Encyclopedia Britannica Inc.(A) In 1768 Colin Macfarquhar and Andrew Bell publish what they called a ―Dictionary of Arts and Sciences‖ - Encyclopedia Britannica, Inc (EBI). Its mission was ‗ serving society‘s need to know‘. By 1815, when the fifth edition was published, the set had ballooned to 20 volumes from earlier 3 volumes. Throughout the 19th century and into the 20th, when the company was purchased by Americans and moved to the U.S., EBI continued to enhance its reputation as the premier source of knowledge. The company recruited notable scientists and scholars, including Thomas Malthus, Sigmund Freud, and Marie Curie, to contribute. It expounded upon such cutting-edge topics as taboos, anarchism, ether, and Darwin‘s theory of evolution. As demand mushroomed, it hired a permanent editorial staff and began printing—and updating—annually. In 1943, William Benton extended the company‘s global reach and expanded its product line, acquiring in the process Compton‘s Encyclopedia and dictionary publisher G. & C. Merriam. In 1981, EBI entered the digital age, it offered an electronic version to business users of LexisNexis In 1989, the company moved further into the electronic age when it published Compton‘s Encyclopedia on CD and the target audience was schools and libraries. Still in the same year, the company boasted 2,300 sales. EBI moved door to door, talking with individuals and families. By 1990, the company‘s sales revenues hit a new high—$650 million, and the 32-volume set remained the standard to which other encyclopedias around the world aspired. During the early 1990‘s, the software giant Microsoft decided to enter the encyclopedia market. Microsoft released it on CD-ROM in 1993, the product, called Encarta. Many computer manufacturers simply gave it to buyers of their computers as it was sold at less than $100. Encyclopedia Britannica Inc.(B) In 1993, EBI responded to microsoft’s entry by Selling its compton’s unit Publishing the entire text on a 2 cd set. Making no changes in the consumer mkt The company was in financial trouble by1996 and hence Jacob Safra acquired the firm. 1. Describe the strategy and tactics of EBI as of 1990? -EBI was formed in Scotland during ―information age‖. EBI continued to enhance its reputation as the premier source of knowledge. The company recruited notable scientists and scholars. EBI offered electronic or digital version of the product only to business users and refuse to offer its products to nonbusiness users such as schools, libraries, and the users with individual interests. But later EBI expanded its market share by making schools and libraries as the main target by offering Compton‘s Encyclopedia on CD. EBI using marketing strategies from door to door (door to door), talk to the whole person or family, then attempt to influence or encourage them to invest in the Encyclopedia Britannica which is the storehouse of all science. The implication can be seen in the company‘s sales revenues that reach $650 millions. 2. Why was EBI’s business model so successful for more than 200 years? -From the EBI‘s history, we can see that EBI created solution by knowing the market‘s needs. Start with the ‗information age‘ EBI understand the insight that people will soon need information, so EBI came up to provide it. Encyclopedia is an expensive product, not all people can buy it. EBI understood this situation and soon offered a weekly installment to ease the consumers. After all, EBI did it very well by always watching the situations and conditions that happen in the market and EBI always looking for some ways to give the best solution. 3. How vulnerable was this model in the early 1990’s? - This model was highly vulnerable in 1990‘s as it entered the electronic/ digital media. The product of EBI is encyclopedia in book form. Of course this form has two main weaknesses. Firstly, it is hard to edit the information in the book if there is a mistake(s). Secondly, the information never stop, there will be so many new information originating. And EBI doesn‘t really keep attention on this, and this vulnerability attacked soon by Microsoft with its CD-ROM encyclopedia that easy to edit and add and was cheaper too. 4. Should EBI respond to Microsoft’s moves? If so, how should EBI respond? Why? - YeSeeing the lower price and the ease of reaching the product that provide by Microsoft‘s Encarta, EBI being a market leader should respond to Microsoft‘s moves. If EBI don‘t do that, maybe EBI will soon loss its customers. The easy way to respond Microsoft is by releasing a CD-Britannica, but still EBI has to maintain on its encyclopedia books because not everyone able to buy a computer too at that time. After all, researching the market (consumers and competitor‘s moves) and knowing the potential matter inside the company itself are important 5) What control systems would you recommend for EBI so that the company can understand the potential for transforming its business model? A control system is way(s) that is created to control the activities