Strategy Formulation by Mc Graw Hill to Deal with Changing Macro Environment

This document discusses the strategy formulation by Mc Graw Hill to deal with the negative impacts of the changing macro environment with the break of COVID pandemic. It includes a PESTLE analysis, SWOT analysis, and Porter's five forces analysis. Recommendations are provided to effectively deal with the dynamic external environment.

BBS003-1
Foundations of
Business
Communication

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PESTLE analysis:............................................................................................................................3
SWOT ANALYSIS:........................................................................................................................4
Porters five forces analysis:.............................................................................................................5
RECOMMENDATION...................................................................................................................6
CONCLUSION................................................................................................................................7
References........................................................................................................................................8

INTRODUCTION
Mc Graw hill is a learning science company that is delivering learning experiences and
helping students, partners, educators and professionals to drive the named results. Mc Graw hill
is a organisation that is presently facing certain issues that are arsing because of the biggest
challenges that are taking place in the industry. There are certain issues that are faced because of
the present changing environment because of the COVID 19 situation (Babey, , 2020). So there
is a need to make a detailed evaluation of the different factors with regards to the changing
macro environment. The report deals with a case study based on how there will be strategy
formulation by Mc Graw hill to deal with the negative impacts of the changing macro
environment with the break of COVID pandemic.
MAIN BODY
PESTLE analysis:
Political factors: Mc Graw hill is affected by the changing nature of political environment in
united states economy that is continually expanding and there is expectation of market for
professional education resources to grow among the industry sectors.
Economic factors: There has been a situation of significant government expenditures in
education, low college graduation areas and insufficient placement of jobs in United kingdom
has resulted in the additional economic and social cost that has resulted in increasing aggregate
per capital student loan debt and higher incidents of default (Brown, , 2020). Students in UK are
succeeding based on the higher competitive global markets.
Social factors: With the changing external environment McGraw hill education will be
focussing on use of a data driven approach of improvement of outcomes and innovation. It will
lead to engagement of students with offering them high level of personalised learning
experiences.
Legal factors: There is a shift of McGraw hill education to a multi year license that may affect
their comparison with GAAP revenue as Compared to prior periods and lead to increase or
decrease on the sales that is reflected in the operations on a delayed basis.

Environment factors: The external environment is changing very fast and there is need to focus
on making a detailed analysis of the impact of lock downs, supply chain disruptions and the
changes in customer behaviour that is going to affect McGaw hill in the coming time period
(Chaturvedi, 2020).
Technological factors: there has been a significant enhancement in the operation cost of
McGraw hill education that is not leading to make investment on updating the technology and
they are just using the common software platforms for their technological up-gradations.
SWOT ANALYSIS:
Strength:
 The present merger of McGraw hill education and cengage will lead to enhancement of
brand image and there will be no overlapping of products that is going to benefit them
having a shared vision and development of digitally enhanced platforms of learning
(Carbaugh, 2020).
Opportunities:
 With the present outbreak of coronavirus there is a potential of the market to grow by
6.96 billion dollars in the coming time period of 2020-2024 because of the growth
momentum of market is expected to accelerate with the forecasted period because of the
study growth year.
Threat:
 There is a risk of substantial portion of credit facilities that have to be refinanced and
ext6end in the coming time period of 11 months is that most of the credit facilities can be
extend to a time period 23 months.
 The COVID 19 pandemic may result into higher issues of funding and higher education
institutions may result in delays and altercation of classes. There can be further
contribution to materially lower education enrolments. All such factors could result into
lower demands and reduction of overall profitability and revenue for a particular time
period.
WEAKNESS:
 Mc Graw hill is willing to capitalize the market by expansion of portfolio of technology
enabled adaptive tools & learning solutions. But they are having one common software

