Foundations of Planning: Local job cuts and outsourcing by Fairfax Media

Back to bit more of a sober tone this week after last time’s gaming excitement.

To begin this time…

…refresh your understanding of the principles of strategic management that are explore on pages 84-100 of the text. Once you’ve done that, read this article, consider the summary below, and then answer the questions at the bottom of this post.

In summary…

…company planning is usually done in the secrecy of boardroom meetings: strategies are not usually announced openly, but can be inferred based on a company’s actions. The actions described in this article are well known: local job cuts and outsourcing.

The article covers a recent decision by the troubled Fairfax Media, to cut a third of their editorial positions in regional NSW (Newcastle and the Illawarra) and move them offshore to New Zealand. This decision was met by great disappointment and anger of the local communities.

Cutting jobs is a result of planning activities, which may not always be revealed to the public. In this case, the article identifies some motivators for these cuts: a reduction in the classified and display advertising across the printed media. This means that one of the major sources of income for the company has been seriously reduced. Fairfax is trying to address this decline in income by reducing its costs.

Yes, less money is coming through the traditional channels of the print media. This is a trend that would be identified during an external analysis (p. 89). The job cuts are clearly made in response to this threat, but, don’t forget, managers must keep their eyes open to spot opportunities. The future of print media may not be so gloomy, particularly in regional communities, as can be seen in this study published by Columbia University.

Some issues to notice and pay particular attention to here are…

• Types of planning approaches evident in the article
• Company goals that can be inferred from the article
• Elements of strategic planning – strengths, weaknesses, opportunities, and threats
• Types of strategies

Consider the following questions for discussion…

1. From the article, what types of planning has Fairfax undertaken prior to the elimination of the regional editorial positions?
2. From the article, what company goals can you identify? Which are the stated goals and which are the real goals? Based on what, can you tell them apart?
3. What elements of strategic planning are evident in the article? What elements are missing? How would you, as a top manager in Fairfax, use these missing elements?
4. The job cuts are part of what type of strategy (Table 4.2, p. 91)?
5. Based on the additional information on the future of print media, what do you think of the job cuts? Are they justified? Would you support them? How would you address this decline in income?