of an organization. Before EBI control the system, firstly EBI has to make the strategy formulation in transforming its business model. To make the right strategy formulation, EBI ought to see the internal and external factors faced by EBI at that time and EBI should forecast every possibilities that would happen in the future for each strategy that EBI‘s going to take. After the strategy formulations created, EBI should make a right and tight system to control the implementation of those strategies The company should go for a fully centralized IT system so that it can transfer its business model into the electronic age and make buying and selling of books on electronic media very simple. It needs to have its own website to transform its business model and make it fully electronic and digital. ________________________________________________________________________ Encyclopedia Britannica Inc.(B) 1)How effective was EBI’s response to the threat of the digital revolution? EBI‘s response to the digital revolution was not at all effective. EBI responded by: 1 selling its comptons unit for $ 57 million 2 publishing the entire text of encyclopedia on a 2 CD set and offering 3 yr 2 workstation license to businesses only for $ 2100 3 making no changes in the consumer market EBI created the encyclopedia CD rom for the consumer market. The company offered the Cd freee to consumers who bought the print set ( which cost Britannica abt $200-$300 to produce compared to $1.50 for a CD ROM ) however the company charged $ 995 if the customer wanted just the CD but still annual sales and revenues continues to slide. Britannica was available online to university faculty and students at a price of $2000 per year but the moderate families opted for the less expensive Microsoft CDs. Thus EBIs response was ineffective . 1) What strategy should Jacob safra follow to get EBI back on track? EBI can be brought back on track by reducing the subscription fees . It also needs to change its model and bring about bundle pricing i.e offer a lower price when multiple items are bundled together. A subscription base pricing where an annual fee for unlimted access is charged can also be incorporated. It can also incorporate a strategy where base product is free but advanced products are charged. Time base pricing is another technique that can be incorporated. Also Britannica should go for a site offering selective search engine targeting high quality web sites.All these efforts can bring Britannica back on track. 2) What would be your recommendation for control systems for EBI? EBI should go for value chain analysis so as to analyse cost revenue and assets in each activity which in turn would help to achieve cost cum differentiation strategy. As EBI falls in the ? category of BCG model EBI should try and increase its mkt share. Its should use cost reduction techniques such as reducing the cost of advertising, R&D and sales force and it should go for online advertising. EBI should do proper industry analysis as it faces severe threat of substitutes, intense rivalry among the competitors and the threat of new entry. Encyclopedia Britannica Inc. (C) 1)Evaluate EBI’s Internet Strategy and tactics EBI launched a new internet service at www.britannica.com. The company planned to earn revenues from advertising, including sponsorships for topical features called ―Spotlights,‖ and a percentage of goods sold through ecommerce. Unlike EBI‘s subscription service, which tapped the 231-year old archives and was marketed primarily to schools and libraries, the new Web site targeted Internet users more broadly, and included links to more than 150,000 approved Web sites. EBI also began negotiations with partners to furnish information and services to the site – such potential partners included Amazon.com and bn.com. We‘ll try to cut through the clutter of the Web, give you information you can depend on, and not force you to become an expert on how to search the Web. Britannica‘s site won‘t be elitist but won‘t be for everybody. We‘re looking for people with a certain kind of intellectual curiosity.- a spokesperson said. Sales from Britannica Store, the online outlet for EBI‘s products and tie-ins gave additional revenues. These included CDs, DVDs, reference books, clothing, and a variety of science and nature products ―chosen for their educational and entertainment value 2. Are there lessons from the EBI saga that are relevant to brick and mortar companies? Yes there are many lessons that are rekevant: 1 protection of the business units market share and competitive position 2. updating the business with the latest trends in the industry 3. proper industry analysis need to be done such as intensity of rivalry among existing comopetitiors, threat from substitutes , threat from new entry etc 4. transform the business model depending on the needs and trends in the technology. Learnings: Understanding which strategy need to be adopted at what stage. Proper industry analysis should be done based on porters 5 forces model.