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Strategic Management of Chinese Media SME After Transforming into Enterprises SHU Yiming1, LI Li2 1. School of Management, University of Shanghai for Science and Technology, China, 200093 2. School of Information Management, Shanghai Finance University, China, 201209 [email protected] Abstract: With the further reform of Chinese cultural restructuring and transforming institutions into enterprises in media industry, most of the media small and medium-sized enterprises (SME) are entering the market economy as being enterprises. How the media SME survive and develop in a complex and unfamiliar market environment has become the focus of various communities. To the media SME, the strategic management issues are more important than tactics, which relates to their survival. Based on the strategic management and systems theory, this paper studies the status quo of the strategic management of the media SME, and then builds a strategic management model of the media SME by aiming at the peculiarity of media industry in order to provide a reference for their smooth transition. Keywords: Transformation, media SME, strategic management, core competence

1 Introduction With the further reform of Chinese cultural restructuring, focusing on transforming institutions into enterprises and reshaping market entities, the media industry is quickening its pace in the transformation, merger and restructuring of the publishing and issuing units, the film-making and releasing units, and art troupes etc., and is trying every effort to carry out the system reform in issuing Party newspapers and journals, and to establish the separated relationship between the production and broadcasting of TV and radio programs. The government has been quickening the property rights reform, perfecting corporate governance structure, and establishing modern corporate systems, so that an efficient and competitive mechanism of micro-operation is to be formed in the media enterprises. After being translated into enterprises from institutions, most of the media units will enter directly into market apart from a few absorbed into the media group to create the media “aircraft carrier” by the government Facing a complicated and unfamiliar market environment, media SME will receive triple pressures from international media giants, domestic media groups, and the private media enterprises. It is a great challenge for the media SME without finishing the technology restructuring and upgrading to confront the more and more diversified media means and media carriers typically based on high-tech, digitalization, and networking. Therefore the strategic management issues of the media SME are more important than tactics, which relates to their survival. Any carelessness will cause to be engulfed by the ruthless market. The research on strategic management of ordinary enterprises at home and abroad has been quite mature. In recent years, with the domestic media institutions being changed into enterprises, domestic scholars began to study the strategic management of the media SME. Up to now, studies in this field can be classified into four parts: First, from the strategic view, we should consider the strategic management of the media SME with new values and vision. Researcher Benedetta Prario and Cinzia Dal Zotto have pointed out that the trend of globalization and diversification in the media industry should be concerned, and there is such a fact that media products are manufactured abroad, and strategic decisions are made abroad too[1]. Cao Peng thinks that as a industrial macro-strategy, the ultimate goal of the media industry is not to establish a unified market but a diversified and flourishing market. It is beneficial for the nation and the people to develop the media SME[2]. Second, from the perspective of strategic goal, scholars believe that the media SME must find their own strategic positioning in order to survive and develop well. Zhou Xiaohong argues that the strategic orientation of SME is to put all of their resources on a

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M & D FORUM specific single product or business to become a national and even world’s “singles champion”[3]. Yang Bin holds the view that the small and medium-sized publishing houses have to find their own position so as to survive[4]. Wei Yushan thinks that the development strategies of China’s press and publishing industry should identify the root causes of problems to encourage content innovation, and focus on technology, particularly the development of digitalization[5]. Third from strategic choice the researchers should put forward various strategic models for the media SME. Chen Yi argues that media enterprises should implement a new media strategy to meet the needs of the “Web 2.0” times[6]. Kong Xiangjun creates a “three-dimensional and four-step strategic decision-making program” for the media industry in the “Warring States Period” [7] Song Zuhua holds the view that the top priority of China’s media SME is to strengthen the brand strategy[8]. Wan Muchun takes the “Times Global” as his study object and researches the correlation between the reverse competitive strategy and profit model of the media enterprises[9]. Fourth, some scholars research the strategic management of the media SME from other perspectives. Rajagopalan and Spreitzer think that we should engage strategic change from the integrated aspect, and design an comprehensive theoretical model of enterprise strategic change[10]. Christian Wagner emphasizes the importance of enterprise strategic management system (ESM) in the information society and believes that ESM will provide a strong support for the strategic decision-making of SME[11]. From various angles, Academia has given its concerns in different degrees about the strategic management of the media SME, and has enriched the research content in this field. But there still exists some shortcomings, and we need further study. On the one hand, the enterprise strategic management is a systematic engineering, but the present studies tend to focus on one aspect of the media SME and need systematic research on this issue. On the other hand, they focus on the strategic management of ordinary enterprises and can not cover the special properties of the media enterprises. The value and role of the research are discounted to some extent. Based on the above, this paper applies the strategic management and system theory to analyze the present situation of the strategic management of the media SME. Then combining the characteristics of the media industry, the paper establishes a strategy management model for China’s media SME in order to provide a reference for their smooth transition.

