Discussing the implications of the digital “era” to the strategic positioning of the New York

Times applying Jay B. Barney’s “Looking inside for competitive advantage” (1995)
by Ana Luísa Silva, Daniela Plácido, Davide Ippolito, Hans Hosenfeld, Iara Sobral and Soraya Cansse

Traditionally, the process of strategic management was focused on the environmental and internal forces
with which a firm is confronted. These external environmental opportunities and threats combined with
the internal strength and weaknesses of a company were summarized within the SWOT analysis. There
are several tools for analysing the external environmental opportunities and threats, such as Porter’s
Five Forces1 or the PESTEL analysis. However, there are fewer tools which focus on the internal
strengths and weaknesses of a company. Thus, Jay B. Barney suggests in his paper “Looking inside for
competitive advantage”2 an approach to analysing the competitive implications of the internal strengths
and weaknesses of a company, particularly the firm’s resources and capabilities to add value by enabling
the exploitation of opportunities and neutralization of external threats. According to Barney, the main
considerations when analysing the company’s resources and capabilities are the questions of the value,
rareness, imitability of the offerings and the organisation of the firm.
Applying this internal analysis framework to the case of the newspaper New York Times, the traditional
main competitive advantages were the qualitative content of their articles and the consequently positive
reputation and reliability, not just in the USA, but across the world as well. Furthermore, the New York
Times was one of the only newspapers that could claim to have a nation-wide distribution network in
the USA. Nowadays, with all the changes brought by the digital “era”, the New York Times’ traditional
competitive advantages are no longer meeting the market requirements as they did in the past. Indeed,
the quality of their articles and the brand reputation can still be considered as valuable assets.
Simultaneously, whilst they provided high-quality articles back in the day, they were only competing
with a few national newspapers and several ones on a regional level; the competition has now intensified
due to the easy access to a worldwide audience online. Therefore, the formerly ensured rareness of the
New York Times’ offerings has consequently become less rare and has thus weakened its competitive
advantage. Many young newspapers are also actively targeting their audience with customized articles
and news, often at an even cheaper price. Since better-suited offerings for target audiences have a higher
value for the consumers, additional pressure is put on the New York Times regarding the perceived
value of their articles. Pursuing the initial strategy and the same framework in a changed environment
ultimately led to a drop in the company’s revenues of nearly 50% from 2008 to 20143. When considering
the major shift from offline towards online consumption of news and information, traditional
newspapers need to revise their formerly established competitive advantage. The application of Barney’s

1
Porter, M. (2008) The Five Competitive Forces that Shape Strategy. HBR January.
2
Barney, J. B. (1995) Looking inside for competitive advantage. Academy of Management Executive, Vol. 9,
No. 4, 49-61.
3
New York Times Company, Inc. 10-K reports, 2010 and 2014.
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four questions can provide a framework to elaborate a sustainable positioning exploiting the
opportunities and neutralizing the threats this shift might implicate for the New York Times.
Even though the New York Times noticed the opportunities and threats of the internet back in 1996 by
launching their first website, they could not keep pace with the disruption in the newspaper industry.
Only in 2014, the New York Times reacted by implementing structural modifications and adapting their
business model in order to sustain their competitive advantage.
Mark Thomson, the CEO of the New York Times, executed his new digital strategy throughout the
company, where major organisational and personnel changes were made by letting go of personnel who
did not share his vision on all levels, and promoting and acquiring personnel to cater to digital offerings.
This, combined with the launch of several mobile apps and other previous initiatives to migrate towards
a digital strategy, led to a total of 910,000 online subscribers in 2014, and digital advertising accounted
for 27% of the New York Times’ total advertising revenues3.
Nevertheless, the flexibility, innovation and especially the more favorable cost-structure, allowing
younger online newspapers to provide their audience with faster and cheaper information, will be
difficult to match by the New York Times, while simultaneously maintaining its renowned high-quality
content. In terms of a competitive advantage to ensure a profitable market position, new strategic fields
and business models might be more promising to match its resources and capabilities. One possibility
could be the shift from providing information to the general public towards the supply of customized
intelligence to corporations or educational institutions. Regarding the application of Barney’s analysis,
it could create a valuable offer through customized information thereby better meeting the customers’
preferences as well as selling more pertinent advertising. Increasing revenue streams and profitability
would consequently create opportunities to increase the offering’s value by e.g. further investing in its
quality or by reducing the price for the end customer. It would additionally increase the rareness; due to
a limited number of high-quality information providers, using the established brand reputation and
customer loyalty could help to cater to uncovered market segments. The brand reputation coupled with
the journalistic quality are the main factors which would render imitation difficult for potential followers
and market entrants. The New York Times would not need to adjust their organisation as much as if
they were trying to compete in the online news segment. In this way, they could exploit this opportunity
with existing resources and capabilities rather than try to imitate online newspapers, which were initially
designed with a lean organisational culture to best fit online journalism.
To sum up, with the shift from offline to online, the New York Times’ competitive advantage was
weakened due to the changing market environment which led to a more diversified and intensified
competition. In order to reach a profitable positioning within this changing digital environment, a
favorable market segment for the New York Times could be the specialization towards being a supplier
of customized intelligence. This approach must continuously evaluate their key offerings considering
the aspects of value, rareness, and imitability as well as their own organisational structure, and stay
willing to adjust its competitive advantage whenever necessary.