CHAPTER 1 1

CHAPTER 1
1. INTRODUCTION:
1. 1. COMPANY PROFILE
Orient BlackSwan, is one of India’s best known and most respected publishing houses. Incorporated in 1948, the consistent emphasis of their publishing has been on quality.They publish, well-researched academic books by distinguished authors.Some interesting and informative general and trade books like: •    Indian literature in translation•    Books for children including mysteries, biographies and folklore•    Tracts for the Times, a series on contemporary social, cultural and political issues•    Popular books on the environment, mathematics and science•    Distinctive school textbooks reputed for their high quality, relevance and affordability etc are also published by them.They also selectively reprint outstanding titles published abroad, to make them accessible and inexpensive to readers in India and the subcontinent. Through their associate company, Universities Press, they offer their readers cutting edge professional books in biotechnology, computer science, engineering, home science, management and medicine. Their 13 offices coupled with a distribution network of over 1500 booksellers ensures easy availability of their books throughout India.1. 2. ROLE HANDLED:
To aid in the activities of the various departments and help in understanding the market and promoting the product.

By identifying trends prevalent in the market.

By coming up with solutions to threats and problems identified.

Through strategy formulation.
1.3. BUSINESS PROBLEM IDENTIFIED:
One of the biggest challenge faced by the textbook publishing industry today is the highly competitive market. There is stiff competition for textbooks in India and competitors have to find different strategies just to stay afloat in the market. The key to surviving in this highly volatile industry is by being flexible with their strategies and being able to adapt to any sudden changes. Thus the question that arises here is whether or not the business can handle these rapid changes . From this we can say that the business opportunity identified here is
” To develop a robust business model”
1.4. PRELIMINARY UNDERSTANDING:
Some of the changes which have been prevalent in the publishing industry are as follows:
An increase in the use of Digital books and media.

A change in the reading habits of the consumers and
Political and legal changes prevalent in the publishing industry.

With this understanding of the changing market the project was undertaken.

1.5. OBJECTIVES OF THE STUDY:
The objectives of this study are as follows:
To identify the current business model of Orient Blackswan
To identify recent trends influencing the textbook publishing industry.

To propose improvements and action based on the findings in the model.

1.6. DATA:
The data used in the study are all secondary data collected from various sources. The data used includes both qualitative and quantitative data.

1.7. RESEARCH DESIGN
The testing of robustness of the business model will follow six steps as proposed in the business model stress testing approach by Timber Haaker, Harry Bouwman, Wil Janssen and Mark de Reuver.

1. Describe business model
2. Identify and select stress factors
3. Map Business Model to Stress factors
4. Create heat maps (Using selected evaluation criteria and calculations given in Appendix)
5. Analyze results
6. Formulate improvements and actions
CHAPTER 2
2. ANALYSIS:
2. 1. Step 1- Describing the business model
Through an observation of its activities during the course of the internship the following business model has been identified. For the purpose of easier analysis, the various factors of each segment have been assigned a percentage value out of 1000.

Figure 2.1- Business Model of Orient Blackswan Pvt. Ltd
2. 2. Step 2- Identifying and selecting stress factors
In this we make use of the PESTLE analysis in order to identify the trends which might put stress on the business model.

CBSE to ban the use of textbooks of private firms in school shops – CBSE has recently issued a circular banning the selling of textbooks of private firms in their schools, due to the financial and physical burden imposed on the students as textbooks of private firms are costlier than NCERT textbooks. The circular also mentions that the shops should only stock NCERT textbooks. Orient Blackswan being a private company will also be affected if this ban is strictly imposed. The two outcomes we will select based on the implementation of this ban are ban on textbooks only vs. ban on additional study material too.

Students to rent textbooks more than buy them- With the increase in cost of books, more and more students now prefer to rent textbooks or buy them second hand rather than buy expensive new editions which only have minimum changes added to them. The two outcomes we will look at here will be students completely shift to buying or renting secondhand books vs. students not completely shifting to renting books.

Digital textbooks pose privacy issues – With the advent of technology more and publishers are facing issues of piracy of their textbooks. Entire books are copied and uploaded online for the use of students with the publishers themselves getting no revenue from these pirated book. The two outcomes we will look at here will be Preference for online books vs. preference for physical books.

