question:حالا فصل بعدی (به انگلیسی روان) : Chapter 10 Company Size, Operational Type, Ownership Structure and Business Strategy: An Analysis of Taiwanese Satellite Channel Companies Li-Chuan (Evelyn) Mai Ming Chuan University Since the Taiwanese Government amended the CATV Law and introduced the Satellite Law in 1999 (Taiwan Daily, 1999), the satellite and cable television (CATV) industry has been successful in attracting both local and foreign entrepreneurs, and their presence has translated into more competition. STAR TV entered the market in 1991, and “STAR TV Chinese” was the first foreign channel to be broadcast via a CATV system. Successively, TVBS, Discovery, HBO, CNBC, Disney, ESPN, NHK, Super TV, and so on entered this market. These companies compete with domestic satellite channels, and competition has been very intensive since the 1990s. Therefore, how to formulate the business strategies in order to survive the environment is very important for both domestic and global satellite companies. This research reviews the development of the satellite industry and market structure in Taiwan, analyses the business strategies in companies of different sizes and ownership structures, and attempts to investigate the relationships among company sizes, ownership structures, operational types and business strategies. Porter’s strategic model was applied to examine the business strategies of these satellite companies. BACKGROUND In Taiwan, the development of the satellite channel industry is closely linked to the CATV industry. The major development of the satellite television industry occurred after the Taiwanese government introduced the Cable Television (CATV) Law in 1993 and the Satellite Law in 1999. The satellite and CATV 140 Mai - Company Size, Type, Structure and Business Strategy markets attracted many investors, including foreign operators, who led the market into intense competition. But in the 198Os, before the Taiwanese government legitimised the CATV industry, some illegal CATV stations utilised satellite dishes to receive foreign satellite channels, including NHK 1 and 2, WOWOW, and China Central Television. Those satellite channels were re-transmitted without the consent of the copyright owners. Therefore, the Taiwanese government used the “Broadcast and Television Law” to confiscated these illegal CATV stations’ facilities and prohibited the installation of satellite dishes without permissions. Not until 1988, did the Taiwanese government legalise “little ear” (small satellite dishes). In 1992, the government allowed the private ownership of “middle and big ears”. In the early 199Os, the distribution of domestic channels relied on physical transportation, such as aeroplanes, trains, and taxis, to deliver their videotapes. When the global satellite channels were launched in Taiwan, the operators of the domestic channels started transmitting via satellite in order to compete with foreign channels. All of domestic satellite signals were up-linked via satellite transmissions from outside Taiwan. The reason was that the Taiwanese government did not regulate the satellite businesses. On the other hand, Taiwan was not allocated a satellite quota (the sovereignty of Taiwan is not recognised by most countries, and its diplomatic and other resources are allocated to the People’s Republic of China). Therefore, all up-links were done through foreign satellite channels from Singapore, Indonesia, Hong Kong, Indonesia, and India. In 1995, the Taiwanese government permitted channel operators to up-link their satellite signals from Taiwan, and this policy allowed the operators to save some costs. In 1990, there were about 20 channels in Taiwan (China Times Express, 1990), and most of the programmes were transmitted to CATV systems through landlines. In 1995, there were 200 channels, including 70 transmitting via satellite (Tsaur, 1995). In 1996, the number of channels had reduced to 120, most of which were distributed via satellite transmission (Yang, Kwan, & Mai, 1996). As a result of the intense competition, the number of channels was further reduced to just over 100 by 1999, with satellite channel operators having consolidated into about 30 companies. According to the latest (1999) survey by the author, the number of satellite channel operators has stabilised at around 30 companies, but they now offer just over 80 channels. About half of the broadcasting rights were owned by the three largest firms in the satellite channel market; China Trust offers 13 channels, ReBar offers 14 channels and Filmate offers 18 channels. Mai - Company Size, Type, Structure FOREIGN SATELLITE and Business Strategy 141 CHANNELS IN TAIWAN “STAR Chinese” was the first satellite channel launched in Taiwan (Feng, 1998:95), and it was watched by most people with CATV systems. “STAR TV”, the main company, was founded in Hong Kong and owned by a Cantonese entrepreneur, Chia-Chen Lee. In 1995, Rupert Murdoch (News Corporation International) took over the company and aimed to penetrate the greater Chinese satellite TV market further. Therefore, STAR TV provided STAR Chinese to CATV systems for free, later providing “STAR Plus”, “STAR Mandarin Movies”, “STAR Western Movies”, “STAR Sports”, “STAR World” (Western drama) and “Channel V” (music channel), increasing the cost of subscription for each additional channel, a typical Murdoch strategy employed in developing BSkyB in Europe. Other satellite channel operators were also interested in the Taiwanese market. In 1993, Hong Kong TVB co-operated with the Taiwanese-born Fu-San Chu to establish the TVBS TV stations, providing the “TVBS Satellite channel” (a drama channel). They then founded “TVBS+I” (a news channel), “TVBS-G” (a comedy and lifestyle channel), “ERA Sports” and “ERA Business”. HBO, CNN, CNBC (a business channel) and CBS Hour (an American Comedy channel) were licensed to TVBS. The competition in the satellite channel market suddenly became intense. Furthermore, in order to expand distribution efficiently, most global channels were licensed to domestic channel agencies or companies (Liu, 1997: 9). For example, NHK was licensed to the “Commercial Group”. The Taiwanese broadcasting copyright for TNT, the cartoon channel, and Discovery belonged to China Trust, one of the largest CATV companies. ESPN and the Military Information Channel belonged to the Tan-Tun Company, while Disney belonged to the “Po-Hsin” company. These domestic agencies owned most distributing channels, were experienced in distributing videotapes or films, and had good connections with CATV stations. Only STAR TV, MTV, Singapore TV and Discovery established branches in Taiwan and promoted their channels to Taiwanese subscribers and produced local programmes, but distributions still relied on their domestic channel agents. Even though the quality of the Taiwanese domestic channels improved, the global satellite channels achieved greater popularity in Taiwan, particularly HBO, MTV, Disney, and ESPN. Following market growth, global satellite channels continued to expand into the Taiwanese market, including Cinemax, Hallmark, TV5 (French channel), and BBC during 1993 to 1995. National Geographic channel had been broadcasting since 1998. However, some of these channels have been withdrawn from the market, such as CBS Hour, the Military channel, TV5, and BBC (Liu, 1996). Meeting the copyright fees for the popular 142 Mai - Company Size, Type, Structure and Business Strategy channels meant raised subscription costs every year. Therefore, to formulate suitable business strategies are important for these satellite channel companies. LITERATURE REVIEW Strategic management is focused on how the resources and skills of a company should be used to achieve goals (Bennett, 1996: 3; Chandler, 1962; Child, 1972; Chisnall, 1995: 181; Lorange & Vancil, 1976; Thompson, 1993: I), increase performance (Gunnigle 8z Moore, 1994), and accomplish long-term objectives (Dubrin & Ireland, 1993: 143; Faulkner & Johnson, 1992: I7), and to be able to estimate external risks and environment (Hunt & Lambe, 2000). Business strategy is concerned more with adaptive management processes, planning, and actions, as from deliberative, rational, conscious, and intentional actions and thinking (Bailey & Johnson, 1992; McGrath-Champ, 1999; McCarthy, Markides, & Mintzberg, 2000; Mintzberg, 1978; Mintzberg, 1994; Mintzberg & Frances, 2000), and excellence in the implementation of strategies in order for the company to perform well (Thompson, 1993: 1). Business strategy has been frequently studied since the 1960s (Kay, 1993: 6). The most influential model of business strategy was presented by Porter (1980: 13-39), and was applied in a number of studies (Bauer & Colgan, 2001; Fitzsimmons Jz Fitzsimmons, 1994: 46; Gunnigle & Moore 1994; Hit, Ireland, & Hoskissan, 1997: 123-131; Silva, Lisboar & Yasin, 2000;) although his model was seriously criticised by some academics (Bowman, 1990: 53-54; 1992: 6483; Chan-Olmsted & Jamiso n, 2000; Pruet 8z Howard, 1996). Some scholars have continued to develop other strategic models, they are either with broader and vague definitions or with narrow perspectives that has made further application difficult. For instance, Greiner and Schein (1989: 46) adopted three categories to classify strategies, namely “using social networks”, “playing it straight” and “going around the formal system.” “Using social networks” includes establishing alliances and coalitions, dealing directly with key decision-makers, etc. “Playing it straight” involves using data to convince others, being persistent, and focusing on the needs of a target group. “Going around the formal system” is concerned with working around obstacles preventing progress, not necessarily using organisational rules. These three aspects of the model could not be distinguished clearly one from another, and two or three different strategies may be adopted at the same time. For example, the “playing it straight” of the strategy sometimes involves using social networks. Furthermore, several other models have been proposed, including linear strategy, adaptive strategy, and interpretative strategy (Thompson, 1993: 20). Mai - Company Size, Type, Structure and Business Strategy 143 Linear strategy focuses on achieving goals. Adaptive strategy is concerned with the development of the relationship between the firm’s capabilities and resources for exploring business opportunities. Interpretative strategy presumes that the firm and its environment are clearly correlated, and managers continually respond to changes in the industry to ensure the success of their business. These aspects of the three models are vague. Companies plan strategies mostly aimed at achieving business goals, but whether they are linear or non-linear it is difficult to judge. For example, Helms, Dibrell & Wright (1997) found that there is not a linear relationship between competitive strategies and business performance and demonstrated that the adoption of a low cost strategy and differentiation is not inconsistent with higher profitability. Moreover, MacMillam (1998) applied the game theory to strategic development. Game theory focuses on the reaction of other players in a particular situation, i.e., a company must pay careful attention to its competitors. This model is narrowly focused, concentrating on competitors and ignoring the business environment, company capabilities, and other relevant factors. Therefore, these models are not appropriate to this research. Many academics (Bauer & Colgan 2001; Bennett, 1996: 66; Bowman, 1990: 54, 1992: 65; Bowman and Johnson, 1992; Dobson & Starkey, 1993: 62-63; Dubrin & Ireland, 1993: 144; Fitzsimmons 8z Fitzsimmons, 1994: 46; Gunnigle & Moore 1994; Hit et al., 1997:123-131; Segal-Horn, 1992; Silva et al., 2000; Smith, Arnold & Bizzell, 1991:263) have subsequently applied Porter’s model to develop and discuss strategic models. Until now, his model has been widely adopted by most scholars (Silva et al., 2000). As a result, Porter’s generic strategic model is applied to this research. Porter (1980: 13-41) argued that business level strategies should take into account the three generic strategies of cost leadership, differentiation, and focus. Overall cost leadership strategy focuses on producing a highly standard&d product, with the aim of becoming the lowest cost producer in the industry, with the product being the cheapest in the market. Differentiation involves a firm producing clearly differentiated products for customers, that means they have a unique position in the market. Focus strategy targets a particular group of buyers or a geographical market. Porter (1980: 42) emphasised that the three generic strategies can be altered, but no two strategies can be adopted at the same time. He regards being “stuck in the middle” of two strategies as an extremely poor strategic situation. Porter’s argument is challenged by some researchers. They question the notion that the adoption of two strategies would lead to a company being “stuck in the middle” and the failure to develop a clear strategy. For instance, Bowman (1990: 53-54; 1992: 64-83), and Pruet and Howard (1996) attempted to examine Porter’s arguments. Bowman (1990: 53) states that 144 Mai - Company Size, Type, Structure and Business Strategy a cost leadership strategy should consider the firm’s skills and resources, structure and system, culture, style and values, because these factors determine whether the firm can adopt the strategy. He (1992: 64-83) believes that a firm may pursue the cost-leadership strategy and simultaneously differentiate its products. Bowman (1992:64-83) notes that Cronshaw, Davis and Kay (1990) also have ideas different from Porter. They agreed that a company frequently adopts different strategies in response to the market, particularly when the market competition is intense. Moreover, Pruet and Howard (1996) doubted the validity and utility of Porter’s approach, which advocated a single generic strategy. Similarly, Chan-Olmsted and Jamison (2000) argue that there are many strategic adoptions in media industries. In practice, Porter’s three generic strategies cannot contain all the possible strategies available to communication businesses. They found, for example, more than three strategies generally adopted by telecommunication operators, such as focus, strategic alliances, cost leadership, best product differentiation, customer-solutions orientation, etc. Although Porter’s strategic model is used by many researchers and professionals, some of them argue that his model cannot be applied to all firms. Consequently, there is a need to examine Porter’s model in the Taiwanese environment. COMPANY SIZE, OPERATIONAL TYPE, OWNERSHIP STRUCTURE AND BUSINESS STRATEGY Some studies have demonstrated that a company’s ownership structure, operational type, and size have a strong relationship with business strategies (Bennett, 1996: 123; Hanly & Cheung, 1998; Mansfield, 1984; Owers, Carveth, & Alexander, 1993: 3-46; Ralph, 2000: 77; Tayeb, 1988: 42). Some researchers have studied the relationships between ownership structures or sizes and the company’s performance (Aw & Batra, 1998; Han & Suk, 1998; Kawahara 8z Speece, 1994; Picard & Rimmer, 1999). A specific strategy can help a company to perform well. In fact, strategies and performance have a cause-effect relation. Thus, this research reviews the relevant literature. Company Size Company size is one accepted definition of 1988:14), as opposed revenues (e.g., Picard of the factors affecting performance. The most widely company size is the number of its employees (Tayeb, to some scholars who define it according to its total & Rimmer, 1999) or capital. Whatever the definition, Mai - Company Size, Type, Structure and Business Strategy 145 company size is related to corporate strength and economies of scale. Sometimes, large companies become difficult to manage, because of their hierarchical structures and slow responses (Picard & Rimmer, 1999). Furthermore, a company with a hierarchical structure has different proceedings compared to a company with a flat structure in terms of strategic planning and decision-making (Mansfield, 1984: 138; Tayeb, 1988: 42-43). Finally, because of different organisational structures, the results of strategic choice and adoptions might be different. Large corporations usually have a complicated structure with built-in inefficiency; therefore, in the 198Os, there was a “wave”; many large companies restructured their organisations, reducing their size or changing the set of operations substantially in order to implement strategies efficiently (Owers et al., 1993: 3-46). In other words, company sizes are significantly related to strategies, as well as to a corporation’s performance and operations. Operational Type Different operational types affect strategic formulations. For example, companies with multi-products may have competitive advantages in operations, including economies of scope, risk reduction, and complementary demand (Hanly & Cheung, 1998). Ownership Structure Top management teams (TMT) are involved in strategic formulations, as are shareholders (Bennett, 1996: 33). In fact, shareholders and founders exert powerful influences on a business, which means that one of the manager’s most important tasks is to balance the various stakeholder groups’ opinions (Lynch, 2000: 467). Consequently, the TMT considers the shareholders’ interests, the resources and the capabilities of the company in formulating management decisions and allocating resources in order to accomplish business purposes or long-term objectives. Some studies have reported companies with different ownership structures have different strategies and performances (Kawahara & Speece, 1994; Han & Suk, 1998). For instance, Kawahara and Speece found that Japanese-owned firms founded in Hong Kong attempt to maintain their Japanese identities and give more weight to Japanese products. As a consequence, these three factors-ownership structure, company size and operational type- all have influences on the strategic adoptions of a company in general. However, whether they affect the strategic formulations of the Taiwanese Satellite companies needs more research. Therefore, the hypotheses of this research are stated: 146 Mai - Company Size, Type, Structure and Business Strategy Hl: Companies of different sizes have different business strategies. H2: Companies with different operational types have different strategies. H3: Companies strategies. with different ownership structures have different RESEARCH METHODS A survey is employed to collect the data of this research in order to examine the different strategies among those of companies with different operational types, company sizes and ownership structures. To ensure accurate results and analysis of the various types of business strategies, all the satellite channel companies were studied. Due to mergers and consolidation, there are now about 30 satellite channel companies. Strategic choices and decisions are generally made by the most senior staff who are in charge of the strategic business unit (SBU) or top management team (TMT) that is normally responsible for the planning, organisation, leadership and control of the business @as & Teng, 1999). These managers are assessed according to the overall financial performance of the business and their ability to establish strategic directions. These managers usually understand their strategies well; therefore, this research aims at the TMT of the Satellite channel companies in order to collect more specific information. Non-probability (purposive) sampling was adopted, and the members of the TMT of each company were sampled. The composition of the TMT is different from one company to another. In the satellite channel companies, there are at least four departments involved in strategic decision-making, namely the programming department, the marketing department, the news department, and the planning department. According to company structures, the samples are within these companies giving a sample size of 3 to 4 for each company, and a total of 93 targets. A questionnaire was designed for the survey. It was sent by mail or facsimile or administered face-to-face to company presidents (or chairmen), vice-presidents, general managers, managers of marketing departments, planning departments, marketing departments or news departments between January 1999 and June 1999. Seventy-five managers responded to the questionnaires, representing an individual response rate of 80.75% of the population. Twenty-nine of 30 companies were surveyed, representing a response rate of 96.67% of the population. Mai - Company Size, Type, Structure and Business Strategy 147 Operational Definitions The operational definitions of the independent variables, operational type, company size and ownership structure are defined as follows: The size of the company Large companies were categorised as having more than 120 employees, medium sized companies between 8 1 and 120 employees, smaller companies between 41 and 80, and smallest companies with fewer than 