Supply Chain
Supply Chain refers to an organized system of individuals, activities, resources, and organizations that are involved in moving services and goods from the producer to the consumers. Traditionally, the book publishing business involved many individuals along its supply chain, for instance, a person to print the book, transport to stores, and market among other activities (Potter, Denis, and Martin 605). However, with technological advancement, the supply chain of the textbook has tremendously changed and many players have become obsolete since machines and the internet have taken their part (Pate and Tan para 1). These technological advancements have led to the reduced cost of moving the book from producer to consumer. For instance, the digital printing technology has increased the pace, quality, and the number of books while reducing the production cost which has made the textbooks cheaper than before (Rockinson-Szapkiw et al. 261). This situation has led to development and popularity of e-texts and other digital print materials that have affected the company's primary focusing on the traditional tangible books. Mountain publishing has not adopted the technological changes in the textbook business along with its supply chain which has a potential of affecting its future profitability. Thus a change in its supply chain structure will limit the experiences of losses is a critical consideration to promote its competitive advantage in the publishing industry.
Return on Assets (ROA)
Return on Assets (ROA) is an indicator used to reflect the profitability of a company relative to its entire assets. The assets of a company refer to the sum of shareholders equity and its total liabilities. ROA helps the investor to evaluate how effectively a company uses its assets to generate the desired income. Therefore, to determine ROA net income divided by the total assets is used to show the earning resulting from the invested capital. The industry has a significant influence on a company's ROA; thus when calculating this value, it is essential to compare the result from previous performance or with another company in the same industry. In this context, the mountain publishing company could compare its ROA with its previous year's ROA results or with another company in the same business. Hence, the higher the value of ROA the better the returns a company is obtaining from its investments. The strategic profit model is used to calculate the profits of a company by focusing on assets turnover, leverage, and the profit margin of a company (Buurman 22). The profit margin is achieved by subtracting the total cost in the production and sales of its goods and services from total sales to establish the net income. The next income is divided by net sales to find the percentage of the earnings which reflects the profit. Secondly, the asset turnover is used to determine the efficiency of a business to generate gains from its assets. To establish assets revenue, the revenue from sales is divided by the total assets. When the asset turnover has declined, it means the return on equity has decreased. Finally, leverage which refers to the ration of debts to equity is obtained by dividing the total liabilities by the total equity. Therefore, the strategic model is a reliable tool for establishing the portability of a company by focusing on its assets, sales, income, and returns from assets (Buurman 34). The information is then utilized to align its resource to fill the identified gaps and meet its profit-making objectives.
In this context, mountain publishing incorporation has discovered that the textbook publishing business is experiencing a shift which had started a decade ago with the rapid use of technology in the industry and potential customers.
This situation threatens its profit-making activities now and in future unless it changes activities along its supply chain. First, the consumption of textbooks has shifted to electronic where customer buy books online or rent a digital book instead of going to the store or a physical library to borrow from reading a book. For this reason, instead of investing more assets on printing books which includes many people who are paid for their services, for instance, transportation to its stores, it could invest on an online platform to post their materials to access a larger online market. This strategy is important as it will reduce the human resources needed in the area of transport.
Moreover, introducing electronic books will reduce the use paper and ink used to print more than needed book based on sales projects since publishing on a website will require just an upload of the digital file for customers to buy. Consequently, mountain publishers will save on revenue needed to acquire the raw materials and people working in the printing section which will ultimately increase their profit margin and expand its customer base.
In conclusion, Mountain publishing incorporation has realized that its business activities and profit-making is at risk due to the introduction of technology in the textbook business industry. It model of supply chain reflects a traditional set-up which with time will become absolute. Therefore, using the ROA through the lens of the strategic model is vital to establish the gaps in its conduct and change for a better future. For example, adopting the model of online business such as the Amazon company is a practical consideration.
Works cited
Buurman, J. Supply chain logistics management. McGraw-Hill, 2002.
Potter, Andrew, Denis R. Towill, and Martin Christopher. "Evolution of the migratory supply chain model." Supply Chain Management: An International Journal 20.6 (2015): 603-612.
Pate Andrew and Tan Teri. “Reinventing Book Printing: The New Supply Chain: New tools are helping publishers manage the supply chain more efficiently.” Publishers Weekly. (2014). Retrieved from https://www.publishersweekly.com/pw/by-topic/industry-news/manufacturing/article/61351-reinventing-book-printing-the-new-supply-chain.html
Rockinson-Szapkiw, Amanda J., Jennifer Courduff, Kimberly Carter, and David Bennett. "Electronic versus traditional print textbooks."Electronic versus traditional print textbooks: A comparison study on the influence of university students' learning." Computers " Education 63 (2013): 259-266.