The effect of GST on Textbook Publishing – With the introduction of GST, publishers have been given leeway as there is no GST on books. But despite this measure, it is not all happy news as the prices of books still increases due to the GST imposed on the various other members of the supply chain such as the authors, printers etc. The costs of these inputs automatically result in an increase in the cost of books. The publishers cannot even get it waived off as the Input Tax Credits cannot be claimed for something that already comes under the exempted category. The two outcomes we will look at here will be Whether GST on books is better vs. No GST on books is better
Table 2. 1 :Summary of selected uncertainties and outcomes
Perspective Uncertainty Outcome 1 Outcome 2
Legal GST on books No GST on books GST on books
Society Renting of books Preference for renting books Limited preference for renting books
Technological Preference for Digital books Preference for online books Preference for physical books
Political CBSE ban on textbooks of private firms Ban on textbooks only Ban on all study resources
2. 3. Step 3 – Map Business Model to stress factors
The various uncertainties selected by us affect different aspects of the business model based on the two outcomes which may occur as a result of that uncertainty.

In step 3,we will see which aspects of the business model is affected by the outcomes and whether the impact on the business model is positive or negative.

CBSE ban on textbooks of private firms- If the proposition by the CBSE board to ban the use of textbooks of private firms goes through it will have a severe impact on the customer segment aspect of the business model.

From data collected from secondary sources approximately 83 schools in Chennai is classified below as per their accreditation.

Source: Wikipedia
Figure 2.2: Classification of schools in Chennai based on their accreditation.

From the data we can see that, 37% of the listed schools are accredited as CBSE. This means if the ban on textbooks is legally enforced Orient Blackswan will lose about 37% of its customers in the Chennai area alone. Including the 12% of schools following the state board system that makes about 49 % of the customer segment.
This might not adversely affect the business model in the first outcome where only the textbooks of private publishers are banned as Orient blackswan does not only publish textbooks but if the second assumed outcome where all additional study materials such as guides, answer keys etc are banned then the customer segmentation aspect of the business model as well as the value proportion aspect of the business model will be severely affected.

Preference for Digital Books – The second trend we will look at is the preference for Physical books vs. Preference for Digital books. With the improvement in Digital technology more and more people are opting for Digital books compared to Physical books. This has led to pirated books being readily available in the Web. The existence of these pirated books is increasingly becoming a problem for publishers as they won’t get any revenue from these. Thus depending on whether the preference for Physical books or preference for Digital books is greater the degree in which certain aspects of the business model are affected differs. If the preference for Physical books is higher, then the cost structure, revenue structure, channels etc are affected positively. And no changes need to be made to the business model.

But if the preference for Digital books is higher than it will have a negative impact on several aspects of the business model such as Key partners (Printers. Retailers), Revenue, and Channels. Cost might not be affected as much as making Digital books is cheaper than Physical books.

Source : https://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/63225-college-students-prefer-a-mix-of-print-and-digital-textbooks.html
Figure 2.3: Preference of Students for print vs. e-textbooks.

Preference for rented books – The third trend we will look at will be the preference for rented books vs. buying new books. Students especially University students have a tendency to rent books rather than buy new ones, this is a loss for the publishers as well as the print shops as more sales means more revenue for them. Costs reduce because one book rented means one less book printed but in the long run this might result in overall loss. Thus in the two outcomes we will be looking at their impact on the business model in the case of renting of books and buying new books.

Source: Student Survey, Winter 2012: 2,583 students in 6 large enrollment courses were invited to take a survey; 30% response rate.

Figure 2. 4: Format of Textbooks preferred by the students.

Impact of GST: The fourth trend we will be looking at is the impact of GST on the business model. Book lovers and students will now have to pay more as books will become costlier by 10-20 per cent under the Goods and Services Tax regime.

Though books continue to remain exempt under GST, but inputs such as printing, binding and royalties to authors now attract tax at 12 per cent. Since the publishers don’t get input tax credit, they now propose to pass it on to customers.