40 employees. The scales were used in this research as “l-40”, “41-8O”, “8 l120”, and “above 121” staff. The operational type of the company These were defined as single channel operation, multiple channel operation, or multiple system station operation (MSO). The ownership structure of the company Indicated whether a firm was familyowned, multinational, diversifi ed, singleton, or foreign. The definitions of these ownership structures are as follows: 0 l l l l A family-owned company-the owners of the company are mostly from the same family. A domestic multinational group-a group involved in many different industries, playing an important role in Taiwanese economic development, and owned by Taiwanese entrepreneurs. Diversified ownership-a company with some linked businesses in the same or different industries, but its economic scale is smaller than multinational groups, and owners of the company are also diverse. A singleton type of ownership was defined as one in which the capital of the company is limited or without establishing any linked businesses or companies. Foreign ownership- the owners of the company are foreigners. The questionnaire for the quantitative research included four parts: the style of the company, economic scale of the company, generic strategy of company and sample profile. The measurement of Porter’s (1980, 1985) generic strategy, “overall cost leadership”, “differentiation”, and “focus” derives Dess and Davis’ (1984), and Bowman and Ambrosini’s (1997) statements concerned with these three strategies. Managers were asked to state the extent to which they agreed with the statements, ranging from “strongly disagree” (1) to “strongly agree” (5). There 148 Mai - Company Size, Type, Structure and Business Strategy are nine variables for examining the “overall cost leadership” strategy, seven for the “differentiation*’ strategy, and five for the “focus” strategy. Factor analyses and reliable tests are used to examine the reliability and validity of the 21 variables of the strategic model. The results show that these variables can be classified into seven factors, which explain 69.624% of total variance (see Table lO.l), with a high validity. Table 10.1: Explained Variance of 7 Factors of Porter’s Strategic Model Factor Factor Factor Factor Factor Factor Factor Factor Eigenvahe 1 2 3 4 5 6 7 2.973 2.318 2.300 2.154 1.863 1.519 1.495 Explained Variance 14.158 11.036 10.953 10.256 8.871 7.232 7.118 Cumulative Variance 14.158 25.194 36.147 46.403 55.274 62.506 69.624 The results of the factor analysis show that there are a minimum of seven different strategies adopted by these CATV companies (see Table 10.2). The results indicate that Porter’s three generic strategies-overall cost leadership, differentiation, and focus-cannot contain all the strategies adopted. In other words, Porter’s strategic model cannot fit these companies. “Cronbach’s alpha” examination was employed as a “reliability test” to confirm the internal consistency of each of the factors. Factor 6 did not achieve a reliability level of Alpha bigger than 0.5 (a = 0.2110; see Table 10.3). It means the three variables of Factor 6 are not consistent and its validity can be challenged. Therefore, this factor is eliminated from subsequent discussions. The six remaining factors are renamed according to the highest value or the characteristics of the set of the variables in each factor (see Table 10.2): Factor 1 is explained by five variables: “focus on narrow targets” (explained value = .888), “narrow target, more competitive” (= .830), “focus on geographical markets” (= .662), “focus on particular buyers” (= .550), and “sale polices concern particular buyers” (= .530; see Table 10.2). This factor accounts for 13.85% of total variance with an Eigenvalue equal to 2.908 (see Table 10.1). The reliability test suggests that this factor has a high level of consistency (a = 0.8291; see Table 10.3). Considering the highest value and characteristics of the set of variables, this factor is renamed “concentrated/focus strategy”. Mai - Company Size, Type, Structure and Business Strategy 149 Table 10.2: Component Matrix of 7 Factorsof Porter’sStrategicModel Variable /Factor 20 Focus on narrow targets 21 Narrow targets, more competitive 3 4 5 6 7 1 2 ,888 -.157 -.112 -.193 .009 -.OOl -.008 .830 .OOl -.I 13 .OOl -.005 .004 .103 17 Focus on geographical markets 662 .339 .008 -.009 .OOl -.005 -.006 19 Sale policies focus on particular 550 -.414 .483 .004 -.OOl -.OOl -.138 buyers 18 Channel focuses on particular .530 -.528 .378 -.007 -.OOl -.009 -.209 buyers 16 Offer superior channels to .008 ,792 .009 -.003 -.008 -.009 .OOl compete with others 10 Emphasise distinctive channels -.007 .606 -.OOl -.251 .319 .106 .154 in competition 11 Regularly develop new channels -.163 .585 -.206 .002 -.179 .OOl -.509 06 Monitor operations to keep costs under control -.009 .103 .865 .009 .162 -.008 -.002 OlEmphasise on costs control .148 03 Make efforts to secure cost -.005 sources of supply 04 Maintain maximum utilisation of -.2o9 resources ,002 13 Give new channels top priority 12 Offer unique channels enabling .002 change 08 To be the lowest cost producer 05 Emphasise competitive price strategies -.003 .862 .008 .006 .003 .155 -.006 .416 ,748 -.006 .136 -.115 .oo3 .193 .721 .135 .oO4 -.256 .105 .136 -.72O -.007 .395 -.005 .450 ,151 -.546 .008 .239 -.002 .172 .005 .009 .009 .722 .253 .006 -.179 -.005 .179 .108 ,720 -.179 -.159 09 Offer similar channels, compete .005 .006 -.OOl -.llO ,713 -.142 .258 on prices 02 Pressure to cut overheads .206 .188 .009 .127 -.004 -.733 .lOl 15 Sales performance information is important .145 .148 -.007 .005 -.OOl 596 .461 07 Devote time and effort to improving efficiency -.206 -.304 -.159 .117 .285 -.485 -.004 14 Our channel seldom changes -.137 .006 .003 -.204 .108 -.002 .840 150 Mai - Company Size, Type, Structure and Business Strategy Table 10.3 (a): Reclassified Types of Business Strategies Factors 19. Our company’s sales policy always concerns particular buyers/subscribers 5 ammeskhannels/services 14. We try hard to maintain the maximum feasible utilisation rices N=75 Reliability Alpha Reliability % 52.77 Mai - Company Size, Type, Structure and Business 151 Strategy Table 10.3 (b): ReclassifiedTypesof BusinessStrategies Factors Factor 6 (eliminated) 2. There is constant pressure here to cut the cost of overheads 15. Information about sales performance is considered to be more important than cost control information 7. As our customers are very price sensitive, we devote considerable time and effort into improving efficiency Factor 7 (Constant strategy) 14. Our line of programmes/channels/services seldom change in a substantive manner Reliability Alpha Reliability % 0.2110 21.10 0.9999 99.99 N=75 Factor 2 is explained by three variables: “offer superior channels to compete with others” (explained value = .792), “emphasise distinctive channel images of strategies” (= .606), and “regularly develop new channels” (= S85; see Table 10.2). This factor accounts for 11.12% of total variance with an Eigenvalue equal to 2.334 (see Table 10.1). The reliability test suggests that this factor possesses a high level of consistency (a = 0.5277; see Table 3). Considering the highest value and the characteristics of the set of variables, this factor is renamed “distinctive strategy”. Factor 3 is strongly influenced by two variables: “emphasise cost control” (explained value = .865) and “monitor operation to keep costs under control” (= .862; see Table 10.2). This factor accounts for 10.91% of total variance with an Eigenvalue equal to 2.290 (see Table 10.1). The reliability test suggests that this factor has a high level of consistency (a = 0.7761; see Table 10.3). This factor is renamed “cost-control strategy” in consideration of both the highest value and the characteristics of the set of variables. 152 Mai - Company Size, Type, Structure and Business Strategy Factor 4 is explained by four variables: “to secure cost sources of supply” (explained value = .748), “maintain maximum utilisation of resources” (= .721), “giving new programmes top priority” (= .720), and “offer unique channels enabling higher charges” (= 546; see Table 10.2). This factor accounts for 10.17% of total variance with an Eigenvalue equal to 2.136 (see Table 10.1). The reliability test suggests that this factor has a high level of consistency (a = 0.6606; see Table 10.3). Considering the highest value of the set of variables, this factor is renamed “cost/resource maintenance strategy”. Factor 5 is influenced by three variables: “to be the lowest cost producer” (explained value = .722), “emphasise competitive prices” (= .720), and “offer similar channels and maintain competitive prices” (= .713; see Table 10.2). This factor accounts for 8.79% of total variance with an Eigenvalue equal to 1.848 (see Table 1). The reliability test suggests that this factor has a high level of consistency (a=0.5968, see Table 3). After the highest value and characteristics of the set of variables, this factor is renamed “competitive-price strategy”. Factor 7 is explained by only one variable, i.e., “our line of programmes/ channels/ services seldom changes in a substantive manner” (explained value = .840; see Table 10.2). The factor accounts for 7.32% of total variance with an Eigenvalue equal to 1.538 (see Table 1). In consideration of both the value and the characteristics of the variable, this factor is renamed “constant strategy”. In summary, the result of the factor analysis shows that Porter’s three types of generic business strategies-overall cost leadership, differentiation and focus-do not correspond with the business strategies of the Taiwanese CATV companies. The results show that there are at least seven strategies adopted by the CATV channel companies. DATA ANALYSIS Of the 29 satellite channel companies surveyed, five companies employ fewer than 40 (17.25%) staff, the lowest number of employees being 6. Twelve companies (41.38%) employ more than 121 staff. Twenty-three (79.30%) out of 29 are completely Taiwanese owned. Eight of 29 companies are with the singleton type of ownership structure, seven companies are with the foreign type, six are with the family type, six are with the diversified type, and only two of 29 companies are with the multinational type (see Table 10.4). With respect to operational types, about 45% (13) provide one channel to their subscribers, nearly 50% (14) provide multiple channels, and about 6% (2) provide multiple channels and also operate stations. The capital of 19 (65.50%) of the companies is under NT 300 million (under US 8.57 million), but the Mai - Company Size, Type, Structure and Business Strategy 153 capital of eight (27.50%) of the companies is higher than NT501 million (US 14.3 1 million). Table 10.4: Satellite Channel Companies Variables Frequencies (Co.) Percentage (%) Comnanv Size l-40 staff 4 l-80 staff 81-120 staff 120+ staff 5 8 4 12 17.25 27.58 13.79 41.38 All the shareholders are from Taiwan Some shareholders are not from Taiwan No shareholders are from Taiwan 23 3 3 79.40 10.30 10.30 6 2 6 8 7 20.70 6.80 20.70 27.60 24.20 13 14 6 2 1 2 3 2 0 0 0 44.82 48.28 Ownershin Structure Family Multinational Diversified Singleton Foreign Operational Ta Single channel Multiple channel 2 channel 3 channel 4 channel 5 channel 5+ channel Multiple Channel and Station 1 Station 2 Stations 3 Stations 6.90 154 Mai - Company Size, Type, Structure and Business Strategy N=29 Business Strategy In terms of business strategies, the results of frequencies indicate the total business strategies in the satellite channel companies. Overall, the results show that these respondents disagree with (Mode = 2; see Table 10.5) the following statements: “Our programmes/channels focus on narrow targets/buyers/ subscribers”. “Because our programmes/channels focus on narrow targets, we are more competitive, more effective or more efficient”. “Our programmes/channels focus on a particular geographical market”. “Our programmes/channels/subscribers focus on particular buyers/ subscribers”. “Our company’s sales policy always focuses on particular buyers/ subscribers”. “We aim to be the lowest cost producer in our industry; we emphasise competitive prices as part of our marketing strategy”. “Because we offer very similar programmes/channels/services to our competitors, we try to maintain competitive prices”. “There is constant pressure here to cut the cost of overheads” Mai - Company Size, Type, Structure and Business 155 Strategy Almost all of the respondents (97.40 %) “make extensive efforts to secure of the cost sources of supply ” , “carefully monitor operations to keep costs under control” (94.60 %), “place considerable emphasis on the control of operating costs” (94.00 %), and “try hard to maintain the maximum feasible utilisation of capacity/resources (92.00 %)“. The results indicate that most respondents tend to control costs. On the other hand, over half the number of the respondents disagree and strongly disagree that their programmes/channels focus on a particular geographical market (69.30%), or that “their programmes focus on particular buyers/subscribers” (69.30%). The results show that over half the number of respondents do not focus on a particular geographical market nor particular buyers or subscribers. Most respondents tend to promote their channels to wider scopes of markets. The frequency results only show that overall business strategies are adopted by these satellite channel companies. For further analysis, the model needs to be tested by using other statistics methods in order to classify its dimensions. Table 10.5: Frequency Results of Business Strategies (65) (8) secure the cost sources of supply 4. We try hard to maintam the maximum feasible utilisation of our capacity/resources 5. We emphasise competttive prices in our marketing strategy 6. We carefully monttor operations to help us keep costs under control (0) 0.00 (0) (1) 4.00 (3) (1) 4.00 (3) 80.00 (60) 12.00 (9) 4 570 2.70 45.00 (34) 2.70 40.00 (30) 85.30 W) 4.00 (3) 9.30 (7) 2 1.045 (2) 8.00 (6) 1.30 (1) 4 .581 7. As our customers are very prrce sensitive, we devote considerable ttme and effort into Improving our efficiency 8. We aim to be the lowest cost producer m our industry 9. Because we offer very similar programmes/ channels/ servtces to our competitors, we try to mamtam competitive price 1.30 (1) 14.90 (11) 6.80 (5) 67.60 (50) 9.50 (7) 4 .890 5.40 (4) 6.70 (5) 58.10 (43) 56.00 (42) 5.40 (4) 14.70 (11) 29.70 (22) 21.30 (15) 1.40 (1) 1.30 (1) 2 1.015 2 .949 (2) 1.30 (1) 156 Mai - Company Table 5 Continued Variables 10. We emphastse our distinctrve programmes/channels/ image in our marketing campaigns 11. We regularly develop new channels or srgnificantly change the line of channels/ service we offer 12. We try to offer unique programmes/channels Iservlces enabling us to charge premium prices 13. We give the development of new programmes/channels/ service top priorlty 14. Our line of programmes/ channels/servtces seldom change in a substantive manner 15. Information about sales performance is considered to be more important than cost control information 16. We arm to offer superior programmes/channels/services to those of our competitors 17. Our programmes/channels are focus on parttcular geographical market 18. Our programmes/channels focus on particular buyers/ subscribers 19. Our company’s sales policy always focuses on parucular buyers/ subscribers 20. Our programmes/channels are focus on narrow targets/ buyers / subscribers 2 1. Because our programme focuses on narrow target, we are more competitive, more effective or more efficient Size, Type, Structure Strong Disagree Disagree and Business Strategy No Agree Strong Mode Idea Agree Std. Dev 0.00 (0) 2.70 (2) 8.10 (6) 71.60 (53) 17.60 (13) 4 1.30 (0) 13.30 (10) 9.30 (7) 69.30 (53) 6.70 (5) 4 .844 0.00 (0) 16.00 (12) 8.00 (6) 63.50 (47) 12.20 (9) 4 .844 0.00 (0) 14.90 (11) 12.20 (9) 62.20 (46) 10.80 4 .859 2.70 44.00 (33) 4.00 (3) 45.00 (34) 4.00 (3) 4 1.084 0.00 (0) 21.60 (16) 12.20 (9) 58.10 (43) 8.10 4 .925 1.30 (1) 5.30 (4) 6.70 (5) 64.00 (48) 22.70 (17) 4 .797 9.30 60.00 5.30 24.00 1.30 2 1.005 5.30 (4) 50.70 (38) 4.00 (3) 34.70 (26) 5.30 (4) 2 1.128 5.30 58.70 9.30 28.00 4.00 2 1.060 9.30 60.00 5.30 24.00 1.30 2 1.005 12.00 51.40 13.50 20.30 2.70 2 1.037 (2) (8) (6) .607 N = 75, % (Person) Company Size One-way ANOVA is utilised to examine whether the companies of different sizes tend to adopt different strategies. The results demonstrate that companies Mai - Company Size, Type, Structure and Business 157 Strategy of different sizes tend to adopt different strategies and the results are shown here (see Table 10.6): Table 10.6: Company Size and Business Strategies Strategy Concentrated/ Focus Distinctive Cost-control Competitive-price Constant Company Size (No. of staff) l-40 41- 80 81-120 121+ Mean Difference 3.578 -3.578 -4.111 -4.694 Standard Error Sig. 1.526 1.526 1.792 1.417 * * * *** l-40 41- 80 -1.743 1.743 .609 .609 ** ** 81-120 121+ l-40 41- 80 81-120 .778 1.652 1.116 -1.116 .894 .709 .559 .447 ,447 .447 -** * * * 121+ -.694 .744 -.744 2.083 -2.083 .414 .878 ,878 .815 .815 .499 ---* * * ,425 .499 .393 -* * l-40 41- 80 81-120 121+ l-40 41- 80 81-120 121+ - 1.ooo .417 1.ooo .856 Companies with l-40 staff: The “concentrated/focus” (Mean difference = Std. Error = 1.527, P < O.OS),“cost-control” (Mean difference = 1.116, Std. Error = 447, P c 0.05), “distinctive” (Mean difference = 1.743, Std. Error = .609, P c 0.01) and “constant” strategies (Mean difference = -1.000, Std. Error = .499, P < 0.05) are significantly different for companies of different sizes. This indicates that companies with l-40 staff tend to adopt “cost-control”, “concentrated/focus” and “distinctive” strategies, but not “constant strategies”. Companies with 41-80 staff: these companies have significantly different strategies from others in terms of “concentrated/focus” (Mean difference = - 3.578, 158 Mai - Company Size, Type, Structure and Business Strategy 3.578, Std. Error = 1.526, P < 0.05), “cost-control” (Mean difference = -1.116, Std. Error = .447, P < 0.05), and “distinctive” (Mean difference = 1.743, Std. Error = 0.609, P < 0.01). This indicates that companies with 41-80 staff tend to adopt “distinctive strategies”, but not “concentrated/focus” or “cost-control strategies”. Companies with 8 l-120 staff: These companies adopt “concentrated/focus” (Mean difference = -4.111, Std. Error = 1.792, P c 0.05), “cost-control” (Mean difference = .894, Std. Error = .447, P < 0.05), “competitive-price” (Mean difference = 2.083, Std. Error = .815, P c 0.05), and “constant” (Mean difference = 1.000, Std. Error = .499, PcO.05) strategies significantly differently from other companies. They tend to adopt “cost-control”, “competitive-price”, and “constant strategies”, but not “concentrated/focus strategies”. Companies with more than 121 staW These firms adopt “concentrated/focus” (Mean difference = -4.694, Std. Error = 1.417, P c O.OOl), “distinctive” (Mean difference = 1.652, Std. Error = .559, P c O.Ol), “competitive-price” (Mean difference = -2.083, Std. Error = .815, P c 0.05), and “constant” strategies (Mean difference = .856, Std. Error = .393, P c 0.05) significantly differently from other companies. They tend to adopt “distinctive” and “constant strategies”, but not “concentrated/focus” or “competitive-price strategies”. Consequently, hypothesis 1, which states that companies of different sizes have different business strategies, can be accepted. Operational Types Hypothesis 2 states that companies with different operational types have different business strategies. This is tested using one-way ANOVA, and the significant results are shown in Table 10.7. Table 10.7: Different Operational Types and Business Strategies Factors Concentrated Strategy Operation types Single Multiple MS0 Mean Std. Difference Error 3.927 1.868 2.007 0.938 -3.923 1.868 N = 75, *P < 0.05; **P < 0.01; ***P < 0.001 Significance * * * Mai - Company Size, Type, Structure and Business Strategy 159 Only the “concentrated/focus strategy” is significantly different within single, multiple channels and MS0 companies compared with other types of strategy (Mean difference - 3.927, Std. Error = 0.868, P < 0.05; Mean difference = 2.007, Std. Error = 0.938, P < 0.05 and Mean difference = -3.923, Std. Error =1.868, P < 0.05 respectively). Therefore there is insufficient evidence to support hypothesis 2, which states that companies with different operational types have different business strategies. Ownership Structure The results of the differences between different ownership structures and business strategies are shown in Table 10.8. Table 10.8: Ownership Structures and Business Strategies Factors Competitivemice ‘Strategy Constant Strategy Ownership Type Family Multinational Diversified Singleton Foreign Family Multinational Diversified Singleton Foreign Mean Difference -0.465 0.465 -2.008 0.775 2.008 0.900 -0.900 - 1.365 1.262 1.125 Std. Error 1.034 1.034 0.782 1.048 0.782 0.442 0.442 0.337 0.45 1 0.326 Significance --* -* ** ** ** ** ** N = 75, *P < 0.05; **P c 0.01; ***P < 0.001 Family ownership structure Only “constant strategy” (Mean difference = 0.900, Std. Error = 0.442, P < 0.01) in the family-owned companies is significantly different from other ownership structures. This indicates that the companies with family ownership tend to adopt “constant strategies”. Multinational ownership structure Only “constant strategy” (Mean difference = -0.900, Std. Error = 0.442, P c 0.01) in multinational-type companies is significantly different from companies with other ownership structures. This indicates that multinationals are less likely to adopt “constant strategies”. 