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2 Analysis of the Status Quo of the Strategic Management of China’s Media SME Owing to the short time within which China's small and medium-sized media units participate in market competition with the identity of enterprise, the experience in strategic management is not mature enough to seize the media market trends through the methods of strategic management, thus the media SME can not effectively integrate internal and external resources to enhance their core competitiveness. 2.1 Strategic philosophy: the unity of economic performance and social responsibility China's media enterprises have dual properties of politics and economy, which means that their social responsibility is a very important and sensitive topic. The media SME pay too much attention to their profitability and growth indexes, and have few assessments of the issues of social responsibility in the process of strategic management. Driven by “profit maximization”, some media enterprises have misbehaved by spreading mendacious news and deceptive advertisements, providing vulgar entertainment or violating government’s regulations on public opinions. They have ignored their responsibilities such as social stability, national security and consumer's mental health for the society and people. 2.2 Strategic goal: a clear positioning After being translated into enterprises, the media SME have difficulty in eliminating the impact of path dependence under the institution system and can not form a clear strategic positioning in accordance with market situations. So their strategic decisions are often blind, lacking the analysis of their strengths, 65

M & D FORUM their weaknesses, the opportunities for them and threats against them. They usually follow others blindly, and pursue blindly the “ratings”, “entertainment”, advertising revenue and the scale of operation, etc. Ambiguous strategic objective positioning makes the media SME not only lose their direction of operation but also probably cause serious operational risks. 2.3 Strategy choice: differentiation The media industry includes extensive fields obviously different with each other. Without a universal strategy, this decides that the strategies should be differentiated among different companies in the same industry and within the same company in different periods. The world's leading strategy consultant Mitchell. Robert said: “Enterprises need a distinctive strategy to win”; “Imitation is suicide”. A serious shortage of innovation does not enable China’s media SME to formulate the development strategies tailored to their own characteristics, leading to the convergence of product and business structure, and vicious competition, unable to carry on a competition of differentiation. 2.4 Strategic management system: the overall operation In accordance with “the whole is greater than the sum of its parts”, the strategic management, as a system, considers the resources, the capacity, the professional and the non-professional, and the external environment of the enterprises, etc. focusing on the overall optimal. Without the idea of system theory to examine the whole process of the strategy formulation, implementation, evaluation and manipulation, the various subsystems of China’s media SME can not effectively cooperate with each other, ultimately affecting the healthy running of the entire strategic management system. First, lack of scientific decision-making mechanism, restrictive mechanism and much reliance on experience in strategic decision-making often leads to serious policy blunders. Second, lack of a formal human resources strategy has greatly constrained the technical innovation and management innovation of the media SME. Third, the organizational structure and business strategy does not match with each other, the relationship between which should be that the change of the organizational structure is decided by the strategy changes. With the strategy formulation, China’s media SME do not attach importance to the reconstruction of the organizational structure, and still uses the old authority and communication channels to manage the new business activities. The final result is that the organizational structure can not support t effectively the realization of enterprise strategic objectives.