“Books are not taxable under GST, but we are at a disadvantage as we lose out on input tax credit. Prices of books will increase by 15 per cent to 20 per cent,” said Amit Bhargava, Director of Taxmann.
Table 2.2 – GST rates in the publishing industry
Particulars GST Rate
Royalties 12%
Printing material 12%
Printing of e-book, only if print version of book is also there. 5%
Publishing Houses Nil
Services (transportation) 12%
Services of content writers 18%
Total: 59%
Sources: https://www.hubco.in/articles/how-gst-shall-impact-the-content-writers-in-india-impact-of-gst-on-content-writing-after-1st-july-2017

GST and its impact on content writers in India


2. 4. Step 4 – Create Heat Map

Figure 2.5 – Heat Map
CHAPTER 3
3. RESULTS AND CONCLUSION:
3. 1. Step 5 – Analyze results
From looking at the heat map we can see that the trend with the most amount of red cells is under preference for renting books. This shows that the customer preference for renting books results in a loss of revenue for the key resources and key partners segments and also in the channels and customer relationship segments. Printers and book sellers affiliated with the publishing house are also affected in this scenario.

In the case of no GST the customer segments and customer relations are the most affected as they will have to buy books at a 10 t0 20% more price as the publishing houses will shift the increased costs of production to the customers.

In the case of online books while on one hand the preference for online books is an opportunity for promoting online sales, there is no guarantee that the content of books can be protected. Entire books are copied and uploaded online for the use of students with the publishers themselves getting no revenue from these pirated book.

So preference for online books is a negative trend unless publishers can find a way to protect the content of their books. This is the case not only for the online books but for the physical books too.

In the case of ban on all study materials, one of the reasons CBSE schools are considering banning the books of private firms is due to the perception that the subject level in the books is higher than necessary for the students and that the books will put undue physical, mental and financial pressure on the students.
Losing this consumer segment from the heat map affects the printers or producers and distributors of the book the most as well as affecting the sale of the books through various channels.

A Ban on only the textbooks on the other hand only affects the sales through various channels the most and does not affect the printers or others much. The relationship with the customers and key resources such as print shops etc are also shown to be near the danger zone.

Out of the segments of the business model the channels of the company used to promote and make the product available in the market the product are the most affected by the various trends followed by customer relationships and key partners.
This is because the channels act as the intermediary between the customers and other partners of the business and thus more susceptible to change.
3. 2. Step 6 – Formulate improvements and actions
In the case of renting of books, while we can’t easily change students preference for renting textbooks which comes from a variety of factors, we can maybe create an additional platform for renting books. Rather than just selling new books, creating an option for students to rent old editions of books rather than just letting them sit idle in inventory may become an additional source of revenue.
In the case of GST we cannot make the government to decrease GST or remove the exemption so that we can avail tax credit. What we can do on the other hand is improve the supply chain in order to reduce costs and avail more discounts from suppliers of ink or paper by developing a better relationship with them.

In the case of piracy issues, putting forth new policies in order to protect the content of books or creating a patent on them might help in preventing the thefts of books. Improving the digital platform by creating a Digital library (SAAS model) will also prevent customers from looking for other cheaper, illegal avenues.

In the case of ban on textbooks of private firms being proposed by CBSE, the main reason being given by the board is the physical, mental and financial put on the students. Focusing more on improving the Digital versions of textbooks and Digital study materials to be used by students in smart class will reduce the burden put on the students.
3. 3. CONCLUSION:
From our testing of the robustness we can see that while there are some areas which can be improved, overall the business model is robust. The results show that the key to weathering these changes is my focusing on the different segments other than the ones currently being used such as Digital printing in the case of the printers who are part of the supply chain and putting more focus on the Digital platform in the case of the publishers.