platform and architecture. This may not lead to development of greater custom solutions
and analysing of the learning data in the present situation (McGraw hill education, 2020).
Porters five forces analysis:
Bargaining power of suppliers: McGraw hill education is suffering from the issue of not
being able to retain the key authors and talented personnel that is required to enhance the
competitiveness & growth. Further McGraw hill education is not bale to reduced the cost of
print product as facts as revenues from those products whose demand is declining.
Threat of new entrants: There is a high threat of new entrants as the COID pandemic has
resulted into enhancement of opportunities in digital sector instead of traditional classrooms.
Bargaining power of customers: With the evolving of educators and learners there is
higher focus on more effective learning solutions so that there can be enhancement of learning
tools that is a central feature of the digital learning solutions. Adaptive learning is based on
cognitive since and educational theory (Gonzales, McCrory Calarco and Lynch, 2020). It has
lead to reduction in the overall bargaining power of customers.
Threat of substitution: The changing nature of education companies can affect the
present position of McGraw hill education . The focus on digital products and technology may
result in the emergence of additional competitors and higher substitution threat for McGraw hill
education (McGraw hill education, 2020,).
Industrial rivalry: In the present scenario according to Lindsay McKenzie, 2019 The two
major competitor brands that is McGraw hill education and cengage are planning to further
merger and operate under the brand name of McGraw hill. These two big players of the industry
are planning this merger to deal with the high competition. This merger will lead to meeting of
equals.
From the above discussed scenario it can be said that the unites states of the higher
education there is pace of digital adoption that is rapid for all the end markets and lead to success
of sales for adaptive offerings. It has created a 300 basis point enhancement of higher education
market share of McGraw hill education from year 2013 to 2019.

RECOMMENDATION
Strategies that can be used by Mc Graw hill to deal with the threat of dynamic external
environment:
There are some of the strategies that can be formed by Mc Graw hill in order to effectively deal
with the situations of fast changing environment:
 The trend of globalisation has lead to demand for high level of education attainment in
international markets. Mc Graw hill is selling English language product cross 100
countries. Further there can be expansion in developing countries. As many developing
countries English is being focused as to be used a universal language.
 Mc Graw hill the portfolio of proprietor content that has been developed over 125 years
has lead to building up of a Market leading title hat is based on the foundation of
transformation in large & a brand that is based on growing of digital learning solutions
provider. The top 10 product categories that is representing 50 present of net sales of Mc
Graw hill can be used to extending the portfolio of traditional printed products and new
digital solutions to incorporate the existing content & curriculum.

CONCLUSION
From the above mentioned scenario it can be summarized that the present threat of
COVID Pandemic as affected every industry and for achievement of a competitive position there
is need to invest in new products & new ways to further deliver them. In some cases investments
in new products & distribution channels may be less profitable is there is need to focus on
effective Strategy formulation on part of organisations. It will lead to dealing with the
competition from large industry participants and new market entrants there is high risk due to
rapid changes on the markets and industry.

References
Books & Journal
Babey, A.M., 2020. Doing your research project. A guide for first-time researchers: by Judith
Bell with Stephen Waters, Berkshire, UK, McGraw-Hill Education, 2014, 273 pages (306
including the Glossary, References and Index),(paperback), ISBN-13 978-0-3352-6446-9.
Brown, K., 2020. Introduction to Health Physics, Author: Thomas E. Johnson. McGraw‐Hill
Education, New York, 2017. Paperback: 944 pp. Price: $66.51. ISBN
9780071835275. Medical Physics, 47(4), pp.2044-2044.
Chaturvedi, S., 2020. Essentials of Management: by Harold Koontz and Heinz Weihrich.
Chennai: Tata McGraw Hill Education, 2015, 540 pp., Rs. 647, ISBN: 978-9-3392-2286-4.
Carbaugh, B., 2020. The Decline of College Textbook Publishing: Cengage Learning and
McGraw-Hill. The American Economist, 65(2), pp.284-299.
Gonzales, A.L., McCrory Calarco, J. and Lynch, T., 2020. Technology problems and student
achievement gaps: A validation and extension of the technology maintenance
construct. Communication Research, 47(5), pp.750-770.
Online
McGraw hill education, 2020, [Online], Available through<
https://s22.q4cdn.com/942918855/files/doc_financials/2020/Q4/MHE-2020.03.31-Annual-
Report.pdf
Rival Publishers Join Forces, 2019 [Online], Available
through<https://www.insidehighered.com/digital-learning/article/2019/05/02/cengage-and-
mcgraw-hill-merge