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The publisher Random House, a fully owned subsidiary of the German family company Bertelsmann SE & Co. KgaA, faces significant changes in its markets and internal structure. While printed books have been the company’s core competence from its earliest years, with the advent of the Internet, customers, especially in the West, are beginning to prefer electronic books. Will printed books be completely replaced by digital ones, or will e-books remain a niche market? How will this development affect production, distribution and marketing? Will Random House be able to compete for authors and sales with such online e-book giants as Amazon? The imminent merger with the U.K. publishing house Penguin also provides an opportunity and incentive to expand Random House’s operations into China as part of the internationalization strategy of the parent company. A post-merger integration plan must be established since the two publishers’ regional presences and product offerings are in part complementary. How can the new Penguin Random House strengthen its position as the world’s biggest and most successful publisher?
The case is intended to be used in strategic management and international management courses at the undergraduate or postgraduate level for students with some experience in developing strategies for international companies. ·To implement strategies for product development in the case of e-books and create a market entry strategy for the Chinese e-book market. ·To prioritize problems and actions based on the strategic framework of a management holding company. ·To understand the company’s value chain to achieve success in the book business.