To Analyze Rand Mcnally Case Study Using the Competitive Forces
Additional Cases Rand rvlcNally Maps Out a Trip into a Digital Future In 1856 William Rand and Andrew McNally founded a small printing shop in Chicago which they called Rand McNally. The company did not begin printing maps until 1916, but it has been the leader in maps ever since, credited with creating the mapping conventions for our current numbered highway system. In 1924 Rand McNally published its first Rand McNally Road Atlas. The various versions of this atlas have sold 150 million copies in the years since, making it the all-time best selling map product from any publisher.
Today Rand McNally has 1,200 employees, mostly at its Skokie, Illinois headquarters. Through the following decades the company continued to develop and maintain its position as the most well-known and respected publisher of geographic and travel information. As recently as 1999 it sold 46 million maps, which accounted for more than half of all printed maps sold in the United States. Of course Rand McNally also produces many other products such as globes, a widerange of geographic educational materials, travel-planning software, and products for trucking fleet route planning and optimization.
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Its products are currently sold through over 46,000 outlets, including 29 of its own retail stores. As the digital economy developed at the beginning of the 1990s, Rand McNally’s strength still resided in its printing technology, and like so many other companies at the time, its management did not understand the full impact of the new Internet and other computer-related developments. The company did respond to changing business conditions by producing travel and address location software it then sold on CD-ROMs. It also established a modest Web site in 1994 in order to support its customer’ use of its CDs.
However, the Internet soon offered many other opportunities, and Rand McNally failed to maintain its leadership and pioneering spirit. The company had become conservative. AEA Investors purchased Rand McNally in 1997 in expectation technologies such as the Internet. Despite new ownership and unwilling to take risks, apparently due to fear of losing money. interested,” observed Jim Ferguson who later became director “Management had not adapted to the n~w-economy model. ” of the company modernizing itself through the use of new eadership, little changed as the company remained staid and “We proposed putting maps online, but senior management was not of product management for Rand McNally. com. He added, When they realized that nothing was changing, the investors intervened and in July 1999 appointed Richard J. Davis as President and CEO. Davis already had 25 years of experience in management of emerging high-tech companies, including seven years with Donnelley Cartographic Services and GeoSystems. (GeoSystems was the company which established MapQuest, Rand McNally’s chief competition in the new online environment. Davis said his goal was to develop technology solutions and corporate growth rising above the historical 5 to 6 percent range. Davis immediately brought in Chris Heivly to head up the recently created RandMcNally. com group. Heivly promptly put Rand McNally maps and address-to-address driving directions online. Prior to the arrival of Davis and Heivly, management had feared that putting the company’s maps online would undercut the sales of the company’s traditional paper maps, something MapQuest, then still known as GeoSystems, had risked doing in 1996.
The most important goal of the new management was to transform Rand McNally from a map company advisory service so that it would not become obsolete. Management plans included: • • • • • into a travel planning and Making Rand McNally’s Web site indispensable to travelers. Updating map products for the fast-growing Net environment. Link the company Web site and products to other services on the Net. Generating more brick-and-mortar store business from Web site visitors. Remaining overwhelmingly a business-to-consumer company and not try to become a business-to-business company.
To accomplish these objectives, the company had to address two needs that all types of travelers experience: the need for quick information about travel conditions and recommendations on meeting those needs along the way. To accomplish this the Web site must not only help travelers to plan the trip, but travelers must be able to bring the Internet with them as they travel. Travelers need online road maps, detailed driving instructions, and road condition updates while they are on the road, which means they will have to be delivered through wireless technology as soon as it matures.
The Rand McNally Web site also needed to work with third parties to provide other travel information such as timely weather and hotel reservations. The site also had to have a very userfriendly interface, one that can be used comfortably by people who are not highly skilled Internet users. Profitability remained a critical goal for both management and the investors. Profitability requires services that are good enough that customers will be willing to pay for them. Rand McNally’s main online competition was MapQuest, whose Web site has been highly successful. In March 2000 the site had 5. million visitors who viewed and printed its electronic maps. During the same month Rand McNally had only 255,000 visitors. In addition, MapQuest had partnered with many corporate and Internet business forces whose visitors need to use maps on their sites, for example to locate their stores. These giants include AOL, Excite, Yahoo, Ford, Walmart and many, many others. “We put out more maps in 36 hours than are sold in the United States in a year,” proclaimed MapQuest CEO Mike Mulligan. The financial community showed its strong support for the MapQuest model when, at end of 1999, the company was sold to AOL for $1. 1 billion.