160 Mai - Company Size, Type, Structure and Business Strategy Diversified ownership structure Two business strategies, “competitive-price strategy” (Mean difference = -2.008, Std. Error = 0.782, P < 0.05) and “constant strategy” (Mean difference = -1.365, Std. Error = 0.337, P c 0.01) are significantly different in diversified companies compared to other types of companies. This indicates that diversified companies are less likely to adopt “competitive-price” and “constant strategies”. Singleton ownership structure Only “competitive-price strategy” (Mean difference = 1.262, Std. Error = 0.451, P c 0.01) is significantly different in single companies compared with other companies. Companies with the singleton type of ownership tend to adopt “competitive strategies” as opposed to diversified companies. Foreign ownership structure “Competitive-price strategy” (Mean difference = 2.008, Std. Error = 0.782, P c 0.05) and “constant strategy” (Mean difference = 1.125, Std. Error = 0.326, P c 0.01) are significantly different among foreign companies. The results indicate that foreign companies tend to adopt “competitive-price” and “constant strategies”. The results presented in Tables 10.8 show that companies with differing ownership structures adopt different business strategies. This does not apply to all, however, so there is no strong evidence to support hypothesis 3: companies with different ownership structures have significantly different business strategies. DISCUSSION The results show that Porter’s model of three generic strategies can be classified into seven different strategies. It means that Porter’s model cannot fit well into these Taiwanese satellite channel companies. Although the new classification is closer to the business strategies of these companies, it still has its constraints in reflecting the actual strategies of these companies. This may be the result of the model which is based on the western perspectives-in a way, lack of the eastern consideration. Moreover, the results of this research may be a general or aggregated result from the interviewees’ responses, so some Taiwanese aspects and industrial characteristics may not have been reflected in the statistical results. This indicates that there is a need to build up a strategic model that is suitable for measuring business strategies of the Taiwanese media companies. This research suggests that adopting an in-depth interview approach and taking Mai - Company Size, Type, Structure and Business Strategy 161 into account Taiwanese perspectives of strategic adoptions could establish a new strategic model that would have higher validity and reliability and be closer to the real conditions of these companies. The results show that most respondents (over 90%) tend to control costs. The reasons could include several points: firstly, because of the Taiwan is facing economic recessions and intense satellite market competition. For them, it is difficult to estimate returns and profits, therefore, most respondents adopt the cost control strategy in response to the trends of the merger and consolidation. Secondly, some Taiwanese companies are less likely to adopt definite strategies than western ones (Huang, 1999), and tend to invest in business conservatively, thus, undoubtedly they generally adopt cost control strategies. The results indicate that confronting with changeable investing environments, most Taiwanese entrepreneurs tend to adopt cost control strategies. However, most respondents tend to control costs that would affect their strategic formulations. This research must emphasise that cost control is not only choices. Most successful strategies can give a firm unique position in the market, or can strengthen the competitive advantages (Haberberg & Rieple, 2001: 32), suggesting that entrepreneurs and respondents would attach importance to strategic planning and estimate the advantages and disadvantages of strategies, using defensive or offensive strategy, not only seeking to control costs. The hypothesis that companies of different sizes have different business strategies, could be accepted (Hl). In comparison, the results of this research are efficient in supporting hypotheses 2 and 3, that companies with different operational types have different strategies and companies with different ownership structures have different strategies. The results demonstrate that company sizes are the most important in affecting business strategies among these factors. This research found that companies of the smallest sizes (l-40 staff) tend to focus on particular subscribers and buyers, or particular geographical viewers, and emphasise costs control (see Table 10.6). These companies usually change their programmes/channels/services in a substantive manner frequently in order to find out better strategies for their, companies. In other words, smaller companies tend to focus their resources on achieving particular goals or targeting certain group of viewers, adopting defensive and lower risk strategies. These might be also related to the scale of companies that afford them to be more flexible. On the other hand, companies of the biggest sizes (more than 120 staff) tend to differentiate their channels, maintain their channel characteristics, but not compete on price. These companies tend to adopt long-term strategies and establish their product images. Obviously, companies of the two sizes have significantly different strategies. 162 Mai - Company Size, Type, Structure and Business Strategy In terms of operational types, there are not many significant differences among companies with single, multiple and MSOs types, only the “concentrated/focus” strategy is different (see Table 10.7). Companies with single and multiple channel operational types tend to focus on special viewers, but not MSOs. Essentially, the MSOs can be seen as multi-product firms. These companies may have broader strategies for their diversified products, and have some advantages, including bigger economies of scope, risk reduction, and complementary demand, compared to single-product firms (Wanly 8z Cheung, 1998). Similarly, a single-channel operational company can be seen as a singleproduct firm. They normall y concentrate more on their single product, and adopt a specialised or concentrated strategy in response to their competitors. The results show significant differences between the two different operational types: companies with the single-channel operational type tend to adopt concentrated/focus strategies, unlike MSOs, which adopt various strategies. In Taiwan, not only large firms are able to provide multiple products; small and medium firms can also do so in different geographical markets (Aw & Batra, 1998), e.g. adopting concentrated/focus strategies. It is noteworthy that the multi-system operators (MSOs, owning stations and channels) adopt offensive strategies. In contrast to the other types of companies, MSOs have much more resources than either multi- or single-channel operators, although there may be other different business strategies, which have not been found by using statistical analyses. This research suggests that utilising a qualitative approach might explore more differences. With respect to ownership structure, companies with the family type of ownership tend to adopt the “constant strategy” (see Table 10.8). Harris and Ogbonna (1999) found that a structured process of strategic formulation does not occur in family-owned companies, with the strategic direction largely being determined by the present chief executive officer. Other members of management find it difficult to participate in the strategic decision-making process. A reason could be that these companies tend to adopt “constant strategies”, and “seldom change their programmes or channels in a substantive manner”. Adversely, multinationals and diversified companies usually have hierarchical structures of organisations, and might have more members in the TMTs. Thus, they are less likely to adopt “constant strategies”. Foreign companies tend to compete prices, which could be an efficient strategy for new entries and easier to get into the market. Moreover, foreign companies may have to do more marketing research and invest more to understand the Taiwanese market. If they only adopt competitive-price strategies, they may be able to distribute their products (channels) universally in a short term. Mai - Company Size, Type, Structure and Business Strategy 163 This research suggests that companies with the family and singleton types of ownership could apply more strategies in responses the market. For a longterm plan, foreign companie s could not only compete prices, but also do more research for understanding the local market. CONCLUSION A strategic model can help entrepreneurs to rethink their strategic formulation. However, Porter’s model cannot fit into Taiwanese satellite companies; there is a need to establish a new strategic model with eastern business organisations. This research suggests that to adopt a qualitative approach and consider the industrial characteristics and business environment to build up a strategic model for understanding the Taiwanese satellite businesses. This research found that company size is the most influential factor of business strategies compared to the factors of operational types and ownership structures. The investigation is valuable for professionals who can forecast their competitors’ strategies. 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question:فصل بعدی (به انگلیسی روان): Chapter 11 An Assessment of the Broadband Media Strategies of Western European Telecoms David H. Goff University of Southern Mississippi This analysis examines the broadband strategies of the four major Western European telecommunication service providers: British Telecom (BT), Deutsche Telekom (DT), France TClCcom (ET), and Telef6nica. According to Goff (20OOb), new income from Internet-related services offset revenue lost to telecoms due to deregulation and subsequent price competition in such core areas as long distance and international connections, former profit centres that had partially subsidised the cost of providing local service. Broadband Internet access is considered to be the key to unleashing the Internet’s full potential and a critical core business for incumbent telecoms. Telecoms had been offering broadband access to business customers for many years before the emergence of the public Internet. Unlike the earlier forms of premium-priced access that required special lines, telecoms now offer ADSL (asymmetric digital subscriber line) mass-market broadband access at flat rates via their existing copper wire network. Broadband connections are fast, “always on,” and theoretically enable the Internet to deliver a wide range of media services (e.g., interactive games and digital video entertainment content, including video-on-demand as well as video conferencing) while also meeting the data needs of small-to-medium size enterprises (SMEs). Broadband connections encourage longer online sessions that lead to higher levels of e-commerce activity. According to Virtel (2001), “the race is on in Europe to become the first country to develop a large-scale broadband infrastructure and hence-and this is what it’s all about-to attract call centres, Internet and other technology companies (p. 2).” Broadband access in Europe has been largely controlled by the incumbent telecoms. These firms have been methodically deploying broadband technology, but have been extremely slow to open their networks to competitors. Consumers in most 170 Goff - Broadband Media Strategies markets have few, if any, choices. Despite these factors, though, consumer uptake of broadband services gained momentum in 2001. Jupiter MMXI asserts that critical mass for broadband in Europe will be achieved when market penetration reaches 15% of all households. This level is not expected until 2006 (Jupiter MMXI, 2001). As former national monopolies, the four firms analysed in this study enjoy significant economic advantages in wireline telephony, Internet access, and the provision of data services to business; they also compete as major players in domestic and regional wireless communication. Despite their position of privilege, the four companies have experienced rapid and significant change driven by the primary forces of the ongoing convergence of communications technologies and industries: technology, privatisation, deregulation, and competition. While sharing some common characteristics and objectives, each firm has developed somewhat different convergence strategies, appropriate to the specific economic and political conditions within each home nation, but responsive to the pan-European directives and initiatives of the European Union (Laffont & Tirole, 2001). Analysis of these strategies begins with a brief overview of each firm, covering its primary lines of business and organisational structure, and progresses to an assessment of the firm’s overall convergence strategies. The primary analysis follows, focusing upon the broadband strategies of each company, addressing the rollout of broadband access services, the actions of competitors, and consumer response. Broadband serves several functions, including data exchange by small-to-medium sized enterprises (SMEs) and the delivery of information content to businesses and consumers. Therefore, the study also examines the efforts of these telecoms to both compete and partner with traditional and new media in the creation and delivery of information and entertainment content. A SHORT HISTORY OF WESTERN EUROPEAN TELECOMS Worldwide, telephone services operated as monopoly enterprises throughout most of the 20th century. In the United States the dominant firm (AT&T) was privately owned, but in most countries telephony was combined with telegraphy and postal services under a PTT (Postal, Telephone, and Telegraph) model. By the 1980s a worldwide re-evaluation of national telecoms was in progress. As a result of the post-WWII shift to an information-based economy and the diffusion of computer (digital) technology, telecommunications systems carried increasing amounts of data in addition to voice traffic. It had become evident that national monopolies were heavily vested in legacy copper wire technologies and Gaff - Broadband Media Strategies 171 inefficient at adapting to change. New firms emerged and clamoured to introduce new high-capacity digital network technologies designed to serve the changing needs of the information-intensive business sector. Starting with the formation of British Telecom in the United Kingdom in 1981, European governments began first to separate telecommunications operations from the PTT structure, and then to authorise limited competition with the govemmentowned firms (Harper, 1997; Noam, 2001). A decade later national and pannational (European Union and International Telecommunic ations Union) policymakers had recognised the developing global information society and were calling for increased competitiveness in the telecommunication sector (Goff, 2000a). From the mid-1980s onward, national monopoly telecoms were privatised throughout Western Europe. The Internet emerged from the private sector, and its Internet Protocol (IP) quickly became the network technology of choice for the growing number of companies recently licensed to unleash the forces of competition in the telecoms sector of the economy. Wireless mobile services proliferated throughout the region. Cable television firms were licensed to provide competing local telephone services to residences and businesses and soon added Internet access. During this decade, telecommunications services evolved from providers of local and long distance telephony to become fullservice integrated communicati ons networks, and from national systems to an interconnected “network of networks,” (Noam, 2001, p. 1). At the beginning of the 21st century the tripartite forces of convergence (technology, economics, and politics) created a set of conditions generally shared by the former national telecoms of Western Europe. In economic terms, telecoms have been forced to adjust to the new competitive landscape. This required substantial investment in new technologies and a realignment of lines of business, changes that impacted the earnings of each firm. The former national telecoms have been forced to offer new services while protecting their legacy core lines of business (Zerdick et al., 2000). These core activities and competencies are significant. In each country the former national monopolist telecom connects the vast majority of telephony and data communications users to the rest of the world. This ownership of the local loop, the so-called “last mile” of the network, is vitally important to the dominant telecorns and to their competitors and regulators. Because of their longevity, the dominant telecoms have evolved long-standing business relationships with their customers, an extensive array of international business alliances, and a strong reputation for customer service, network reliability, and network security. As former components of national government (generally still owned in part by governments), these firms retain considerable political influence Building new or rebuilding old network infrastructure to 21st century standards is a costly 172 Goff - Broadband Media Strategies undertaking, and the former national telecoms enjoy distinct advantages over their rivals in their financial resources and access to financial markets (Zerdick et al., 2000). The competitive advantages of these firms is at the heart of regulatory and policy initiatives in the region. For meaningful competition to exist in telecommunications new firms must connect their networks to customer premises. This can only happen if the new competitors either build their own “last mile” access or “rent” the last mile access from a former national telecom. The European Union (EU) ordered that domestic telephone monopolies would cease on January 1, 1998. Despite the EU mandate, the record of progress in each country is different, and as a general rule, the former national telecoms have been slow to “unbundle” the local loop. In November 2001, Reinhardt reported that no phone lines has been made available to competitors in France, Spain, Greece, or Ireland and that the limited competition in the broadband market caused the price of accessin Europe to be 20% higher than in the U.S. Worldwide, the entire telecommunications industry experienced a devastating economic downturn beginning in 2000, when the European telecoms services sector valuation fell 48% between March and the end of the year (Hurst, 2001). Industry expansion following 1996 had been highly leveraged and European telecoms had acquired 415 billion in syndicated loans, 415 billion in bonded indebtedness, and another 500 billion from the stock market and private sources (Roberts, 2OOla). Despite increased competition and falling prices in voice telephone services, “nearly half of European bank lending in 1999 was to telecoms” (Roberts, 2OOla, p. 2). Much of this money was spent by newer telecommunications providers on infrastructure built to support an expected upsurge in bandwidth intensive (broadband) uses: undersea cables, vast amounts of optical fiber, and new licenses for third generation (3G) mobile telephony services. Firms bid 99.3 billion for the technology that would bring broadband Internet access to the mobile phone (“Running for the Exit,” 2001). These high prices added significantly to the debt load of the successful bidders, and the combined effects of the 2000-2001 downturn are reflected in the strategic actions of telecom firms as firms have begun to restructure and industry segments have experienced consolidation. Despite these negative considerations, the market for mobile phone services continues to grow in the region, and in the first half of 2001 demand for broadband in Europe nearly doubled (Reinhardt, 2001). Goff - Broadband Media Strategies 173 THE TELECOMS OF WESTERN EUROPE AT THE TURN OF THE CENTURY This chapter focuses on developments of four major telecoms based in the United Kingdom, France, Germany, and Spain. United Kingdom British Telecommunications plc (BT) is a wholly owned subsidiary of BT Group plc and the primary provider of telephony services in the United Kingdom. In late 2001 BT operated with six divisions. BTopenworld provides Internet access (including