Sandesh

Sandesh is a leading daily newspaper in Gujarat. It is published in Gujarat and was founded
in 1923. The Ahmedabad based Gujarati newspaper is also published from Mumbai,
Vadodara, Bhuj, Surat, Rajkot and Bhavnagar. Sandesh has 9 supplements which are
published Sanskar, Nari, Ardha Saptahik, Nakshatra, Cine Sandesh, Kids World, Shradha,
Action Replay and Business@Sandesh. The Sandesh also publishes Gujarati weekly and
Sandesh International from Chicago, Illinois, United States. It also launched a Gujarati News
Channel, Sandesh News on 24th October 2013.
Strategy
Sandesh is a blooming regional newspaper in Gujarat. The main strategy is evident from the
fact that the focus of the management has always been profits and cash generation which is
evident from a razor sharp regional focus and deployment of generated cash in profitable
avenues. The company has so much cash to burn and they could use the cash to give out
dividends to its shareholders and instead the company has invested in Applewood Real Estate
Company.
Also their strategy has been to capture the print media and be the market leader in that.

The evidence of the same can be seen from their financial reports where they have been able
to maintain a net income of Rs. 100 500 Crores. Also they are a zero debt print and media
company with cash and cash equivalents of more than 100 Crores since FY 2011.
Also another evidence of the fact that they want to become the largest print newspaper in
Gujarat is that they were at 3rd, behind Divya Bhaskar by just 1% as of 2011, and at 2nd as of
now in Gujarat after Gujarat Samachar.
[So what is the strategy? To be profitable is not a strategy but a goal]
Trade-offs
There are various trade-offs which the company is making in one way or the other and the
advantages and disadvantages which are the company is facing based on the trade-offs are
listed below
1. Tradeoffs that the company i.e. Sandesh is making is in terms of medium of news
flow.
2. Sandesh Ltd is focusing only on the regional sector and not trying to scale up and
expand to other states.
3. By trying to keep the ownership to themselves they have just given 12.16% stake to
Times Group, who could have been a major push for the Sandesh group to go global
or at the least national.
4. One of the other tradeoffs can be seen in a little different way. In order to keep the
family ownership running, they have a history of making rash and improper decisions
at times because the managers are not so empowered; rather the family owners poke
their nose in each and every decision, be it big or small.[How did you find this?]
Advantages

There are fewer advantages of the trade-offs that Sandesh Ltd is doing. Few of them are listed
below.

1. Focus on single medium i.e. Print Media keeps them focused in what they are doing
in a narrow way. Their 70% of the focus is on Print Media.
2. Evidence of the above can be seen from the fact that they are the 2nd most popular
regional newspaper of Gujarat.
3. Targeting a single region i.e. Gujarat is better than expanding pointlessly. They had
spent around 30 Crores in order to order new printing machinery so as to compete
Divya Bhaskar and defeat them and hence become the 2nd largest/most popular
newspaper in Gujarat.
4. Also the focus on building cash has been their main aim that is the reason why they
keep on investing money back into the business or take up new ventures like investing
in Applewood Real Estate Company.
5. They have been one of those very few media companies who have managed to be in
huge profits with considerable Cash Flow.

Disadvantages
There has been some criticism of the trade-offs done by the company outside as well as inside
the company. Few of them are listed below.

1. With too much focus in Gujarat and restricting Times Group to take major stakes, they
have restrained themselves from going National, providing them a chance to even
earn more.
2. Also in order to keep the family ownership in place and to be present in all decision
making, they have developed a negative feeling amongst their employees. It is evident
from the reviews given by the employees on various job portals.
3. The common consensus of the employees is that the owner does not value their
contribution and take the final decision on their own.
4. Investing major part of the money in the business and not giving any dividends is also
one of the problems with their tradeoffs.
5. In todays era where social media and television news is more preferred, Sandesh Ltd.
Is still relying majorly on their print media.
6. As stated by one of the ex-employees, the confusion of the directors and internal
politics creates a lot of hindrance to electronic media which is caused by the print
media division itself.
[Trade off analysis is good]
VISION
At Sandesh we are partnering entrepreneurs and seeding their visions with the power of our
belief. We are aggressively growing businesses by bringing our in-depth strategic insight,
technological know-how, and execution capabilities to form Joint Ventures across various
sectors like the Bollywood Film Industry and Real Estate. Thus fortifying ideas and helping
build a better future.
The strategy of Sandesh has been to maximize its profits and cash generation hence they are
aggressively increasing their business by reinvesting the money back into their business and
also by making investments heavily on various profitable avenues like Bollywood Film
Industry and Real Estate etc.
MISSION
To become the largest print newspaper in Gujarat.
This can be seen in their strategy as they are mainly focusing on the regional sector and have
no plans of expansion to other states. Also they have not shifted their focus from print media
so as to become market leader in that area.
Industry Analysis Newspaper Industry
Today, in much of the world, newspapers have lost their sheen. India is perhaps among the
few countries where this is not the case. One can still be able to spot the odd building owned
by a flourishing local newspaper. Indeed, in India, there are more than 82,000 newspapers in
publication. How has the countrys newspaper industry managed to buck the global trend
where digital media is gradually taking over print media.