Davis understood that he needed to shake up the very staid and conservative corporate culture dominating Rand McNally. He wanted to make the company agile again so it would be able to be resume its leadership in the digital age. He worked hard for rapid change within Rand McNally and did so in a very personal way, repeatedly demonstrating that he understood how very difficult cultural change can be. He tried to give all employees the feeling that they have a stake in the success of the entire company, both the print and digital arms. In the process, he personally met with more than 900 employees to sell his vision of the company’s future.
He responded personally to e-mails he received from employees, and as he walked through the halls, he greeted his employees by name. He also continually publicly recognized achievements by many different employees. Although he also made opportunities for longtime employees to join the new Internet group, few took advantage of the opportunity. Davis directly faced the many old-time employees who were disgruntled because they believed that too much money was going into the dot-com group. Ultimately, two of the eight executives who reported to him left over the changes, and he also had to replace the whole management team.
As Rand McNally tried to become a major force on the Internet, its advantages were clear. It was an old, very well known and highly respected name in the field of travel and maps. The company was profitable and therefore had income from existing sales, enabling it to take the necessary time and spend the needed funds to design and develop its new businesses. Some of the technology that Rand McNally wanted to use, such as wireless travel services, was still not well developed, so that no company had yet achieved a genuine lead. Also the need for online maps to aid and orient people was growing extremely rapidly.
Heivly and Davis both also believed that MapQuest had weaknesses, and these too were Rand McNally advantages. They believed that Rand McNally maps are more accurate than those of MapQuest. Moreover, they concluded, MapQuest driving instructions were overly detailed, contained much information that was out of date, and usually did not select the most appropriate route to travel. Nor, in their minds, did MapQuest have the reputation and respect of and the personal relationship with the American people that Rand McNally has. “We’ve been on the backseat of everyone’s car in America,” said Heivly.
Thus, despite the backing MapQuest recently had gained when it was acquired by America Online, Rand McNally management’s outlook was very positive. Davis reorganized the company into three divisions: RandMcNally. com, a unit that services businesses, and a unit that services consumers. However, the key to the future in the eyes both of management and of the investors was RandMcNally. com. In order to break into the Internet competition and become a force rapidly, Davis decided to create an auto club similar to the American Automobile Association (AAA) with its over 40 million members.
Rand McNally’s main goal in creating the automobile club was to entice Internet visitors to pay something for their use of the Rand McNally Web site. Management’s expectation is that once customers pay for one service, they will become willing to pay for other products and services as well. The auto club was planned to provide standard services, including emergency roadside service and a network of repair shops. Rather than taking on AAA head on, management chose to create affinity groups such as recreational vehicle drivers and Corvette owner clubs. We want to get people who are not signed up for anything,” explained Davis. Management also wanted to create links for users while they were on the road using Net-capable mobile phones, car navigation systems, and other wireless devices when they become mature enough. The Web site is linked to the RandMcNally. com store where visitors can purchase the more than 3500 products that are sold in the brick-and-mortar stores. Visitors can print customized free maps and address-to-address driving instructions. The “Plan a Trip” section has an improved ability to search out what travelers want on their trips.
For example, the site can answer such questions as “name art museums within 25 miles of the trip. ” Visitors can also store their personalized trip plans and information online. At the time of launching, the site carried information on more than 1,100 U. S. cities, 379 National Parks and 4,000 other points of interest and local events. The site also supplies continuously updated weather information and twice monthly updates on road construction projects that might interfere with travel. Finally, it contains trip-planning checklists as well as a section that offers materials and ideas on traveling with children.
The print products have been affected as well. The Rand McNally Road Atlas has changed its advertises other company’s products. It gave up the revenue in order to advertise its own Web of a number of new print products it has developed growing out of the development of its Web in to the GPS (global positioning system) market in a big way, selling GPS products to visitors current position for various reasons. For example, they sell a device that attaches to the Palm to a laptop PC. Both will pinpoint one’s current location. The early experience rear cover so that it no longer site.
A travel atlas for children is one site. Rand McNally has also jumped who want to keep track of their computer and another that attaches of Rand McNally is that the Web site is drawing more visitors. Davis was surprised at the impact upon the whole company, saying, “I thought we would be able to create this dot-com entity, and the rest of the company would continue doing what it has always done. But the dot-com group was developing a consumer solution and it impacted right back through the whole company. Consumers attracted to RandMcNally. com have also shown up at the firm’s retail stores.