focus on financials could derive his time and
attention from editorial efforts. Given that editors probably have few experiences in
not be a reasonable option for the company. Walker and Company has to develop a
simple performance measurement and control system to save valuable but scarce
Walker and Company must consider basic assumptions about human nature described
in our text book. Especially, people in a publishing company often have a strong
commitment to their motivation. I used to work for a small publisher when I was an
achieve their goals to make great books. It was the time when the company was
growing. Then, the growth stopped. It was a very specialized publisher.
Nevertheless, it tried to respond the situation by focusing on more specific areas and
reducing the number of new titles. It couldnt let employees see enough opportunities
for the future. As a result, the company lost young, talented people. While this could
happen in other industries, it has a strong impact on the publishing industry in which
Strategy as Perspective
Walker and Company must clarify its mission and vision first. If it develops
strategies without a clear future direction, it will end up with being bought up or gone
Strategy as Position
buyers and customers, many substitutes, low barriers to entrants, and high
beginning to select their customers extensively. Also, the businesses must pay careful
attention to the quality of labor which is a critical factor of success in the market.
Therefore, Walker and Company must thoughtfully examine value proposition and
to lead the company to publish fewer titles in fewer segments. It could be the strategy
Strategy as Plan
Based on the fewer titles in fewer segments strategy, Ramsey Walker set the goals:
10% ROA and free cash flow $500,000 in 1999 and $1 million by 2000. These goals
needed to be communicated with employees as a profit plan. I will discuss about the
How Walker and Company can leverage emergent strategies is unsure. In the current
happen, I didnt see a system to harness organizational learning in the company. With
such a system, the company may take advantage of dialogues between sales reps and
I described the profit plan for childrens books in 1998 in Appendix 1. It was developed
to achieve 50% of free cash flow target in 1999, i.e. $250,000. It is an ambitious plan.
However, a great turn around in cash flow is necessary for the future of the business.
Through the profit plan, the company must communicate with people a clear message
about the strategy that the company will get healthy profit and cash flow and
Exhibit 1 and 2 shows the industry and publishing of childrens books are in
moderate growths. By concentrating resources on high growth lines, the company will
gain higher sales volume per title. A key assumption of this reasoning is a 20% growth of
average sales amounts per new title. Illustrated picture books, photo essays, and black
and white illustrated books had growths of 15%, 18%, and 7% respectively from 1995.
Focusing on illustrated books, the company should enhance the visibility of the products
Compared to large print and adult nonfiction lines in Exhibit 3, childrens book line has a
higher expenses percentage of sales. Even though the fixed expenses from Western line
would be re-allocated, the expenses in childrens line could be reduced by a similar level
Inventory turnover of 2.7 is also critical. Given that accounts receivable could not
be collected any faster and accounts payable could not be stretched any longer, reduction
Total sales (including sub rights income) 5,395,774 665,561 1,802,509 2,109,904 689,168 128,632
1997 1998
Performance Measures
Sales growth % itself lacks many essential factors of the business and so cannot be
and well communicated with employees. The fewer titles in fewer segments strategy
is meaningless unless they can keep selling a good numbers of books. There are
many ways to use sales growth percentage. For example, the company can leverage it
as a benchmark for planning. The company can use it for the decision about mix of
book categories. It can also set target sales amount of each book based on desired
growth rate.
Profit %
Healthy profit is essential for sustainability of the business. But, profit percentage
cant show the effectiveness of the strategy in this case. To measure the value of the
strategic plan, the company needs to observe more specific measures to control the
business.
As stated in the case, unit sales dont show the cost. The company must manage the
cost of books thoughtfully. In addition, the business should monitor sales of each title
not average. It sends a strong message to the employees that each title must meet
sales targets of the year. It also allows the company to respond to the market trends
quickly.
Return-on-Assets
Effective asset management is a critical success factor of the company. ROA could
be a good performance measure for the company and top managements (George
Gibson and Ted Rosenfeld). To earn high ROA, the company needs to take advantage
not a high margin business. Efficient asset utilization and persistent growth are
ROI
Operating Expenses
To capture enough amounts of net profits, the company must streamline the operation
Agenda
How should Walker and Company develop simple, reader friendly financial
The success of the strategy depends on whether the company can make the plan day-to-
day operations of publishing. People in the publishing company are usually too busy to
plan must be reinforced by written explanations about the strategy. Even though the
number of new titles was reduced, the clarification could show a strong commitment to
the growth which is essential to create exciting opportunities for employees. The key
Free Cash Flow = Net Income +/- Change in Net Working Capital
ROA and free cash flow could be managed as annual goals. However, the other three