broadband) and Internet-related services. BT Retail markets the firm’s products and services to domestic business and residential customer segments. BT Ignite offers data services and consultation to businesses throughout Europe. BT Wholesale provides network services to other BT units and to competing telecoms that must use the BT network to connect to customers. BT Affinitis is a management and information consultantcy service. BTexact Technologies (formerly BT Laboratories) is BT’s research and development unit (“BT annual report,” 2001). Debt reduction has been the over-arching strategy of BT since 2000. In March 2001 the company responded to indebtedness of nearly 40.48 billion by selling its Yell directories division for 3.1 billion and liquidating real estate holdings for 3.47 billion (“BT annual report,” 2001; “BT Announces, 2001). In October 2001 BT announced the end of Concert, an unprofitable joint venture with AT&T (“British Telecom, AT&T,” 2001). More importantly, in November 2001 BT demerged its money-losing wireless assetsby creating a new company, mm02. Prior to the demerger, the BTWireless unit had controlled the Genie wireless portal and a set of wireless operations in the UK (BTCellnet), Germany, the Netherlands, Ireland, and the Isle of Mann (“BT Wireless to Adopt,” 2001). BT Group believes that uniting wireless assets under single brand name will improve chances of success in the UK and other European markets. At the same time, the formation of mm02 effectively separated the potentially profitable but highly competitive and risky mobile telephony business from the other BT lines of business. Broadband services figure prominently in the strategic plans of BT, although consumers in the UK have been slow to acquire broadband access. While BT’s ADSL enabled lines passed 13 million UK households, only 40,000 residential customers had signed up by October 2001 (“Who’s Who,” 2001). A new marketing campaign was aimed at residential consumers; the price of broadband installation was cut in half, the monthly subscription charge was 174 Goff - Broadband Media Strategies reduced by f5, and the rate of new connections nearly doubled as a result (“BT Sees Broadband Demand,” 2001). Slow demand for broadband coupled with BT’s overall financial woes caused an additional strategic shift related to the provision of content to broadband subscribers. BTopenworld initially planned to be a major provider of broadband content to its subscribers. Those plans were scaled back during the economic downturn as BT concentrated on its broadband network build-out. Rather than planning a wide assortment of content offerings, BT has concentrated recently on interactive games and music (Gibson, 2001). BT is required by the British government to make its access lines available to competitors, and has tasked the BT Wholesale unit to comply with this mandate. However, like other former national monopoly telecoms in the region, BT has been notoriously slow in this phase of unbundling its local loop. Firms wishing to provide competing DSL service have two options. One is to lease DSL-enabled lines directly from BT Wholesale. The other is for competitors to connect their own DSL technology to an unbundled local loop. Critics contend that BT has stymied both approaches in what appears to be a strategic delaying tactic. Requests for wholesale access have met with long delays (Wray, 2OOla). Firms that wish to install their own DSL equipment complain that BT is slow to unbundle the access circuits. When unbundled lines are available, competitors then face very high costs to locate their expensive DSL equipment. Essentially, they must either lease physical space within BT-owned structures, or locate their equipment in nearby buildings, aboveground cabinets, or belowground installations. One competitor reported that BT was charging ~36,000 to f95,OOO to build a room for competitor equipment within a BT facility and then charging a low price of f264 for planned business-hours physical access to the room to as much as f792 for unscheduled after-hours access. Additional charges are collected by BT for the connection from the DSL room to the main exchange where the phone lines terminate (Shillingford, 2001). In 2000, some 50 firms announced their intention to enter the DSL broadband access competition in the UK, but the economic downturn coupled with delays in gaining local loop access caused all but five to fold (Wray, 2OOla). While others may yet emerge as conditions improve, the consolidation in this sector has clearly benefited BT. The company’s recent marketing efforts and broadband price reductions, coupled with new “plug and play” technology that allows new DSL subscribers to connect without a visit from a technician, should enable BTopenworld to add substantially to its market share, lessening further the chances of competitors to gain a foothold. BTopenworld does face competition in broadband access from cable operators as well as satellite broadcaster BSkyB. In fact, as of November 2001, 70% of Britain’s broadband-enabled homes have cable-delivered access (“l~,OOO Broadband Customers for NIL,” 2001). Policy-makers and investors Goff - Broadband Media Strategies 175 once thought that cable would become a key competitor in the UK telecoms market, but cable developed slowly and the 27 franchises in this sector are now owned by only two firms. The largest, NTL, has 2.9 million residential customers including 100,000 broadband subscribers (‘NIL Incorporated Announces,” 2001). The number two firm is Telewest with 1.74 million customer households, of which 70,000 subscribe to broadband (“Telewest,” 2001). Cable telecoms have the advantage of being able to deliver telephony, Internet access, and video through a single connection. However, like BTopenworld, NTL has scaled back earlier plans to produce an array of broadband content, focusing instead on interactive games. As is evident from the sector consolidation, cable growth has been slow, but by late 2001 subscriptions were increasing rapidly. NTL has been rumoured to have an interest in acquiring Telewest. Cable telecoms lack the residential and business reach of BT, and the cable sector in general has a poorer record of customer service, one of BT’s strengths. Telecommunications analysts also observe that without a mobile telephony presence, cable telecoms cannot become full service providers. NTL plans to offer virtual mobile network services through an arrangement with Orange, a mobile brand operated by France Telecom, owner of a 22% stake in NTL (Moran, 2001). While BT has changed direction on creating its own content, the firm still intends to be a force in the provision of digital video. BT plans to offer enhanced VDSL (Very High Speed DSL) service with potential download speed 14 times faster than present day ADSL (Schofield, 2001). In November 2001 BT filed an application with Britain’s Independent Television Commission for a license to provide television services using its DSL-enabled fixed network. BT is also evaluating partnerships with terrestrial digital television broadcasters and BSkyB (Wray, 2001b). France France T&corn (FT) is a diversified full service telecommunications firm operating lines of business in local, long distance, and international wireline telephony; local, regional, and international data network services; wireless telephony; Internet access; cable and satellite television; media production; and telecommunications-related services to businesses. FI has been only partially privatised; the French government still owns 54% (Milner, 2001). As the former national monopoly operator of the legacy network, France TtlCcom dominates the country’s fixed-line telephone access market. However, deregulation-induced competition is cutting into FT’s domestic fixed-line revenues (Matlack & Reed, 2001). In its 2000 Annual Report, France TeEcorn stated its intention to concentrate its efforts in the areas of wireless telephony, data services, and fixed 176 Goff - Broadband Media Strategies line services-including Internet access (France Tel&cm, 2001a). France T&corn is intent on maintaining its market leadership in France while enhancing its competitive position in the rest of Europe, a posture enhanced by recent strategic moves. Already the top wireless provider in France, FI’ became the second largest wireless operator in Europe (behind Vodaphone) with the acquisition of IJKbased Orange in 2000. Operati ng generally under the Orange name, France T&corn has wireless interests in 20 countries. In 2001 France Telecom became the number two Internet service provider in Europe following the purchase of UK-based ISP, Freeserve. Combined with France T&corn’s ISP subsidiary Wanadoo, IT now operates in the Internet access markets of six European countries as well as Senegal, Morocco, Slovakia, and Lebanon. These two acquisitions have greatly improved FI”s competitive position with respect to regional competitors Deutsche Telekom, Telefonica, and British Telecom (Matlack & Reed, 2001). The 53 billion spent on the Orange and Freeserve acquisitions and 3G licenses added significantly to the indebtedness of France TClCcom at a time when telecoms in general were experiencing declining economic fortunes. In February 2001, FT initiated an IPO of 15% of Orange for 790 million, far below expectations. France TClCcom was subsequently able to raise 14 billion from the bond market (Baker, 2001). The firm has also been disposing of investments in Sprint FON and Sprint PCS acquired in a joint venture with Deutsche Telekom. FT is also disposing of holdings in a microelectronics firm and is considering the sale of surplus property (Milner, 2001). While both Orange and Wanadoo posted net losses for 2000, Orange experienced 82% revenue growth while the ISP’s revenue increased 37%. The number of subscribers of m-owned firms rose from 55 million to 77 million (“France TClCcom, 200 1b). France TClCcom is also in the digital television business through ownership of production companies, cable systems in 14 French cities, and satellite distribution. These operations are linked with the Wanadoo Internet access subsidiary and the level of integration should increase as FI”s broadband network grows. Wanadoo began as a narrowband ISP and portal service and has evolved into a provider of ADSL broadband. France Telecom also delivers broadband though its FT Cable operation. Current plans call for using FI”s content production assets to develop material for broadband Internet delivery, and Wanadoo has acquired a company that produces and markets video games and will use this asset to develop interactive game content for its broadband services (France T&corn 2001a). Like Britain, the broadband market in France has developed slowly. The regional leader, Germany, has over 2 million ADSL-enabled lines. With only Goff - Broadband Media Strategies I77 500,000 ADSL lines in place, France T&corn announced in November 2001 that it would spend 351.5 million to extend the availability of its ADSL service to 80% of the French population by 2004. Competing firms wishing to provide competing ADSL services have encountered many obstacles in dealing with France T&corn. Vivendi’s Cegetel subsidiary complained that FT’s wholesale fee structure exceeded the European average and temporarily suspended efforts to establish ADSL service, hoping for government intervention, In January 2001, the French government threatened France TClCcom with fines and price controls if it continued to delay unbundling of the local loop (Hazan, 2001). Cable broadband access is significant in France. At the end of 2000 there were over twice as many subscribers to cable than DSL users (Pastore, 2001). Germany Deutsche Telecom AG is the largest telecom in Europe, due in part to the size and scope of the German economy. The firm is seeking to consolidate its dominant domestic position in the face of competition while positioning itself as a major European and international player. And, like other European telecoms, DT has experienced the travails of the economic decline in the technology sector of the economy and faces a daunting level of indebtedness from bidding on 3G mobile licenses. Deutsche Telekom has organised its operations into four divisions. T-Corn provides network services for the residential, business, and international markets. T-Systems offers integrated IT, telecommunications, and e-commerce services to major business customers. T-Mobile International AG controls the consolidated mobile telephony businesses with operations in Germany, Austria, the United States, Britain, and the Czech Republic. Finally, T-Online International AG operates Europe’s largest online service provider/portal. T-Online has participated aggressively in the consolidation of the European Internet access market by establishing or acquiring ISPs in Austria, France, Switzerland, Spain, and Portugal in addition to Germany (Deutsche Telekom, 2OOla). Deutsche Telekom is generally regarded as a strong national firm that has been slow to expand into other markets. The company’s fixed services network is the most highly developed in Western Europe with over 8 million ISDN lines and more ADSL access lines than are found in Britain, France, or Spain. At the same time Germany leads these countries in the deregulation of the telecoms sector (Put-ton, 2001). In the area of fixed services, Deutsche Telekom has been forced to engage in price competition and to provide other incentives to retain market share (“The World Beyond,” 2000). While most of the competitors seeking accessto Deutsche Telekom’s network have been relatively small firms, the threat remains that a national telecom from another country may see 178 Goff - Broadband Media Strategies Germany’s open market as an opportunity to expand its European territory (Purton, 2001). While most Western European telecoms actively pursued pan-European ad international opportunities for expansion, Deutsche Telekom achieved a slow start in this important area of strategic activity. After forging an early relationship with France T&corn and Sprint, Deutsche Telekom unsuccessfully pursued a merger with Telecom Italia and U.S.-based firms, including Sprint and Quest, only to be trumped by more aggressive competitors (Cantwell, 2000). When Vodaphone-AirTouch acquired the German firm Mannesmarm in 2000, Deutsche Telekom’s present and future wireless interests were threatened. Vodaphone-AirTouch, now owned by German, British, and American interests, was the largest mobile phone operator in Europe, including Germany (Ewing, 2000). By early 2001 T-Mobile had passed Vodaphone-AirTouch in the German market and Deutsche Telekom, desperate for an American presence, moved to acquire VoiceStream Wireless and a smaller firm, Powertel, in the United States. While VoiceStream was not a large player in the U.S., the firm is one of the few in that market using the same GSM wireless standard found in Europe. Like other Western European telecoms, DT bid large sums on 3G mobile licenses in Germany, Britain, and the Netherlands (Ryan, 2001). In addition, the economic downturn in Europe forced Deutsche Telekom to write down the asset value of its real estate holdings, losing 1.4 billion from its balance sheet (Ewing, 2001). In order to reduce debt, Deutsche Telekom sold its regional cable television networks and its shares of Sprint FON and Sprint PCS (Deutsche Telekom, 2001a). In April 2000, DT listed T-Online International AG with a Frankfurt stock exchange for the purpose of financing acquisitions with shares. A general IPO of about 9% of T-Mobile was planned for 2001, but the sluggish economy delayed this move (Ryan, 2001). Deutsche Telekom enjoyed a record business year in 2000 with a 15% increase in revenue (Deutsche Telekom, 2OOlb). Solid growth continued into 2001. At the end of the third quarter of 2001, T-Mobile had added 3.7 million new customers and experienced a 40% increase in revenue over the same time the previous year while T-Online revenue increased 33% (Deutsche Telekom, 2OOla). Despite deregulatory pressure, Deutsche Telekom has remained dominant in broadband access. The firm has promoted broadband aggressively and ended 2001 with 98% of the domestic ADSL market. DT’s success in broadband is due in part to its proactive approach to building a modem network infrastructure, outspending its European counterparts by a wide margin during the 199Os, and the firm now benefits from one of the lowest line costs in Europe. Competitors find that they cannot offer ADSL service in DT’s price range and generate enough profit to succeed. One analysis determined that nearly half of Goff - Broadband Media Strategies 179 competitors’ revenues are paid to Deutsche Telecom (McClune, 2OOlb). The potential exists for significant competition from cable television providers. U.S.based firms Callahan Asso ciates and Liberty Media are selectively acquiring cable properties in Germany (including several purchased from Deutsche Telekom) and elsewhere in Western Europe. However, Cahners In-Stat Group estimated that only 1,000 German households had cable broadband access at the end of 2000, compared to 400,000 DSL subscribers (Pastore, 2001). Spain Telef6nica, S.A. operates the Telef6nica Group, a diversified firm providing fixed and mobile telephony, data services and consultation to businesses, Internet services, and the production and distribution of media content through multiple channels, including the Internet. While Telef6nica has a growing set of global interests, its primary activities are centred in Spain, Portugal, and Latin America. The company is organised into ten lines of business. Telef6nica de EspaAa manages domestic fixed telephony, while Latin American operations fall under Telef6nica Latinoamericana. The mobile telephony line operates globally under Telef6nica M6viles. Internet operations are controlled Terra Lycos. Telef6nica Media is the media content production and distribution division. Telef6nica Publicidad e Informaci6n (TPI) publishes and markets directories and guides. Telef6nica DataCorp provides data and corporate services, and the parent firm has separate units for customer relations management (Atento) and business-to-business commerce (Telef6nica B2B). A recent addition, Emergia, develops and operates broadband network services in Latin America (Telef6nica, 200 1b) . Telef6nica enjoys distinct advantages in comparison to the telecoms of other European nations. The firm has a history of using equity financing for its acquisitions, having issued IPOs for its original Terra Internet division and TPI in 1999 (Peterson, 2000; Telef6nica, 2OOla). Like other telecoms in the region, Telef6nica has enjoyed strong growth from its mobile division. In order to generate capital for future developments, Telef6nica M6viles was also floated as an IPO in 2000. This enabled the firm to bid successfully for 3G licenses in Spain, Germany, Austria, Italy, and Switzerland without incurring the level of indebtedness experienced by other European telecoms. As of mid-2001, the firm carried less than half of the debt load of France TClCcom and Deutsche Telekom (Schmidt, 2001). Telef6nica operates in virtually every Spanish-speaking country as well as in Portugal and Portuguese-language nations. While European fixed line revenues are generally in decline, the Latin American market is growing. In addition, Telef6nica’s combination of content and Internet assets positions the 180 Goff - Broadband Media Strategies company to be a major force in both legacy and new media in the Spanishspeaking world. The firm’s Inter net division, Terra, was formed in 1999 to take over Internet services in the company’s fixed line service areas. Terra quickly acquired the other significant ISPs in Spain and Latin America, building scale and market share (Telef6nica, 2001~). Terra became the leading Spanish ISP and Internet portal and was further strengthened in October 2000 through the acquisition of Lycos, the third largest U.S. Internet portal and the subsequent IPO issued for Terra Lycos (“Portal Plays,” 2000). Lycos was already a recognised Internet brand and its Lycos Europe subsidiary included a partnership with German media conglomerate Bertelsmann, providing accessto Bertelsmann-owned content. Bertelsmann also agreed to buy 1 billion worth of advertising and other services from Terra Lycos over a 5-year period (“Portal Plays,” 2000; Telef6nica, 2001a). Combining the portal service with Internet access dominance in Spain and Latin America has enabled Terra Lycos to gain substantial market share. Revenue has increased and the company projected that the firm would break even by mid2002 (Shook, 2001). Terra Ly cos’ combination of content and distribution assets has been compared to that of AOL-Time Warner, especially in its significance in the Spanish-speaking world. Terra Lycos has established a wide range of partnerships with Web content providers, many compatible with narrowband access. When broadband access is more widely available Telef6nica will be in an excellent position to leverage its media holdings