3 The Theoretical Framework of the Strategic Management of China’s Media SME China's media industry has long been the institutional system and mainly responsible for the political functions, the “mouthpiece” of the Communist Party of China and government, where the economic function was restricted and the strategic management is short of soil for its growth. Having been translated into enterprise, the media SME face a series of major issues such as how to adapt to the role change, to perform correctly the political and economic functions, and to seek survival and development in the market competition, which are closely related with the enterprise strategic management. An enterprise with no strategy, no matter how big its size is and how stable its position is, will lose the survival conditions in this great revolutionary change[12]. Owing to its special property, the media industry can not dogmatically apply the general theory of enterprise strategic management. Based on the analysis of the status quo of the strategic management, it is very significant for China’s media SME to build a strategic management model ( Fig.1), combining the properties of the media industry.

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The so-called strategic management is an art and science to formulate, implement, and evaluate a set of decision-making program that can ensure an organization to achieve its goal and surpass its various functions. The strategic management model of China’s media SME can be divided into three parts: strategy formulation, strategy implementation and strategy evaluation, including six links: description of prospects and mission, analysis of internal and external environment, establishment of long-term goal, strategic analysis and selection, strategy implementation, and strategy evaluation and manipulation. They form an operating system of the strategic management, constantly adjust the deviations in the strategy implementation through interaction and feedback, and finally achieve the strategic objectives. 3.1 Description of prospects and mission The prospects statement and mission statement are the basic starting point of the strategy formulation, implementation and evaluation. The prospects statement mainly answers “What kind of media enterprise we want to be”, which has the role of pooling resources, motivating staff, and then pushing a media enterprise to achieve an outstanding performance. Mission statement mainly answers “What our business is”, which outlines a blueprint for the future development of the enterprise. There is a positive correlation between prospects and mission statements and enterprise performance. According to Business Week, the returns for the enterprises who have prospects statement and mission statements are 30% higher than those who have not. Once having formed and fully disseminating the clear prospects and mission, the media SME will inevitably obtain a kind of deep understanding of the purpose of their existence. 3.2 Analysis of internal and external environment The analysis of internal and external environment of the media SME includes two parts: one is the analysis of external environment, that is to identify the external opportunities and potential threats, and

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M & D FORUM to fully play the role of favorable external factors and effectively avoid the negative ones through the analysis of economy, politics and law, technology and competition, etc. The other is the analysis of internal environment, that is to take the advantage of the media SME and turn disadvantage into advantage through information collection, collation, and evaluation about enterprise management, marketing, financial accounting, etc. 3.3 Establishment of long-term goal Long-term goal is the desired result after the implementation of a specific strategy. The goal should be as quantified, challenging, hierarchical and acceptable as possible, and can coordinate the relations among various departments of the media SME. Meanwhile, each goal should have corresponding timing. Long-term goal often use some indicators, including asset growth, sales growth, profitability, market share, social responsibility, etc. The clearly expressed objectives can point out the direction and priorities, encourage the staff, and reduce uncertainties and conflicts. 3.4 Strategy analysis and selection Strategy analysis and selection is a process of choosing an action plan which enables enterprises to better achieve their mission or goals through analyzing the advantages and disadvantages, costs and profits of a series of strategic alternatives according to the enterprise’s mission. In order to determine an appropriate strategy, the media SME should encourage various functional departments and employees to participate in the process, giving full play to their creativity. 3.5 Strategy implementation Strategy implementation means changing. “The real work is only started after the strategy formulation”. Successful strategy implementation requires the support, discipline, motivation and hard work from all managers and staff. Strategy implementation should consider the match between organizational structure and strategy, the mutual link among performance, income and strategy, and create organizational circumstances conducive to change. Moreover, it should cultivate a supportive culture and be helpful to human resources management. 3.6 Strategy evaluation and control The strategy evaluation and control is the key to the strategic management process for Media SME. Owing to the shortage of intellectual resources or the market environment changes, the media SME often suffer deviation from their strategies. Thus, a complete strategic management process must include strategy evaluation and control to ensure that the actual results meet the requirements of the predefined objectives. The strategy evaluation and control include the examination of the internal basis of enterprise strategy, the comparison of actual results and expected results, and corrective measures to ensure the consistency between action and plan.

