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Adapting to Organizational Change January 31, 2007

Posted by breichen in Merger, Organizational Culture, Organizational Design, Organizational Environment.
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http://money.cnn.com/2007/01/25/news/companies/time_bonnier/index.htm

Time Inc. is a division of Time Warner, and publishes about 150 different magazines worldwide. They are the leading magazine publisher in both the US and the UK. In recent days, Time Inc. has made a deal to sell 18 of its magazines to the Bonnier Magazine Group, a Swedish Firm. The New York Post has reported that the sale is worth about $200 million. The deal will also force Time Inc. to cut the jobs of 300 employees.

Obviously this deal will affect both organizations in a significant way. This is just one example of how an organization’s internal structure can change at any time. At Time Inc., management will have to adjust to a number of changes including the loss of revenue from the 18 magazines sold, smaller organizational size, etc. Bonnier Magazine Group, who acquired the magazines with its U.S. magazine partner, World Publications. With the addition of 18 new titles to its lineup the company will be publishing over 40 titles and will receive over $350 million in revenue, making it one of the bigger publishers of magazines in the US.

Obviously management must consider the effect a decision will have on the organization as a whole. Whenever a decision is made certain changes will occur and the organization and its culture have to adapt to these changes.In this case, Time Inc. must deal with downsizing, while World Publications and the Bonnier Magazine Group have nearly doubled the amount of publications they release and presumably increased the size and scope of the organizations a great deal. It goes without saying that things will have to change within the organization, and that management needs to shape the organization based on the results of their decisions.

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Comments»

1. wilson7 - February 6, 2007

It is going to be interesting to see what happens to both Time Inc. and Bonnier Magazine Group because this is going to be a enormous change for both companies. This type of change to Time might extremely lower the employee moral of the company, other employees might start wondering if their next and begin looking for new jobs. On the other hand, this might increase the moral of Bonnier Magazine employees because they know that their company is going to be around for a while. So I am waiting to see where this goes.

2. Stephanie - February 7, 2007

My first reaction to your post was why is Time Inc. selling? Upon reading the article myself is says:

“This transaction underscores Time Inc.’s commitment to focus our energy, resources and investment on our biggest and most profitable brands.”

I guess the company got too big to handle. At least they recognized the situation before it become a problem, and in addition were able to capitalize on a great sell to Bonnier. I still wonder if there was anything in particular that sparked the agreement.

It is also interesting to note that
Terry Snow, CEO of World Publications, said: “We’re committed to building high-quality brands through exceptional editorial products, whether in print or online, and the potential to be the leading multimedia resource in our new and existing special-interest areas is very exciting to us.”

As my blog last week was about the controversy between printed materials and online articles, I find it interesting that the CEO seems nonchalant about the company’s products being provided online. The focus on the product itself is important, but I wonder what changes will be made in the future regarding putting their products online.

3. Jordi - April 3, 2007

Terrance and Stpehanie hit on a lot of good issues.

It would be nice to know what titles are being sold. Is the sell-off due to too much horizontal differentiation? Did that add coordination costs? Or, are there alternative explanations?

Also, what are the management challenges for Bonnier? Why is this horizontal differentiation going to help them while it was a burden for Time Inc?

Also, how does this relat te the larger history of Time-Warner-AOl and the “unmerger” of old and new media?


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