from the Telef6nica Media division and its Terra Lycos partners to create attractive digital content offerings to broadband subscribers. Telef6nica Media pursues an aggressive convergence strategy and develops content for broadcast and pay-per-view television and the Internet. The division is developing interactive content that will be able to exploit digital broadcast transmission as well wired or wireless broadband delivery. Terra Networks partnered with Telef6nica M6viles S.A. to establish Terra Mobile in July 2000 to offer a global mobile portal to Telef6nica’s wireless customers. Initially configured to work with second generation technologies like WAP (wireless application protocol), Terra Mobile offers the foundation on which to build a true 3G portal (Telef6nica, 2001~). Telef6nica de Espafia operates Telef6nica’s broadband infrastructure. Historically, the firm provided ISDN services to businesses and later made ISDN lines available to others seeking faster Internet access. As demand for enhanced Internet services has grown, Telef6nica de Espafia has been installing ADSL capability. The rollout of ADSL topped 80% of Telef6nica’s lines by the summer of 2001, with more than 100,000 digital broadband lines available (Telef6nica, 2001d). Broadband access in Spain is marketed by Terra at three levels of service and speed and prices that start at approximately 40 per month for typical residential service and top out at nearly 150 for the premium service Goff - Broadband Media Strategies 181 marketed to businesses (“Terra ADSL Plus,” 2001). As is the case across Europe, competition in telecommunications services has been slow to develop and Telef6nica has been accused of using its market dominance to thwart competitive efforts. At the end of 1999, Telefonica controlled 99.5% of the local calling market and dial-up access to the Internet had led to a 14% growth in local call revenues for the year. The firm pursued a methodical rollout of ADSL capabilities, but like the others set wholesale tariffs too high to enable competitors to succeed. In October 2001 the government intervened, ordering a 26% reduction in Telefonica’s tariffs and a 43% difference between wholesale and retail charges (Donegan, 2001). DISCUSSION Convergence The forces of convergence have shaped the strategies of the former national telecoms of Western Europe. All have invested heavily in mobile services and Internet access, including broadband. Each firm seeks to be the dominant provider of these services in its home country and a significant player both regionally and internationally. In mobile services incumbent telecoms enjoyed few advantages over new competitors, enabling a firm like Vodaphone to achieve regional dominance. However, while the mobile sector has experienced tremendous growth, it has been subject to substantial consolidation. During consolidation the financial resources of the incumbent telecoms emerged, enabling such moves as the acquisition of Orange by France TClCcom and Telef6nica’s expansion in the Latin American markets. Mobile Telephony Both France T&corn and Telef6nica are well positioned for success in the mobile sector. FT has a broad European presence with Orange, and Telefonica controls the Spanish-speaking markets. Telef6nica has genuine advantage in the 3G stakes due to its lower level of indebtedness and its practice of funding future ventures in the equity markets. Deutsche Telekom is successful in its home market, but has not developed as a regional or international force in mobile telephony. British Telecom has departed from the European norm entirely by spinning off its wireless assets. Because mm02 is small it is subject to a takeover bid by another national telecom (like Telef6nica) seeking to expand its European stake. The demerger enables BT to focus on enhanced fixed network services, but by narrowing the scope of its operations the firm has 182 Goff - Broadband Media Strategies chosen a different path from the others. Despite the slow rollout of 3G, massive interest remains and 3G projects will move forward quickly as economic conditions improve. However, the level of consumer demand and subsequent diffusion of 3G enabled devices remains unclear. Competition Major barriers to entry exist in the Internet access markets of Western Europe. Dominance by the incumbent telecoms in Internet access has been assured due to the lack of competition from other forms of access (e.g., cable) and the firms’ ownership of the telecommunications infrastructure. The former monopoly telecoms are under national and European Union mandates to unbundle their local loops, but the incumbents are still in control. The impact of delays imposed on would-be competitors was amplified by an economic downturn, thinning the ranks of competitors and allowing the dominant telecoms to consolidate their positions of strength using price incentives to build market share and potential lock-in effects, especially with respect to broadband services. However, if competing providers of DSL service manage to gain significant access to domestic networks, consumers should experience low switching costs and competitors may experience the same kinds of churn problems faced earlier by the free ISPs in Europe. Switching costs are higher when a shift between ADSL and cable modem accessis contemplated. If broadband access becomes competitive, market share will depend on far more than mere availability of broadband service or price. Demand has been price elastic as the upsurge in demand following recent price reductions shows. Telecoms are starting to offer ADSL packages differentiated by price and speed, usually taking a three-tiered approach. The low price service is designed to appeal to budget conscious residential customers while the costlier higher speed package caters to business users. Broadband Media Content Content and value added services are expected to play a key role when broadband becomes more prevalent. France TelCcom and Telef6nica are configured with significant content assets, but Telef6nica holds the stronger position. British Telecom and Deutsche Telekom are largely in the position of partnering with other parties for content provision. This approach affords the benefit of flexibility. However, both the telecoms and the content providers have the ability to change partners. Digital television is growing rapidly in Europe and is delivered by terrestrial broadcast, satellite, and cable. DSL is expected to become a fourth digital delivery platform by using DSL phone lines connected Goff - Broadband Media Strategies 183 to set top boxes. Strategy Analytics (2001) predicted that DSL delivery of DTV services worldwide will increase from 1% in 2001 to 11% by 2008. McClune (2OOla) reports that by 2005 televisions connected to the Internet will account for 13% of the total in France and 11% in Spain. The percentages that will be using ADSL and cable are not specified. At present, cable is generally superior to ADSL in bandwidth and speed, but newer DSL technologies like VDSL (Very High Speed Digital Subscriber Line) are expected by the end of 2002, increasing the potential of broadband to become the fourth DTV platform. However, for telecoms there is a dark side to digital television (Schofield, 2001). One estimate suggests that the percentage of digital television households in Europe will triple from 28 million to 84 million by 2004. No matter how it is provided to the home, digital television has the capability of delivering all manner of digital signals: audio, video, video-on-demand, interactive content, etc. Terrestrial and satellite broadcasters and cable television operators have far more experience in the production, acquisition, and marketing of compelling content than do telecoms. Therefore, some analysts are advising telecoms to follow British Telecom’s lead and leave the content to experienced partners (McClune, 2OOla). Of the four telecoms analysed, Telef6nica appears to have the strongest set of assets for competition in a broadband future dominated by digital television. Forrester Research raised another broadband content issue in late 2001, contending that the owners of superior content will bypass familiar and established portals like AOL and Yahoo! because content firms are already adept at multichannel content distribution. Forrester predicts that firms like Terra Lycos and AOL will succeed because they own both portals and content (Forrester Research, 2001). Most other portals will simply be used to find the Internet sites of major content producers. Issues related to broadband services and content also intersect with the plans of mobile telephony providers. The large players have gambled by bidding aggressively for third generation licenses across the continent of Europe. The motivation behind 3G is the provision of Internet content to the handheld device. The term broadband is used in connection with 3G mobile services but few expect the reality to match the hype, at least in the near term. Nonetheless, a simple extrapolation of well-established technology trajectories leads to a mobile wireless broadband future. Incumbent telecoms and other mobile players face the same issues as wired broadband service providers about the provision of content. At the end of 2000 the Western European telecoms and their competitors await improved economic conditions as they aggressively market their broadband connections and build critical mass. The harsh economic trends of 2000-2001 winnowed out the weak players and forced the survivors to streamline their plans for broadband. The market for broadband access is 184 Goff - Broadband Media Strategies growing at an increasing rate, and digital television continues to develop rapidly. 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question:اینم فصل بعدس (به انگلیسی روان) : Chapter 12 Measurement of the Productivity and Quality of Journalistic Work on the Internet Aldo van Weezel University of the Andes The objectives that the executives of a company establish are primordial in the attainment of their goals. A media company, the same as any other company, has the goal of generating utilities for their owners. However, the fact of being exactly that-a media company-also forces it to have the goal of helping with the development of people in an integral way, promoting values and attitudes that society considers valuable. In order to achieve both goals, economic profitability and social service, the executives of a media company should hold generating products of high quality as one of their high-priority objectives. The problem resides in how to put the objective of the quality into practice. To achieve that, the first thing is to be clear on the fact that the media companies are highly intensive in intellectual work, which is usually carried out by journalists. It is mostly they who are responsible for products that the company delivers, being their performance and the result of their work, elements that affect the survival and prosperity of the company. Therefore, the task of generating products of high quality belongs to the journalists. In order to carry out an efficient and effective management of persons and resources, having tools that allow measurements of quality and productivity of the journalistic work becomes a necessity for the executives of a media company. OBJECTIVES AND SCOPE OF THE RESEARCH This work seeks, in an introductory way, to study the relationship between quality and productivity within the media companies at the present, concentrating specifically on the news sites on the Internet. Not knowing what 192 van Weezel - Measurement of Productivity and Quality the economic future of those companies providing contents on the Internet will bring also justifies this investigation. First of all, the concept of quality is approached, revising its meaning inside the service companies and then relating this concept to the journalistic theory. As a way of bringing the concept of quality closer to the reality, the results of 14 in-depth interviews to the editors of the most important online media in Chile are presented. The bibliography on productivity and how the concepts seen there can be applied to journalistic work are also revised. All this will allow us to relate both concepts, quality and productivity, in order to generate management policies that will help to improve the quality of the informative products of the company, and the productivity of the employees. Finally, the conclusions of the work are stated. The Search of Quality Quality can be defined as “to produce and to provide clients, without error and waste, superior values in products and services that each consumer wants and needs” (Christopher & Thor, 1998). However, there are numerous other definitions of quality, and in the last decades remarkable authors that have written about it have arisen. All their contributions helped with the evolution of the theory of quality management that began as a simple control of the elaborated products through quality inspections to the philosophy of Total Quality Management (TQM) used currently (James, 1996). A review of the most outstanding authors is next. Juran (1964) defined quality as “fitness for use,” and he was known for his trilogy of quality: planning of quality, quality control and improvement of quality. In 1974, Juran pointed out five characteristics of quality: technological, psychological, time oriented, contractual and ethics. Deming (1982), on the other hand, defined quality as “fitness for purpose,” and specified 14 points to guide the search for quality, where he pointed out that an organisation should: be driven towards quality, look for the problems to solve them, constantly worry about improving the production systems and the training of its employees, and not be based on numeric production quotas. Crosby (1979) refers to quality as conformance to requirements and pointed out that the only standard of performance is the one that produces zero defects. He argued also that it is always cheaper to do the work right the first time. Feigenbaum (1991) contributes various ideas to the theory of TQM by means of his theory of the Total Quality Control. Ishikawa (1985) popular&d the ideas of Juran, Deming and Feigenbaum, and created the concept of Quality Circles. Finally, Taguchi (1988) centred his works in the quality of design methods. van Weezel - Measurement of Productivity and Quality 193 It is also important to mention the ideas and concepts of Garvin (1988) about quality. According to him, it has eight dimensions: performance, features, reliability, conformance, durability, serviceability, aesthetics and perceived quality. It has also five bases or focuses: transcendental, based on the product, based on the user, based on the manufacturing, and based on value. Therefore, the centre of attention of quality management has passed from the product to people. The TQM philosophy, a result of all the contributions pointed out above, does not only concern the products and the processes involved in its elaboration, but it should also influence mainly the organisational culture, communications inside the company, the education of employees, and the managerial responsibility; and in the external environment, it should consider the clients and the suppliers very much. This way, in order to achieve the goal of the TQM philosophy, a cultural change is necessary to improve the human relationships inside the company (James, 1996). Within this evolution of quality management, in particular what is related to the service companies, quality has become as important an element as getting scale economies for a manufacturing company. It is desired that services companies adjust to the dynamic changes of clients’ expectations, so that the focus of the quality management moves from “zero defects” to “zero desertions of clients”. This happens because it is more expensive to get new clients than to retain the existing ones (Prahalad & Krishnan, 1999). This saving in the costs from keeping clients has been designated loyalty economies (Reichheld, 1996). Quality does not only generate a greater loyalty of the clients, but also a smaller sensibility toward the price (Porter, 1980); it also makes a company more competitive (Ivancevich, Lorenzi, Skinner, & Crosby, 1996), and gives it a differentiation strategy, a specially relevant when not reaching production levels that allow a strategy of cost leadership (Litman, 1988). Quality of Media Although definitions of quality and theories on managing them are plentiful in the bibliography about service and manufacturing companies, getting to the current TQM philosophy, it is not possible to say the same for the bibliography on media management. Quality in media is not only a desirable objective within the management, but also an indispensable element to reach the social, political and cultural goals that democratic societies imposes on journalism (Picard, 2000). A synthesis of the authors that have treated this problem of quality in media companies is developed next. Nieto and Iglesias (2000) affirmed that quality of information begins with its truthfulness; with the adaptation among the product that the media company offers and the reality that it tries to reflect; and with the coherence among the 194 van Weezel - Measurement of Productivity and Quality promise of information supply made in its moment by the company and he informative contents that it really delivers. In the same line, S6nchez-T&ernero (2000) affirmed that quality consists in the search of a balance between the fidelity to the signs of identity of the media and the capacity of adaptation to the demands of the public; between the information of the public’s desires and the implicit demands sensed by the media managers; and between what the public is willing to pay for and its cost. In this last balance, %nchez-Tabernero stresses the fact that we should not think in short terms, but that managers should rather think of the permanency of the company in the long term. Even more, he affhns that the quality supposes to destine the biggest quantity in available resources to get the best possible elaboration of the informative and entertainment products. The work of Lacy (2000) confirms S&nchez-Tabernero’s statement, also specifying that money is not enough to assure quality, but that in order for a media to produce high quality content consistently over time, it is crucial that it counts with enough financial supports. This support would come, according to Lacy, of the financial commitment that would generate an intense competition in the market. Picard (2000) affirmed that journalism quality tends to be defined not by its presence, but for its absence, due to the practical impossibility to articulate the elements composing it. Bogart (1981) made a quite successful intent of discovering these elements in the press. His research took him to establish that directors of competitive and not competitive, big and small newspapers, agree on three characteristics associated to the quality: accuracy, impartiality and investigative spirit. The surveys of Bogart (1981), applied to managers of written media, delivered as a result that the five most important elements of quality are: a high proportion of writing material with regard to that of agency; the total quantity of contained advertising; a high proportion of interpretative material; the quantity of letters to the director in numbers; and the diversity of the political columnists. The interests of the readers, however, coincided only with one of those mentioned: in the number of letters to the director; the other four elements of interest for the readers would be: the presence of an action column; a high proportion of sport information and features with regard to the total content of the information; the presence of a summary of news; and a high proportion of illustrations. Another empiric study with readers corresponds to the Journalism Credibility Project that was carried out by the American Society of Newspaper Editors (ASNE) in 1999. In this study, the public’s attitudes are studied in the face of the credibility of the media, trying to look for the deep causes of disconnection between the journalists and their public. The study detected six fundamental reasons for which the media have a low credibility: too many grammar and factual errors; little respect for the readers and their communities; prejudices of the journalists when covering a story (as much in the van Weetel - Measurement of Productivity and Quality 195 selection as in the reporting); too much attention to the sensationalist stories; prevalence of work methods that go against the values of the readers (sacrifice of accuracy for speed, indifference in the face of information that can cause damage, etc.); and finally, those who have participated in a journalistic process are the most critical in the credibility of the media. The elements of quality that Bogart (1981) mentions and the report of the ASNE (1999) belong to what Sanchez-Tabemero (2000) denominates subjective elements. According to him, quality depends on objective and subjective elements. The first ones have to do with raw materials, defects of the products, post-sale services, available technology, etc. The subjective elements refer to the quality perceived by the clients, and even though they are more important, they are not so easily measurable. As well as Sanchez-Tabemero (2000) distinguished two types of elements in the quality, Nieto and Iglesias (2000) went beyond contents and support, and they included the audience and the advertisers. Quality, according to them, is the sum of qualities: quality of people’s work, quality of the informative offer that makes the company in the beginning, quality of the informative necessity present in the market, quality of the contents and support of the informative product, quality of the audience, and the advertisers’ quality that insert its announcements in the product. On the other hand, Nieto and Iglesias (2000) affirm that the economic value attributed to the product is frequently an indicator of quality. Picard (2000) agrees with this, explaining that the concept of quality involves providing enough value for the time or money that the consumers spend when obtaining and using a product or service. This is easy to check in the successful media that offer economic information, like the Wall Street Journal, Bloomberg and CNN Financial News, among others. The information that they provide, probably because it is specialised and directed to those who make decisions that involve large amounts of money, is very valuable for their public and therefore they are more willing to pay a high price for it. Salavetrfa (2000) has studied the factors that have taken Spanish newspapers to successon the Internet: the improvement of the informative update, the proliferation of documentary resources, the interactivity with the users, and the personalisation of contents. Now, the quality, according to Sanchez-Tabemero (2000) is a comparative concept, since a product has quality if it overcomes its competitors in those aspects that the public considers more valuable. This is tremendously important to generate any type of evaluation, since it allows the scale of rneasufement not to be rigid, but relative, simplifying the process of analysis of quality. 