Last year Indias newspaper industry grew by 8%. Elsewhere, sales and advertising revenues
are contracting. In India, print publications account for a whopping 43% of all corporate
advertising. Between 2010 to 2014 advertising revenues from newspapers in India rose by
40%. Most of this growth is driven by vernacular newspapers. Rising literacy rates coupled
with localized content coverage explains the sustained spike in regional newspaper sales.
Physical newspapers have also flourished in part because their online versions have failed to
woo Indias 400m internet users. There are many reasons to this like broken links, shoddy
user interfaces and ads masquerading as news stories which has put readers off. Many 24-
hour TV news channels, too, are parodied for covering fluffy news. Newspapers give more
clarity to readers who are confused and looking for the facts after watching shrill debates
on TV news channels, said Arun Jaitley, Indias finance minister recently.

Some more reasons for success of newspapers are:

Newspapers also go to great lengths to cut costs. To utilize excess capacity, Lokmat, a
top-selling Marathi newspaper, uses its factory in Maharashtra to print Maharashtra
Times, a competitor.
For a small fee, vernacular newspapers tie up with rural entrepreneurs to distribute in
smaller towns and villages.
 Customers also obtain discount schemes and benefit from selling the paper back to
scrap paper dealers. And newspapers continue to have a strong social and cultural
significance.

Porters Five Forces Analysis

In order to devise a strategy and follow it, a company needs an extensive analysis on the
Porters Five Force Model. The various aspects included are:

1. Threat from New Entrant

2. Threat from Competition
3. Threat of Substitution
4. Bargaining power of Supplier
5. Bargaining power of Buyer

All the above mentioned five parameters are quite instrumental in knowing the condition of
the industry a company is functioning and its position in that particular industry.

Now, Sandesh Ltd. is basically a regional player who has 70% focus on Print Media and 30%
focus on E-Media. In an era as of now this industry is quite dynamic and there are many
dynamics at play.

1. Threat from New Entrants

In India where media is either controlled by business houses or by political parties just
like in the rest of the world, it is not very difficult to set up a News/ Media firm. Though
capital and sources required to run it are high but then too the entry barrier is not that
high. The current proof of the same is Arnab Goswamis new channel being launched as
Republic. Also new entrants can cover more grounds by focusing on E-Media. In a state
like Gujarat where literacy and governance is high, E-Media is the future.

2. Rivalry Among Existing Competitors

Competition in an industry is what keeps it afloat. In the news segment, there are many
players, National as well as Regional. Regional competition faced by Sandesh Ltd. is
from Divya Bhaskar and Gujarat Samachar. Sandesh has to be on its toes in order to
counter any new technology or methodology brought in by any of the two. That is the
reason why Divya Bhaskar and Sandesh keep on swapping positions. Also major national
players like Dainik Jagran, Dainik Bhaskar, Times of India, Hindustan Times etc. are also
a threat to Sandesh.

3. Threat from Substitutes

 Sandesh as mentioned earlier is focused 70% on the print media which can work to its
disadvantage. In the todays modern era where tablets and phablets have replaced the
laptop and desktop, everything is on the go. According to data of about 64 million
population of Gujarat only 3.9 million read Sandesh printed newspaper. So the major
substitute it has is the E-Media. All major newspapers have their full-fledged websites
and mobile apps. This is where Sandesh lags behind.

4. Bargaining Power of Buyer

It is quite evident from above three analyses that the buyer has a high bargaining power in
this case. The news that happens in the country and covered by the entire major news
agencies are nearly same. There is not much difference, moreover if there is a little
divergence from quality news then there are so many players that the buyer has a pool of
options to switch to. Also with the current advent of Apps offering free news content in
real time, the bargaining power of buyers is going higher.

5. Bargaining Power of Supplier

There are two types of Suppliers for the newspaper industry news content and raw
materials to print the news. Most of the news content is being provided by sources like
ANI and PTI. Since, there are very few news providers and a large number of buyers, the
bargaining power of these suppliers is high. There are large number of suppliers who
provide raw materials to print the news. Hence, their bargaining power is low. Moreover,
the media is moving from physical to virtual space, the power of these suppliers is
decreasing.
[Support your claims by hard facts everywhere in the report. ]
Core Competencies
Swadesh is one of the leading regional newspapers in the state of Gujarat. Since their
inception in 1940s their major focus has been on Print Media. They have been juggling with
the 2nd and 3rd position. Their core competencies as stated by them are:

Focus on the print media by bringing up to date machinery for printing the newspapers.
Focus on presenting the truth and not bending it to increase readership.
They carry the value-based journalism and nationalism as their forces which run them.
They want to pursue the truth and present value based journalism, with professionalism so
as to be reliable among their readers.
Also in a very competitive environment they have kept themselves connected to their
roots and projected the truth, also focusing on print media. It is now that 30% of their
focus is on E-Media.
[What is the core competence from your analysis? Are the above mentioned things
competencies? Or are they decisions/tradeoffs]
VRIN/VRIO Framework Analysis

VRIN framework i.e. Valuable, Rare, Inimitable, Non-substitutable is a framework for the
analysis of the resources of a firm. It basically gives an idea of the competitive advantage that
the firm has over the others in its industry.