4 Conclusion In the “big vessel/carrier” and the “capital operation” times, China’s media SME, merely in the “weanling period”, have no choice but to attach great importance to the strategic management to break the impasse so that they may achieve a healthy development. An enterprise that does not have an unified strategy will be doomed. Every enterprise consciously needs to create and make known their clear objectives and strategies. China’s media SME need to known their own role correctly. “Small is good, small is beautiful, and small is dynamic and competitive”, Schumacher says in his book “small is beautiful”. As an intellectually intensive industry, the media SME are bound to become a major innovation power and therefore have more prominent advantages. The media SME should find their right position, taking “professional, sophisticated, special, and original” as the precondition. According to their professional 68

M & D FORUM features, traditional advantages, personnel structure, marketing channels, market environment, and many other factors, the media SME should find their own room for growth in some market segments and formulate a practical strategic planning. In the meantime, the basic work such as strategy selection, strategy implementation, strategy evaluation and strategy feedback should be done well, which enable the media SME to grasp firmly the regularity of the media industry market to become an innovative, competitive market economy entity. In the strategic management, the media SME should reflect and actively fulfill their social responsibilities, which are determined by the essential attribute of the media. Social responsibility is a kind of “strategic investment”, and the source of the core competitiveness of the media SME. Bertelsmann Group has regarded the fulfillment of social responsibility as its ultimate goal since its founding, which brings Bertelsmann Group great innovation power and international reputation so that the group has overcome critical obstacles one after another and has created a chain of world-famous brands, and in the end, it becomes a global media giant with tremendous influence.

References [1]. Liu Xiaoyan. The Globalization and Diversification of the Media Industry. Journal of International Communication, 2006(6): 5-15(in Chinese) [2]. Cao Peng. China’s media industry needs “aircraft carrier”, also needs “dinghy”. The Journalist Monthly, 2009(9): 45-48(in Chinese) [3]. Zhou Xiaohong. Nurturing “singles champion”: The New Development Strategy for SME. Truth Seeking, 2006(3): 51-54(in Chinese) [4]. Gong Gui. The Development Strategies of the Small and Medium-sized Publishing Houses after Restructuring. China Publishing Journal, 2010(5) : 16-19(in Chinese) [5]. Wei Yushan. Reflections on Development Strategy of China’s Press and Publishing Industry. Publishing Research, 2010(5): 5-7(in Chinese) [6]. Chen Yi. New Media Strategy of Associated Press. Chinese Journalist, 2007(8): 79-81(in Chinese) [7]. Kong Xiangjun. Media Strategy Management in the “Warring States Period”. Modern Communication, 2006, 141(4): 92-95(in Chinese) [8]. Song Zuhua. Brand Strategy of the Media. Journalism Lover, 2006(12): 28-29(in Chinese) [9]. Wan Muchun. On the Link between the Reverse Competitive Strategy and Profit Model of the Media. Gansu Social Sciences, 2007(5): 218-220(in Chinese) [10]. Nandini Rajagopalan, Gretchen M. Spreitzern. Toward a Theory of Strategic Change: A Multi-Lens Perspective and Integrative Framework. Academy of Management Review, 1996, 22(1): 48-79 [11]. Christian Wagner. Enterprise strategy management systems: Current and Next Generation. Journal of Strategic Information Systems, 2004(13): 105–128 [12]. Li Xiangyin. A Model on Business Strategic Management: Strategy-Culture-Structure. China Industrial Economy, 2002, 172(7): 79-83

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