196 van Weezel - Measurement of Productivity and Quality Productivity of Journalistic Work It was stated earlier in this chapter that in the area of quality management there is a wide bibliography related to services and manufacturing companies, but not for media companies; the same happens with the management of productivity. Peter F. Drucker, in his book The Practice of Management (1961), mentions productivity as one of the objectives that every company should have for its performance and results. He defines it as the “balance” among all the production factors required to generate the biggest quantity in product with the smallest effort. Of course, it is possible to specify this definition further and to say that productivity worries about the efficiency and the effectiveness with which the goods and services are made (Sumanth, 1998). On one hand, the efficiency is the ratio between the actual inputs and standard inputs. The effectiveness, on the other hand, is the degree of the reach of goals or objectives. Hence, the efficiency is necessary, but not enough to improve the productivity. In a newsroom, it is possible to translate it this way: If you want to be productive you have to be efficient and deliver a quality product. Reaching quality automatically implies reaching the objective of helping the development of people and society, and the survival and profitability of the company in the long term. It is possible then to speak indistinctly about quality and effectiveness in this case. The problem that arises now is what it means for a journalist to be efficient. The separation of these two elements that compose the productivity is only with the purpose of a theoretical analysis that allows the formulation of plans for the management of people and resources, since in practice, the efficiency frequently helps to obtain a better quality. Picard (1998) proposed the measurement of the productivity of the journalists by means of the analysis of their activities. The reasoning that Picard uses is based on the fact that a journalist who shows high activity levels has the potential and necessary understanding to produce materials of high quality. The categories of use of time that he specifies are seven: personal or phone interviews; phone calls; attendance at events (conferences, meetings, etc.) pertaining to the stories about which they write; attendance at staff and training meetings; reading of newspapers, magazines, etc.; thinking, organising, and waiting for information; and finally, transfers, taking of pictures, and others. Apparently more studies about the productivity of the journalistic work do not exist. van Weezel - Measurement of Productivity and Quality 197 RESEARCH OF CHILEAN ONLINE MEDIA Up to now, the concepts of quality and productivity have been described in a general way, and an attempt has been made to refer to these concepts in the existent bibliography on media management. Before relating these concepts and suggesting management politics applicable to the media, we have to revise the results of 14 in-depth interviews with editors of Chilean online media. The selected media are among the most noted in Chile, and they include newspapers, magazines, financial newspapers, television channels, radios, and news sites that publish on the Internet exclusively.’ The list is not exhaustive, since not all the media have their web pages. As for the results, these cannot be extrapolated to all the countries, although they could be comparable to countries with emergent economies that have an Internet penetration rate similar to the Chilean, that already reached 20% at the beginning of 2001. This rate is still far from the rates of penetration in developed countries that are over the 50% mark (CNTV, 2001). It is also necessary to add that since it is an interview and not a survey with closed questions, the answers are very diverse. The questions were directed towards understanding which is the concept of journalistic quality that editors have; what they do to measure and to control it; what importance they give to it; how they try to improve it; the disposition, by the company, to invest in it; the existent relationship between quality and productivity; the motivation level of the journalists in charge; how they control productivity; what they need to achieve a work of superior quality; and if they consider that their competition is of superior or inferior quality. The answers, since the questions were open, present numerous shades. Grouping those that were similar, it is possible to extract the following information: ’ The most prestigiousonline media in Chile are about 16. The following is the list of the 14 media that are consideredin the research.Internet news sites(no paper copy): El Area (http:Nwww.elarea.cl), El Mostrador (http:Nwww.elmosuador.cl), Primera Linea (http:Nwww.primeralinea.cl), Terra (http://www.terra.cl). Newspapers: Emol (http:Nwww.emol.cl), El Mercurio de Valparaiso (http://www.elmercuriovalparaiso.cl), El Sur (http://www.elsur.cl), La Segunda (http://www.lasegunda.cl), La Tercera (http:Nwww.latercera.cl). Financial newspapers: El Diario (http://www.eldiario.cl), Estrategia (http:Nwww.estrategia.cl). Magazine: QuC Pasa (http://www.quepasa.cl). Radio: Radio Chilena (http:Nwww.radiochilena.cl). Television: Corporaci6n de Televisi6nde la UniversidadCat6lica (http://www.canal13.c1). 198 van Weezel - 0 Measurement of Productivity and Quality Most of the editors pointed out that quality resides within the contents: they should be reliable, trustworthy and truthful besides being presented quickly on the site once the news has happened. Less than half of the editors agreed that quality implies that the information delivered should be complete and deep and that it also has to be well edited, without spelling lacks and in an appropriate language for the public. Very few editors pointed out the importance of: using good sources; the information should be selected and presented according to their importance; the media should have their own agenda; the texts should be brief; and the journalistic ethics should be respected. All agreed that it is possible to measure the quality of the journalistic work, independent of the difficulty it could bring. Regarding how to do it, the opinions were diverse. Also, many agreed that the quality should be measured by means of the interactivity with the readers (e.g., emails), the visit counters and the quanti ty of news hits that it achieves. Only half of the editors recognised that there is a lot of concern about the quality in companies; and the same quantity of editors afftrmed that there are politics within media heading towards the improvement of the quality. Half of the editors confirmed that they have formation programs for the journalists in their company. The most frequent answers point towards, on the one hand, the training for using technological tools, and on the other hand the explanation that specialisation does not exist due to the small size of the team of journalists. Two editors also said that the journalists are formed mainly by means of the experience that they acquire when working on the streets. The controls of quality are exercised mainly by the editors who apply their personal approaches. Only one of the media in the research has a copy editor. Little more than half of the editors believe that their company would be willing to invest in quality. The main reasons for not doing it yet is the recent investment made to begin with the news site and the difficult economic situation of the country. Many editors recognise that there is a relationship between quality and productivity. When explaining this relationship half of them pointed out that more quality means more productivity. According to what we saw in the preceding sections, this is not necessarily true, because productivity requires efficiency also. More than two thirds of the editors believe that the journalists that work for them are motivated to achieve a quality product, and this mainly van Weezel - Measurement of Productivity and Quality 199 because of the prestige of the media and the journalists’ sense of belonging to it. l More than half of the editors recognise that the reaction of the journalists in sight of a productivity and/or quality measurement would be one of distrust confronted to the control and fear of being discharged. Some of the editors recognised that the measurements would make no sense. l Regarding the question of what resources the editors believe are lacking that would increase the productivity of their employees, the most frequent answer was to have a bigger team. This answer is contradictory in relation to the meaning of the asked concept. Again, this answer of the editors demonstrates that they do not understand the concept of productivity discussed earlier in this work. l When asked about the necessary resources to achieve a work with better quality, the most frequent answer was the necessity of getting more time, which reflects what was said in the previous point, regarding how reduced the teams of journalists working online are. Other remarkable answers relate to the motivation of the employees, for example recognition stimuli or economic retributions. 0 Almost half of the editors affirm that their competition is of inferior quality, and the others consider that it is similar or that it is not direct competition. Only one of the 14 editors recognised that their competition is of superior quality. QUALITY AND PRODUCTIVITY MANAGEMENT OF A MEDIA COMPANY Deming said that quality does not come from the inspection, but from the improvement of the processes (James, 1996). In the case of media companies, these processes are not only limited to those described by Picard (1998), which were enumerated in the above. The processes should have standards of excellence to guide them toward a better quality. Giles (1991), for example, picks up standards that are applicable to journalists and organises them in four categories: accuracy, reporting, writing and communication. For example, in the category of accuracy, all the requirements for writing a story are stated, giving form to the process by means of such indications as following the style manual, show a complete context that includes all the points of view in a fair and complete way, verification of identities and addresses, etc. Determining the standards is a complex process that requires a lot of work and the cooperation of the journalists that will take it to the practice. It becomes necessary to have in 200 van Weezel - Measurement of Productivity and Quality mind what has been revised in the preceding sections about quality and productivity to structure a coherent and appropriate standard of quality to the journalistic practice, and that it should offer the media the base of their differentiation strategy. Many traditional media companies have, actually, standards of excellence that reflect, also, their editorial line. The final stage is to take these standards to appraisal systems that allow to see how much these standard statements have been reached-effectivity-and what has been the cost of reaching them-efficiency. In other words, evaluate the productivity of the journalistic work. The next goal is an appropriate communication of the standards and procedures to measure them by the managers toward the employees. These evaluation procedures should encourage teamwork and innovation. It is necessary to break the barriers between different areas or sections if these disturb the effective improvement of the quality. In the media, therefore, experts should be in “topics” and not in “areas”. This will promote teamwork and innovation in an effective way. CONCLUSIONS The media companies that participate in competitive markets are not far from the search of utilities to stay in the business, and therefore, their executives require improving the techniques and management tools they use, continually. Before devoting to the management, it is necessary to recognise that there is an intensive intellectual work in media companies and that it is exercised mainly by journalists. The journalistic work thus becomes the main input of media companies, but it presents two problems at the moment of directing it. On the one hand, the nature of the intellectual work of journalists because of the creativity it requires loses its structure, and on the other hand, the product generated by a journalist has the capacity to influence people and institutions directly. Then, quality becomes the main guide to a good management and a differentiation strategy that allows the company to obtain the goals of profitability as well as those related with the roll of a media in a democratic society. Quality is part of the search of the productivity, which consists in being efficient and effective. The efficiency resides in the good management of the resources, and the effectiveness in reaching the goal or objectives that in the case of the media belong to reaching the maximum quality. The TQM theory could help greatly to reach the quality in the newsroom, with the necessary adaptations to the reality of the journalists themselves. TQM implies an active commitment of the whole company and full participation of van Weezel - Measurement of Productivity 201 and Quality the employees; all that should be summed up by means of the elaboration of an excellence standard that should be known by all the employees. In order for journalists to participate in the TQM philosophy and to assume the commitment of quality with society and with the very company, the motivation should play a preponderant roll. The journalists should also realise that an increase of the productivity in its company will help to make it more valuable, and as a consequence, they will be more and more irreplaceable. From the results of the survey of online media editors, it is possible to conclude that there is still a lot to advance regarding management of the newsroom in these media. None of them has formal standards of excellence that indicate the level of quality that they are aiming at; they trust too much in the single approach of the editors, which in turn have been formed mainly through their own experience. Of the characteristics associated with the quality of the interviewed editors, the only one that would be characteristic of an online media corresponds to the speed and instantaneous publication of the news. The other ones are traditional characteristics of the quality journalism. There is no (or very little) reference to the use of multimedia capacities that the web sites offer today. The scarce attention given to this can be attributed to the following factors mentioned by the editors: a very reduced team, and lack of technical means because it is a recent investment in a business that does not yet show its profitability. The training and specialisation programs are fundamental in the TQM philosophy. Regrettably, they are not well considered by the editors, given the widespread belief that experience teaches everything, reinforced by the small size of the newsroom team that gives them neither the time nor the space to train and to specialise. What a media company should finally look for, is productivity. Its components are quality and efficiency. Therefore, the management politics should point to the management of the productivity in order to solve the problems of quality. And, as seen in this work, it is compelling to continue the research about the productivity in online media, especially in order to establish guidelines on how to generate excellence standards. REFERENCES ASNE - American Society of Newspaper Editors (1999). credibility: Perspectives of the public and the press. Bogart, L. (1981). Press and the Public. Associates. Examining our Mahweh, N.J.: Lawrence Erlbaum 202 van Weezel- Measurement of Productivity and Quality Christopher, W., 8z Thor, C. (1998). World-class quality and productivity. Menlo Park: Crisp Publications. CNTV - Consejo National de Televisi6n de Chile (2001). Estudios de audienciu y consumo televisivo. Crosby, P.B. (1979). Quality IS ’ f ree: the art of making quality certain. New York: McGraw-Hill. Deming, E. (1982). Quality, productivity, and competitive position. Cambridge: MIT Center for Advances Engineering Study. Drucker, P. F. (1961). The practice of management. London: Mercury Books. Feigenbaum, A. (1991). Total quality control (3rd ed.). New York: McGraw Hill. Garvin, D. (1988). Managing quality: the strategic and competitive edge. Free Press. Giles, R. (1991). Newsroom management. Detroit: Media Management Books Ivancevich, J., & Lorenzi, P., & Skinner, S., & Crosby, P. (1996). Gestion, calidad y competitividad. Madrid: Irwin. Ishikawa, K. (1985). What is total quality control? The Japanese way. Productivity Press. James, P. (1996). Total quality management. London: Prentice Hall. Juran, J. M. (1964). Managerial breakthrough. New York: McGraw-Hill. Juran, J. M. (1974). Quality control handbook. New York: McGraw-Hill. Lacy, S. (2000). Commitment of financial resources as a measure of quality. In R. G. Picard (Ed.), Measuring media content, quality, and diversity (pp. 25-50). Turku: Turku School of Economics and Business Administration, Business Research and Development Centre, Media Group. van Weezel - Measurement of Productivity and Quality 203 Litman, B. (1988). Microeconomic foundations. In R. G. Picard, J. P. Winter, M. E. McCombs & S. Lacy (Eds.), Press concentration and monopoly (3-34). Norwood, NJ: Ablex Publishing Corporation. Nieto, A., & Iglesias, F. (2000). La empress informativa (2da. ed.). Barcelona: Ariel . Picard, R. G. (1998). Measuring and interpreting productivity of journalists. Newspaper Research Journal, Vol. 19, No. 4,71-84. Picard, R. G. (2000). Measuring quality by journalistic activity. In R. G. Picard (Ed.), Measuring media content, quality, and diversity (97-103). Turku: Turku School of Economics and Business Administration, Business Research and Development Centre, Media Group. Porter, M. (1980). Competitive strategy. NJ: The Free Press. Prahalad, C. K., & Krishnan, M. S. (1999). The new meaning of quality in the information age. Harvard Business Review, Vol. 77, No 5, 109-l 18. Reichheld, F. (1996). El efecto de la Zealtad. Bogota: Editorial Norma. Salaverrfa, R. (2000). Claves de1 Cxito de 10s diarios econ6micos en Internet. El profesional de la informacidn, Vol. 9, N” l-2,26-30. Sanchez-Tabemero, A. (2000). Direccibn comunicacidn. Madrid: Catedra. estrategica de empresas de Sumanth, D. J. (1998). Total productivity management. Boca Raton: St. Lucie Press. Taguchi, G. (1988). Introduction to quality engineering: Designing quality into products and processes. Tokyo: Asian Productivity Organization. This Page Intentionally Left Blank