A more modified and accurate analysis is now given by VRIO model instead of VRIN model.
Here Non-substitutability is replaced by Organization.

Value It tells how expensive a resource in the market is.

Rareness It tells how rarely it can be found.

Imitability It tells the difficulty level in imitating the resource.

Organization It tells whether the organization is concentrated/organized around the

resource or not.

(Source: https://managementmania.com/en/vrio-analysis)
In the news media industry, the resources that are possible are the machinery used to print the
news i.e. the print media, expertise to exploit the e-media, credibility of the sources providing
news, etc.

Sandesh Ltd. is no different than others of its industry. Its focus is mainly on the print media
which is slowly and steadily shifting towards striking a perfect balance between print media
and E-Media. The resources which Sandesh has are Valuable but neither Rare nor Difficult to
Imitate but it matters whether Sandesh Ltd. has organized itself and its operations around it or
not.

1. Machinery for print media is valuable as without proper and recent technology no one can
survive in this industry as it is needed to print the news keeping the operating costs low.
2. Expertise to handle the social media is also valuable but neither rare nor non-imitable.
But Sandesh has not yet fully aligned themselves around this resource. Still their major
focus is print media.
3. Customer experience is something which can and will provide them longer competitive
advantage. Exploring viewers choices and aligning themselves according is extremely
necessary and Sandesh have managed to do that just fine.
4. Propensity for Innovation can also be seen as a resource as it depends how one can
innovate to provide news in a better form. For example, in-shorts the android app has
found a very innovative way of presenting news in a limited 60 words. This can be
considered a point where Sandesh ltd. is lacking.
5. Credibility of the sources providing news is one of the most important resources that a
news channel or news agency should have. It is valuable but again neither rare nor non-
imitable. But if a firm aligns itself around this resource then definitely they have a long
term competitive advantage. Sandesh ltd. in the local/regional landscape have been
successful enough to show the importance of this resource and their alignment or
organization around the same.

[Good discussion but some data/facts must be given]

Game Theory
The game theory will be analysed based on the impact on the readership of the newspapers if
Sandesh or the competitor reduces or increases the price.
The competitor considered here for the game theory is Gujarat Samachar.
Average Issue Readership of Gujarat Samachar is 44.49 lakh and that of Sandesh is 32.32
lakh.
Now we will consider two cases 10% reduction in profit margin, 20% reduction in profit
margin.
Assumption:
Both the players have a maximum capacity of 125% of the average readership.
So, Maximum capacity of Gujarat Samachar is 55.62 lakh
Maximum capacity of Sandesh 40.4 lakh
Profit margin 10%
The increase in readership of a particular newspaper will increase in proportion of the
reduction of the profit margin from its competitors.
Same data is available with both the players
Case I
10% reduction in profit margin
If both the players reduce the price, then there will be no change in the number of readership.
Profit = profit Margin * Readership
Donot change 10% reduction by Gujarat
Samachar
Donot change profit margin 3.232,4.449 2.908,4.295
10% reduction by sandesh 3.309,4.009 2.909,4.004

Case II
20% reduction in profit margin
Donot change 20% reduction by Gujarat
Samachar
Do not change profit margin 3.232,4.449 2.585,4.076
20% reduction by sandesh 3.232,3.641 2.585,3.559

If Sandesh reduces its price by 20%, then based on the proportion 20% of the readership will
shift to Sandesh. So the news readership should be 41.218 lakh. But the capacity of Sandesh
is 40.4 lakh. So Sandesh maximum readership will move to 40.4 only unless Sandesh
increases its capacity. So the remaining (41.218 40.4) will stay with Gujarat Samachar only.
From both the cases we can conclude that Gujarat Samachar should not reduce its price such
that its profit margin reduces by 10%.
[Nice attempt, only your group has attempted this]
Conclusion
Along with being a game of loyalty, Print Newspaper is a business which can sway a little
based on price. So according to our assumptions and situations considered, we suggest that
irrespective of its competitors price, Sandesh will be better off if it reduces the price of a
newspaper such that its profit margin comes down by 10%, because in this case the total
profit of the company will grow.

References
https://en.wikipedia.org/wiki/Sandesh_(Indian_newspaper)
http://deshgujarat.com/2011/06/20/top-ten-daily-newspapers-of-gujarat-as-per-the-irs-
q1-2011-report/