Rr Donelley
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Basically, what is this case about? What are the critical issues?
This case is about R.R. Donnelley, the largest commercial printer in North America. The companys core business had long been printing magazines, telephone directories, and catalogs in the United States. They experienced slow growth in the late 1980s as its core printing business matured. Growth in subscription and advertising pages had been stagnant, especially since alternative media was becoming more popular, thus reducing demand for printed material.
Looking into this issue, Donnelleys CEO, John Walter looked into one possibility, to move into publishing, which however, received a poor respond in North America until he viewed Central and Eastern Europe as the most promising opportunity for geographic expansion after the Berlin Wall fell in 1989. Demand for high quality printing was expected to grow rapidly in; printing and publishing assets were cheap, local competition was weak, and few of Donnelleys competitors or customers were present in the region.
How do the macroeconomic variables impact on the profitability of the project? What are the relevant variables?
The macroeconomic variables will impact the future success and sustainability of Donnelleys business including its entry strategy in considering which countries would be the most attractive for the company. As mentioned in Lessards article, Frameworks for Global Strategic Analysis, by understanding the macroeconomic variables, the company is analyzing the global strategic frameworks at four levels: the geographic scope of the industry, the competitiveness of various locations, the geographic reach of the firm, and the global integration vs. local focus of specific activities. Therefore, Donnelley will understand the challenge it was facing in each region, what were the strengths and weaknesses of each country that enabled Mauck – the appointed person to investigate the regions – to summarize and rank the countries based on its political stability, long-term market potential, and business and investment infrastructure. These factors will furthermore give detail information on the market size, the challenge the company will be facing through the government regulation, legal procedure and whether there were strong local competition presence in the countries.
All of the factors mentioned above will determine if the countries are attractive enough to pursue or if it is feasible for the company to open its business and capture a considerable market size to generate revenue and what investment size the company would needs. The most important thing for Donnelley in analyzing the macroeconomic variables is to find out if its business will be sustainable if the company enters the Central and Eastern Europe market.