question:اینم فصل بعدی (به انگلیسی روان) : Chapter 13 The Influence of the Human Factors on the Performance of Media Enterprise: Case Studies on Cross-Media Publishing in Greek Media Enterprises Anastasios E. Politis Royal Institute of Technology and Politis Research Media enterprises and the publishing industry face significant structural changes that affect the organisational and the administration structure of the enterprises. The implications for the enterprises are related to new requirements, concerning mainly the ability to function in the new publishing environment and the changing market of communications and information industries (Hancock, 1998). In particular, these changes affect the structure, workflow and working environment of the enterprises that are operating in the publishing sector. Keyword of this development is the application of cross-media publishing concepts (Crossmedia - Die Druckindustrie ‘98, 1999). Traditionally, competence of human capital within the publishing process was based on print media qualifications and skills offered by the traditional education and training oriented within these fields (Komblinger, 1996). The application of new working tools and technologies like XML, Internet publishing and the new requirements for publishing both for print and for electronic media, need to be administrated by human capital with new competence (GOC, 2000). More specifically, the following aspects need to be investigated: l l Orientation of new skills Competence of human capital for cross-media publishing The main research question that needs to be answered is whether media enterprises, and in particular those activated in the publishing, pre-media and prepress processes, as well as their employees, are prepared for the application 206 Politis - The Influence of Human Factors on Performance of new technologies emerging in these fields. These new processes and technologies form the cross-media publishing production concepts. Their main characteristics are the following: Application of new workflows based on the common processing of data for both print and electronic media. Development of asset and content management software. Increasing applications of new processing technologies for publishing based on XML (extensible markup language). Development of new standards and formats for production management and workflow in publishing (CIP 4, Job ticket). The potential replacement or co-existence in new environments of traditional processes like graphic design, page and document layout made today by software applications like Quarkxpress, Indesign and Illustrator. The fact that in new technologies, applied, computer and programming skills are considered important and necessary for the successful employment of existing and potential personnel, but they need to be further defined (Danielson, Ericsson & Estmer, 1995). The main research objective that needs to be explored is the competence characteristics of human capital employed or to be recruited within a media enterprise. The new competence is related with the technologies mentioned previously and the implications on structure, organisational and technical orientation of the media enterprises and, in particular, of these enterprises operating within the pre-media and pre-press fields of the graphic arts and media sector. METHODS The research method is based on literature study consisting principally of industry studies, analyses and scientific conferences on cross-media publishing (Cornprint, 1998; Engelbach, Fahnlick, & van Hoof, 1999; GATF, 2000; CIP4, 2001; XML, 2001). Furthermore, literature studies were carried out on the human capital performance in the media sector (Andersen & Fagerberg, 1997; Mediengestalter/in fur Digital..., 1998; Komblinger, 1998; Crossmedia-Die Druckindustrie ‘98,1999; Koenig, 1999; COMES, 2000; NRW, 2000. The research method also included interviews with media enterprises. Interviews were conducted through the distribution of a questionnaire at Greek publishing, graphic arts and media enterprises. Research was carried out Politis - The Influence of Human Factors on Performance 207 between October and December, 2001. The selection of the enterprises has been made according to their orientation in prepress and publishing production and processes. Questionnaires were sent out to 70 enterprises. Twenty-five questionnaires were sent out by e-mail and 35 by fax. Answers were obtained by 34 enterprises, which is almost 50% of the distributed questionnaires. Reminders to the enterprises took place through telephone. At least 10 of the questionnaires were answered through personal interviews with the owners of the enterprises. Following this procedure, interesting remarks and comments were also obtained. It is interesting that, although information of the enterprises was not requested, almost all enterprises provided their data, such as name, address, telephone, fax and e-mail. The development of the questionnaire was based on the following structure: The first section consisted of two questions requesting the number of employees and the main activity of the enterprise. The second section consisted of three questions where feedback was requested on the familiarity degree on cross-media publishing technologies and processes, the usage of postscript or PDF and the percentage of Internet use for exchanging jobs’ documents. The third section consisted of two questions addressing issues on competence and skills requirements and characteristics and their degree of importance for the enterprise. The fourth section included eight questions regarding the role and performance of human capital within the enterprise environment. The results of the survey were analysed and combined with the literature research in order to obtain the research conclusions. CROSS-MEDIA PUBLISHING BACKGROUND According to a study published by the German federation of printing and media industries (BVDM), print, publishing and Web run together and create new forms of communication. Computer-to-technologies, media independent data handling, cross-media production, database printing, CD-ROM, Internet and Intranet are the elements of communication of today (Crossmedia - Die Druckindustrie ‘98, 1999). Cross-media publishing has been developed rapidly in recent years, especially after the spectacular development of technologies used for the publishing process, like digital prepress and new applications of traditional working tools (PIRA, 2000). As an example, Photoshop originally was used for the image digital processing in prepress production for print media. Now, the same software is widely used for web and multimedia applications. 208 Politis - The Influence of Human Factors on Performance Cross-media publishing is characterising this new process, being a rather new term to the publishing sector. It first appeared in research studies and surveys, international exhibitions and suppliers descriptions (Cornprint, 1998; Engelbach et al, 1999; GATF, 2000). It defines the production workflow and process for publishing both print and electronic media. Another term that is used is pre-media. Pre-media has been introduced as a keyword at printing and media exhibitions (IMPRINTA 1997, IPEX 1998, DRUPA 2000). Regarding this interpretation, pre-media stands for content and information processing before the specification of the output media is defined (Crossmedia - Die Druckindustrie ‘98, 1999). According to Karttunen and Nikulin (1999), printed and web media often use the same content. Then we talk about cross-media publishing or about information trade in selected parallel media. In services and trade, documents need to be produced, output printed and distributed. The distribution may be physical, e.g., remote printing, or virtual, such as e-mail, web-distributed documents, logical documents and databases, from which linking takes what is needed at any one moment. The data management issues of media production are central, and updated process definitions are needed for the workflow, new formats and cross-media publishing channels. There are many standards, and new specifications are derived from various simultaneous and urgent needs (Karttunen & Nikulin, 1999). Another approach in cross-media publishing is the UPAS concept (universal printing application server), which has been introduced by Karttunen and Nikulin (1999). UPAS is defined as a concept to be integrated into future publishing systems to complement the existing production systems, mainly to bring matadata benefits. Regarding Karttunen and Nikulin, UPAS server collects the XML documents, linking their element files (e.g., PDF) to the final outputready XML documents. The modelled product data is then organised as the linking elements in a resource repository, easily accessible and linkable over the web for later reuse. The UPAS server may also process metadata files facilitating costing and production management systems (Karttunen 8z Nikulin, 1999). Dreyer introduced another issue on cross-media publishing interpretation. He argued that the application of integrated electronic workflow production systems at print media processing cannot be realised without XML-based jobtickets (Dreyer, 2001). As Dreyer points out, the application of job-ticket format offers new possibilities in print and electronic media automation of the production process; it optimises the workflow and allows the standardised exchange of orders’ descriptions. XML is considered as a milestone on cross-media publishing workflow and production process. According to a description by Arbortext, Epic E-content Politis - The Influence of Human Factors on Performance 209 engine based on XML forms the centrepiece of a web-based single source system to capture, personalise, and publish business-critical content for delivery to the Web, print, wireless devices and other media (Arbortext, 2001). Furthermore, following a description of cross media concepts stated by Seder (2001), printing on demand and database publishing basic characteristic is the ability to publish the same content in different formats-printed on paper, on CD-ROM or published both on Intra- and Internet. The application of a system based on SGML,/XML is a necessity in order to enable the separation of the structure, content and graphic appearance by an automated generation of different output products. A further advantage of these formats (SGMLKML) is that information based on these standards will be reusable well into the future (Seder, 200 1). Regarding the use of XML for the job definition format, Mann (2001) explains that its application is necessary in order to relate processes to resources. Furthermore, on the same subject, Prosi points out that the job definition format (JDF) application uses XML as a database and not as a markup language. The use of the same code structure offers the possibility to create and read data necessary for the efficient JDF application. JDF requires an object “tree” in order to navigate among links and references. C++ is used a lot for this application (Prosi, 2001). Cross-media publishing trends, especially for newspapers, have been recently presented at the Ifra-Expo 2001 exhibition in Geneva. Based on the reports from the exhibition, five main trends have been defined and are shortly presented below (Cross-Media Publishing.. . ,200l): Merging of suppliers offering publishing systems and components in the publishing process of newspapers. Increasing use of web application for running newspapers editing and processing; formation of workplaces on web browser structures and XML editors. New developments concerning the application of a layout software; Quarkxpress versus Adobe Indesign is one dimension of the problem. Questions arising on the issue of extending the existing layout software in all newspaper layouts or use new software; Interesting new applications on systems supporting XML. Application of artificial intelligence solutions on production workflow and asset management issues (mainly in archive browsing for images and newspapers pages) Further development of digital printing applications for newspapers. 210 Politis - The Influence of Human Factors on Performance EMERGING COMPONENTS OF THE CROSS-MEDIA PUBLISHING PROCESS Content management is defined as a concept, which, among others, facilitates processes for editorial and production systems, personalisation and syndication, database publishing, rights management, enhanced customer relationship management, efficient delivery of content and e-commerce applications (Seybold, 2001). Mathison argues that the primary benefit of digital content management is a solution to the production and reuse of digital media files. But its real value extends far beyond tactical production, to a strategic advantage. Based on this, digital content management delivers a strategic competitive advantage to the publisher through faster product and service development life cycles, implementation of new sales channels on the Internet, higher valuation of the company and significantly improved, secure brand management (Mathison, 1999). Another argument concerning the new interpretation of content is the following: Content within a cross-media process can be also defined as one of the three dimensions in which a media and communications service can be tailored to individuals or communities; the other two dimensions are presentation and delivery (Turpeinen, 1999). According to this argument, the publishing process can be defined in a new way where each element or production step can be adjusted to fit to each of these dimensions. Presentation is the media itself. Delivery is defined as the process whereby the content reaches its users, readers and target groups through the media. This interpretation of content stated by Turpeinen seems to be developed according to Compaine’s definition where content is one of the three dimensions of the media industry. Together with process and format they form the primary business activities of the media industry (Cornpaine, 1984). Another cross-media publishing component is considered asset management or digital asset management. Historically, pre-press houses have stored and maintained their customer’s material first as film and then as electronic files. Today, many enterprises are finding that digital asset management, if done properly, can be a profitable revenue source. This statement was the conclusion of a panel discussion focusing on assessing digital management needs, at International Prepress Association (IPA’s) 36th annual technical conference (Cross-Media production..., 2001). According to Sisson, one of the panel participants, benefits of the application of an asset management process have been, among others, centmlised product information management, ability to leverage content for Politis - The Influence of Human Factors on Performance 211 multiple uses and increased revenue for the customer (Cross-media production..., 2001). Digital asset management is described as a management system, which can be either an elegantly proportioned database, or a clever manipulation of the operating system’s file management technology. Within these two extremes lie all manner of variations on the database theme. Content or asset management is about using computers to improve the ways in which document elements are shared and used. Once it is possible to control digital content elements proactively, they become potentially valuable assets that can be deployed to the overall benefit of the business (Brunner, 2001). Regarding the EU-sponsored project “PRINT-IT” main objectives, “printing and publishing industries need to be brought together in-line with currently available and emerging information and communication technologies”. According to the project description, a global architecture structure should be created for supporting the “Distributed Publishing-DP” concept (Print-It, 2000). The components of this architecture are connected via ISDN and are networked with a high speed ATM backbone. PRINT-IT components are presented here (as they are described in the project brochure): l l l l l l Content providers DP (Distributed Publishing) service provider platform DP point of accessplatform Document server DP ED1 platform Indigo colour digital printing press The components of the PRINT-IT project system include a variety of tasks and processes such as document creation, job tickets, soft-proof, job specification and billing, remote access, transaction management and www server administration. COMPETENCE OF HUMAN CAPITAL FOR CROSS-MEDIA PUBLISHING “Graphic art and media enterprises are entering into new business fields, something that leads to a new market position. Online publishing, cross-media publishing and digital production technologies are the key words for the abovementioned development. W ithin this new market orientation, graphic arts and media enterprises should develop their performance further. One of the important factors for the successful market positioning is the further training of 212 Politis - The Influence of Human Factors on Performance employees and entrepreneurs into the new media qualifications” (Mediengestalter/in fur Digital..., 1998). This is the introduction to the documentation for the necessity of restructuring of training in the German graphic arts and media sector. According to the new qualification profile that has been established in the German graphic arts and media industry, traditional qualifications have been combined with new and are offered since 1998 at the German educational system. The most important element in this reform is the establishment of the “Media designer for digital and print Media” qualification profile (Mediengestalter/in) which is divided into four subqualifications as follows (Mediengestalter/in fur Digital..., 1998): l l l l Media Media Media Media designer operator technician consultant Measures for restructuring the offered education and training are necessary in order to face the lack of qualified human capital within the new media production environment. The survey among some European countries has shown considerable differences concerning the intensity of measurements for the development of new courses and the adaptation to the new requirements of the labour market. For example, Denmark, Germany and Sweden have already developed new courses for cross-media production (Andersen & Fagerberg, 1997; Mediengestalter/in fur Digital..., 1998; Grafiska, 1999). Other countries are now trying to integrate such processes into their educational and training systems (Politis, Praeventive Massnabmen.. .,1999; Politis, The new structure.. . , 1999). In another study published in Denmark, the multimedia job profiles and qualification requirements are described in relationship with 10 responsibility areas: Sales, administrative project management, creative project management, concept development and design, 2D graphics, 3D graphics, programme construction, video and picture treatment, sound and text production. A job profile can consist of one or more responsibility areas. According to Andersen and Fagerberg (1997), “When establishing a school environment the student’s personal qualifications should be taken into account and the multimedia employee’s many different educational backgrounds and personal interests should be included in the planning of the supply of continuous vocational training” Politis - The Influence of Human Factors on Performance 213 During a further training action applied through an ADAPT project by the Verbund Strukturwandel GmbH at the Munich region (Germany), the graphic arts and media qualifications were divided in three main categories: l l l Print-oriented qualifications New media qualifications Other qualifications This classification appears to be the one that combines all useful characteristics of the existing knowledge and experience coming from the traditional graphic arts, the new skills from media qualifications and other new qualifications not directly related to the two sectors but necessary for the complete competence development (Komblinger, 1998). Hence, cross-media publishing competence requirements go beyond this approach by demanding new elements, software tools and extensive management skills in a new publishing environment where content, databases, layout design and standards are met with the traditional qualifications. As Theiss (1999) states: “The necessary dynamic development of the Media sector is based on new competence profiles.” Another emerging approach in human capital competence characteristics is derived from the progress of the CustomDP project (Customdp, 2001). The project is introducing a publishing process based on metadata, I&IL-editors, content and asset management. Furthermore, following the project’s main objectives to build up a system that supports the creation, management, updating and use of different types of customised training materials, a new approach on content creation and management is developing. According to a classification based on Customdp project progress, the following task profiles for different publishing components has been introduced: Publishing component: Task