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411 Case Study: RR Donnelley

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sam lionheart

on 3 April 2012

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Transcript of 411 Case Study: RR Donnelley

R.R. Donnelley & Sons:
The Digital Division GrC 411 Case Study Bryce Beatty
Samantha Lionheart
Michelle Onizuka
Duyen Pham
Michael Shedd Today, We are on ONE team.
Our mission is to:
Educate
Participate
Succeed Our vision is:
A future full of understanding. And Cookies. Mission Statement 1991 mission says: Our strategic vision offers three pathways in which to grow and create value:
Expanding businesses through strategic partnerships;
Developing new business lines and added-value services;
Advancing global through acquisitions, joint ventures and startups." Where does R&D, or a brand new Digital Division fit in to this mission? Financials Strengths
Established long relationships with customers
RRD stands as one of the world’s largest commercial printers
Costs less per unit then offset/web or gravure
Strong sales force team with nearly 500 people
Long-term relationships with customers; 70% of business was based on contracts of 3-10 years
Filmless printing technologies eliminated intermediate steps; allowed for shorter runs, 4-color printing, customization, low cost and fast turn around
Research and development Weaknesses
Lack of cross-training between divisions, sectors and companies
Most, if not all management came from sales
Digital was primarily seen only as a division
Digital division did not produce expected results; low profits
Costs were higher than expected
Weak connection across divisions; not one technology or information system worked across the company or across groups in a sector Opportunities
Huge VDP runs
1995 digital growth forcasted at 16% annually
Electronic warehouse and distributor with print on demand capability
Eliminates roughly 60% of book publishers thoughts
Locate near point of sale
Target consulting firms and ad agencies to influence clients
Customers are interested in digital printing Threats
Emergence of smaller printing companies embarking in the digital world
Quality/price advancement of digital print that could compete with offset
Rise in new technologies
Reduction in job quantities
Lack of demand; unfilled space at empty plants Quotes RRD is very profitable but where is the money going?
Research and development
Investors and Stakeholders
Digital(?) Financials: WWYD?
(What Would You Do?) Financials Activity Average dividend = 0.55
Average Share Cost = 1.67
Net Margin = 0.05494 History
Originally founded in in 1864 in Chicago
They began as a family-run private printing company but went public in 1956
Specialized in large web/offset and gravure
1991: Roy Cowan named executive vice president; pushed for creation of Digital Division
1995: became the world’s largest commercial printer, with 41,000 employees in 22 countries
Business groups were lumped into three sectors: Commercial Print, Networked Services, and Information Resources
Company is now organized into 38 different divisions, 8 business groups and the 3 sectors Quadracci Quips: Video Wisdom Focus: Donnelley is used to longterm long-run offset contracts, can they also branch out to digital? Ready, Fire, Aim! Get out there and try new things.
Put forth effort, reward big failures, not small advancements. You can't buy a list of satisfied customers Great sales force
Customers interested in digital/data management already
Current satisfied customers are prime candidates Pathogenic Paradigms The larger the run, the cheaper the run,
the better the run. Keep your department to yourself "Take intelligent risks" Build plants/equipment for a product/contract “Without a strategy, a company is like a ship without a rudder, going around in circles. It's like a tramp; it has no place to go” “Most of us fear change. Even when our minds say change is normal, our stomachs quiver at the prospect. But for strategists and managers today, there is no choice but to change” “Strategy must have continuity. It can't be constantly reinvented.” “If a man takes no thought about what is distant, he will find sorrow near at hand. He who will not worry about what is far off will soon find something worse that worry” Current Status
Had a Digital Division with a facility up and running in Memphis, Tennessee by June 1995; sales had increased to $6.5 billion by the end of the year
Sales were below expectations in 1996, but they were ranked the top printing company in the U.S.
Executives decided to close down the Digital Division in Memphis in 1997 instead of continuing to invest in it
Announced that instead of operating stand-alone facilities, they want to incorporate digital printing into the larger print plants
In 1997, William Davis, a senior executive member of the Emerson Electric Company, was announced as the new CEO
Still heavily invested in new technologies and other businesses
In 2004, R.R. Donnelley merged with Moore Wallace and purchased several other companies including OfficeTiger, and Banta Corporation in 2007 Video Bargaining power of suppliers
Bargaining power of customers
Threat of new entrants
Threat of substitute products
Competitive rivalry within an industry Porter's 5 forces BIG issues Support
Support
Support! Doctor's orders! Recommendations Absorb a Digital Startup Restructure Donnelley Divide the Digital Division Thank you for your time!
Questions? COOKIES! SWOT
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