profiles: Content: Author, content creator and validator, chief editor, content compiler. System administration: SC0 (small content object) importer, XML editor, metadata enhancer, metadata validator. Based on the Customdp project progress, content creation must be done under the instruction given by a content template. Authors must be registered at 214 Politis - The Influence of Human Factors on Performance the database content type. XML is operating as the “integrator between content creation and publishing system, leading to a structured content creation and publishing process”. In addition, content must be processed according to system specifications (Customdp, 2001). RESULTS Karttunen and Nikulin conclude that technology and format barriers between web and printed media will be lifted. Data interchange between web applications is essential. If XML documents are used as the storage platform for media content and for the linking elements (metadata) to prepare and validate the output documents, the resulting workflow is improved. This will help the print and cross- media actors, such as Internet service providers (ISPs), publishers, printers, printing brokers, repro houses, advertising agencies and buyers and educational media writers. The vendors of the content management, prepress and press fronted systems need to develop more XML and web-aware systems and do it in small steps towards openness required in the web time. An emerging issue that has been arising following the statements made by Mann and Prosi is that programming languages are used quite a lot for the development of workflow applications such as JDF. But, this software application is directed for real-world application by printers and in general by humans with expertise in printing, and print media workflow production. The question arising is whether humans that will be the end-users of such applications must be forced to update their competence with new specific computer and programming oriented skills. Furthermore, in newspaper editing and production the combination of new elements based on cross-media publishing concepts is gaining importance. The new applications are the use of web-based applications, Internet-protocol support, XML functionality, and artificial intelligence applications on workflow production and asset management. According to the report from the Ifra 2001 exhibition, XML is considered as media-neutral editor for print and Internet newspapers editions. In addition, as it can be derived from the PRINT-IT project description, existing/traditional tasks and qualifications of the publishing and pre-press fields are combined with tasks descriptions requiring skills from the ITC sector. Not only the different tasks but also the whole system structure requires administration based on extended and upgraded competence and skills. Finally, progress on the Customdp project reveals that new tasks and job profiles are emerging, concerning publishing of educational material, based on XML editors. From the tasks description it can be assumed that new competence Politis - The Influence of Human Factors on Performance 215 is required in order to be someone able to work within this new publishing environment as suggested by the Customdp project documentation. Results Derived from the Questionnaire Before entering the main findings from the answers obtained from the 34 enterprises, it might be useful to observe the way that the enterprises were involved in answering the questionnaires: This finding is interesting because it expresses a behaviour which indicates the procedure of the enterprises (and in general the graphic arts and media sector, at least in Greece), regarding the pace of changes that are taking place in the enterprises working environment. Although 25 out of 70 questionnaires were sent out by e-mail (the rest were sent out by fax), 29 answers were received by fax and only 5 by e-mail. Based on this finding it can be concluded that the vast majority of owners of media enterprises received the e-mails, printed out the questionnaire, they answered and sent it back by fax. They did not use their computers to answer the questionnaires. This behaviour becomes even more interesting if we consider that most of the enterprises are quite familiar with computer systems that are used in daily production. But they do not use the electronic process for communication purposes. As was already mentioned, 34 answers were obtained out of 70 questionnaires sent out. Results have been rounded up concerning the mapping of percentages for better presentation purposes. The results are summarised as follows. Regarding the number of employees, 54% of the enterprises have 1 to 9 employees, 26% have 10 to 20 employees and 20% have 21 to 50 employees. This is reflecting the structure of the graphic arts and media enterprises in Greece, consisting of micro and small enterprises. Furthermore, regarding the type of the enterprises, 33% are operating in publishing, and 33% in prepress. Twenty percent of the enterprises are operating in the entire production spectrum (prepress, printing and finishing), whereas 7% of the enterprises declare their main operation in printing and 7% in multimedia (web site and CD-ROM) design and production. Regarding the type of enterprises, it can be concluded that the majority is operating in fields that are subject to the implications of the cross-media publishing environments and technologies applications. Interesting are the findings from the second group of questions regarding the degree of familiarity on cross-media publishing technologies and processes, the usage of postscript or PDF and percentage of Internet use for sending and receiving jobs’ documents. 216 Politis - The Influence of Human Factors on Performance The majority of the enterprises are familiar in working with PDF technology (almost 65% of the answers), and relatively familiar with colour management (about 45% of answers). In contradiction, regarding all other technologies, the majority of the enterprises declare that they are either not familiar at all or they have a low degree of familiarity. The percentages range between 65% and 70 % for media asset management, content management, digital networks and workflows (e.g., Apogee, Prinergy) and database management. Even higher is the percentage of very low familiarity with “Job ticket”, and JDF (Job Definition Format) concepts (about 85%), reaching its highest point with XML (extensible Markup Language), where only one enterprise answered that it has a rather high degree of familiarity with XML. This enterprise is among those operating in the multimedia production field. As it concerns the usage of file formats for exchanging digital files of orders and jobs with other enterprises, the majority of the enterprises are using Postscript files, at a percentage of 75%. PDF files are used at a percentage of 15%, whereas other files such as Quarkxpres and Illustrator are used by 10%. Furthermore, regarding the usage of medium for digital communication and exchange of jobs, digital disks such as zip, jazz and CD-ROMs are used at a percentage of 75%. Internet is used at a percentage of about 25%. Regarding answers on the third section of questions addressing issues on the competence and skills requirements and characteristics and their degree of importance of the enterprise, the research resulted in the following. Only a few enterprises regard programming skills as important to be part of the skills of human capital employed in the graphic arts and media sector (about 12%). On the other hand, web-intemet skills, marketing, customer relationship management and skills in publishing production processing are considered important with percentages ranging between 60% and 70 %. Furthermore on the issue of importance of flexible working time, distance working, and knowledge management concepts as well as the efficiency of the education and training systems, research resulted in the fact that they are quite important for the future development of the enterprises. Going further into the issue regarding the role and performance of human capital within the enterprise environment the following answers were provided by the questioned enterprises. Regarding the consideration of the application of human resource management processes in enterprises, according to their size, 50% of the answers regard that they are applicable in large-scale enterprises and 50% in all kinds of enterprises. On the question of responsibility for personnel matters in the enterprise, 80% answered that the owner carries this responsibility, with the remainder, 20%, to be the responsibility of the personnel manager. As it concerns the Politis - The Influence of Human Factors on Performance 217 question of whether there is an employee within the enterprise that the owner trusts totally, by undertaking all tasks and responsibilities without supervision, negative answers were given by 75% of the owners. Regarding the issue of running discussions with the employees concerning investments, improvements in production processes and the development strategy of the enterprise, about 80% of the answers were positive. Furthermore, on the question of whether a system for human capital development should be necessary to be applied to the enterprise, positive answers reached an impressive 90%. Answers on the importance of achievement of good relationships amongst people within the enterprise, as well as trust development among employees, customers, suppliers and other people related to the operation of the enterprise, resulted in percentages of 100%. Finally, the “Investment in people” concept and the effort for the development of human capital are considered an important issue for further progress of the enterprise by all of the enterprises. DISCUSSION AND CONCLUSIONS Media enterprises must face the issue of potential shift from the traditional operations, such as graphic design and page layout, to the content management and processing using XML editors, for example. An issue of significance and a further question that can be asked is whether the new cross-media publishing process will eliminate or reduce the importance of skills and expertise of the existing human capital within media enterprises. Trends on improvements concerning newspaper production systems reveal that new applications based on cross-media publishing elements are introduced. Therefore it can be concluded that certainly, competence requirements need to be updated and new job profiles need to be described for the newspaper editing and production field. Another critical issue related with this is the implications on education and training concerning the effective employment of human capital in the media enterprise of the future. How employees accustomed to working for years with software tools based on graphical interfaces, will react to being employed using programming skills. Regarding the issue of development of new workflow applications such as job definition format (IDF), they are also based on programming skills. These formats need to be built up with interfaces familiar to the existing experience and perception that employees possessfor print and electronic media production. If JDF is going to be applied as a standard for workflow production, then a graphical interface should be developed that will allow the efficient adaptation 218 Politis - The Influence of Human Factors on Performance of the human capital employed at media enterprises in these new working environments. As a general conclusion: Human capital in publishing and pre-press enterprises need to enrich competence in order to undertake new tasks, by adapting all necessary knowledge and skills required for efficient performing within the cross-media working environment and the future media enterprise. Based on the research carried out, the cross-media publishing characteristics can be defined as follows: l l l l Common processing of content and information for publishing of print and electronic media. Development of new software tools formats and production workflow systems. Reorientation of existing production systems, processes and tools (colour management systems, scanning, image processing) in the new production environments. Content management of any form, format and combination of text, images, graphics, sound and video. The results reveal that the lack of information is obvious among the questioned enterprises. The enterprises are familiar in operating with PDF and colour management. In contradiction, regarding all other technologies, the majority of the enterprises declare that they are either not familiar at all or they have a low degree of familiarity. Media asset management, content management, digital networks and workflows are subjects that are unknown to the publishing and prepress enterprises. Even lower is the familiarity with “Job ticket”, and JDF (Job Definition Format) concepts. XML, which appears to be the most significant tool for the future publishing concepts is absolutely unknown among enterprises questioned and interviewed. The enterprises still use Postscript files and exchange data with the use of digital disks such as zip, jazz and CD-ROMs. Internet is used at a low rate for exchanging data for publishing and pre-press production. This finding reveals that most enterprises are confident with tools and software used today in electronic pre-press and publishing. The low rate of Internet-based communications in Greece and in particular the poor infrastructure in high-speed Internet connections in the country, restrict the use of the Internet as a tool for exchanging data for jobs among prepress and publishing enterprises in Greece. Digital disks are distributed through the enterprises with the aid of couriers. The danger, however, will appear when the new cross-media tools are introduced and applied. Prepress and publishing enterprises should not leave the Politis - The Influence of Human Factors on Performance 219 field for further development with cross-media publishing applications to other players outside the traditional publishing sector. The issue here is how the enterprises will react to this development. Education and training should again be the catalyst for the development of the required competence for employees in publishing and prepress applications. Concerning the results regarding programming skills, it is important to mention that the enterprises do not seem to be aware of the importance of these skills for human capital. As it can be derived from the interviews, most of the owners consider that they can gain all computers and informatics competence required by employing one person that has these skills. The issue arising, however, is that the trends concerning cross-media publishing, both on common publishing of print and electronic media and as a workflow application, require specific computer knowledge, based mainly on advanced programming skills. It seems that the pre-press and publishing enterprises make the same mistake with the DTP era (when pre-press enterprises with high-end electronic pre-press systems considered that low-end prepress platforms were not important and they were not competitive to their systems). Furthermore, Internet skills, marketing, customer relationship management and skills in publishing production processing are considered important from the majority enterprises. This seems to make sense as the transformation from production-oriented, into service providers is becoming essential for publishing and pre-press enterprises. Flexible working time, distance working, knowledge management and the efficiency of the education and training systems appear to be important for the future development of the enterprises. Interesting comments have arisen from enterprises concerning the establishment of specific structures and applications of these concepts. In other words, knowledge management needs to be further defined and transformed to a certain structured application, so enterprises can see whether there are benefits in their development. To give an example, these concepts are perceived by enterprises like the IS0 9000 quality assurance system: For an enterprise this is something “good” but they do not touch it unless they are thoroughly informed of the potential advantages, added value and, of course, costs for all these new concepts. Being concerned almost all the time with daily production problems, they do not easily find the opportunity to spend time on strategic issues related to the future development of their enterprise. In most enterprises, owners take care of personnel matters. Another issue concerning tasks and responsibilities is that the owners’ enterprises do not trust, or they do not have, employees who can undertake all tasks and responsibilities without supervision. This has to do mainly with the size of the enterprises, which are registered as micro and small ones. 220 Politis - The Influence of Human Factors on Performance Enterprise size seems to be the factor that leads enterprise owners to discuss investments, improvements in the production process and the development strategy of the enterprise with their employees. Such subjects can be easier discussed due to the closer relationship of the enterprise owners with the employees in daily operation and running of the business. In addition, good relationships among people in the enterprise, trust among employees, customers, suppliers and other people related to the operation of the enterprise and the “investment in people” concept are considered important for further progress of the enterprise, by all enterprises. Again it must be mentioned at this point that all these words are nice and the answer given is positive, but these “loose” statements need to be to turned into structured concepts and applications in order to have a meaningful content. Only after this process can they be evaluated by the enterprises concerning their importance to them. If all previously mentioned parameters are taken into account, then it is easy to define some main characteristics of human capital competence for crossmedia publishing. Firstly, all ne w technologies that are applied must be adapted into the new competence. In addition, a first necessary step for the traditional pre-press and publishing enterprises is to re-orientate the consideration that print and electronic media are processed separately. Within the new working environment, many operations are performed before the output determination to a certain type of media (e.g., the scanning process for an image that will be published in a magazine and will be used for the Web). Apart from the new or further developed skills that are required in order to function with such a new specific technical task, it is necessary for humans to adapt to a new production workflow, where every process has to be determined according to a cross-media publishing working environment. The structure of the publishing production workflow is changing rapidly (it is a continuously changing process). In parallel, it is becoming more complex if it will be compared with the traditional workflows either for print or electronic media. New competence is therefore required for the efficient adaptation and performance of human capital employed or to be recruited with the publishing process where cross-media publishing concepts are applied. This new competence should be formed by the combination of the following: l l l l l Print-oriented qualifications New media qualifications (multimedia, web design and production) Programming skills, clearly defined (e.g. XML, database handling) Digital asset - content management qualifications New production workflow applications (e.g., JDF, CIP4) Politis - The Influence of Human Factors on Performance 221 An issue that needs to be further investigated is whether cross-media publishing will replace existing publishing, pre-press and web sites creation or it will be used in parallel with the traditional processes. Further research is also required for the updating of qualification and job profiles description on new concepts and applications of cross-media, distributed and networked publishing. Furthermore, it is important to explore the future media enterprise competence structure of human capital, which seems to be shaped by merging of graphic arts and media professions and new ICT skills. This question goes beyond previous research outcomes, which conclude that graphic arts and media skills need to be upgraded simply with computer skills. Another interesting aspect related with the previous subject is whether humans from ICT sector will undertake the responsibility to work within cross-media publishing environments and to what extent they will replace employees with traditional expertise in publishing processes. Further extensive research is required in the fields of the adaptation of educational and training systems in such a way that the competence development of human capital for cross-media working environments is sufficiently supported. Arbortext. 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