APPENDIX
Appendix Table 1 – EVALUATION CRITERIA:
Color Percentage Significance
Red 20% and above negatively This segment is significantly affected. Has to be evaluated and corrected.
Orange 10% to 20% negatively Somewhat affected. Segment should be watched and certain modifications need to be made.
Green 5 % and above positively This is positive change and should be encouraged.
Yellow 0 to 10% negatively Some attention should be paid in order to prevent any further increase in this percentage.
Grey NA No change.
Appendix Table 2 – CBSE ban on Textbooks
Segments Outcome 1 Outcome 2
Customer Segments Assuming Textbooks comprise 50 % of the products produced by the firm. If 1000 books are produced, then( 500 x 49/100=245 = 24.5 % of 1000) 25% of the sales of 25% of the business model is affected. (1000x 25/100 = 250 x 25/100= 62.5 = 6.25 % of this segment) Assuming all study materials together comprise 75% of the products produced by the firm, then if 1000 books are produced then ( 750 x 49/100= 365 = 36.5 % of 1000) 37% of the sales of 25% of the business model is affected. (250 x 37/100= 9.25 % of this segment)
Customer Relationships 25% as the relationship with these schools are affected. (500 x 25/100=12.5 ) 37% as the relationship with these schools are affected. (500 x 37/100= 18.5 )
Revenue Structure Here the sale of printed books is affected which comprises 33.33% of this segment then (333 x 25/100=83.25= 8.25% of this segment) Here the sale of printed books is affected which comprises 33.33% of this segment. (333x 37/100 = 123.21 = 12.3 % of this segment is affected)
Key Partners 60% of this segment is affected .(Printers, bookshops and transportations or distribution network) ( 600 x 25/100 = 150 = 15% of this segment is affected.) 60% of this segment is affected .(Printers, bookshops and transportations or distribution network) ( 600 x 37/100 = 222 = 22.2% of this segment is affected.)
Channels 100% of this segment is affected. (1000x 25/100= 250= 25% 100% of this segment is affected. (1000x 37/100= 370= 37%
Key Resources 50 % of this segment is affected. (500 x 25/100= 125 = 12.5 % of this segment is affected) 50 % of this segment is affected. (500 x 37/100= 18.5 % of this segment is affected.)
Cost 40% of this segment is affected. (400x 25/100= 100 = 10% of this segment is affected) 40% of this segment is affected. (400 x 37/100 = 148 = 14.8 % of this segment)
Appendix Table 3 – Preference for rented books:
Segments Outcome 1 Outcome 2
Customer Segments 25% of this segment is affected. (250 x 51/100 = 127.5 = 12. 75 % of this segment is affected) 25% of this segment is affected. (250 x 49/100 = 122.5 = 12. 25 % of this segment is affected)
Customer Relationships 51% as the relationship with these students are affected. (500 x 51/100= 255= 25.5% ) 51% as the relationship with these schools are affected. (500 x 49/100= 24. 5 % )
Revenue Structure Here the sale of printed books is affected which comprises 33.33% of this segment then (333 x 51/100=169.83= 16. 98% of this segment) Here the sale of printed books is affected which comprises 33.33% of this segment. (333x 49/100 = 163.17 = 16.31% of this segment is affected)
Key Partners 60% of this segment is affected .(Printers, bookshops and transportations or distribution network) ( 600 x 51/100 = 306 = 30.6% of this segment is affected.) 60% of this segment is affected .(Printers, bookshops and transportations or distribution network) ( 600 x 49/100 = 294 = 29.4% of this segment is affected.)
Channels 100% of this segment is affected. (1000x 51/100= 510=51%) 100% of this segment is affected. (1000x 49/100= 490=49%)
Key Resources 50 % of this segment is affected. (500 x 51/100= 255 = 25.5% of this segment is affected) 50 % of this segment is affected. (500 x 49/100= 24.5% of this segment is affected.)
Cost 40% of this segment is affected. (400x 51/100= 204 = 20.4% of this segment is affected) 40% of this segment is affected. (400 x 49/100 = 196 = 19.6% of this segment)
Appendix Table 4 – Customer preference for Digital Books:
Segments Outcome 1 Outcome 2
Customer Segments 75% of this segment is affected. (750 x 21/100 = 157.5 = 15. 75 % of this segment is affected) 75% of this segment is affected. (750 x 57/100 = 427.5 = 42. 75 % of this segment is affected)
Customer Relationships 21% as the relationship with these students are affected. (500 x 21/100= 105= 10.5% ) 57% as the relationship with these schools are affected. (500 x 57/100= 28. 5 % )
Revenue Structure Here the sale of all digital books is affected which comprises 100% of this segment then (1000 x 21/100=210= 21% of this segment) Here the sale of all physical books is affected which comprises 100% of this segment. (1000x 57/100 = 570 = 57% of this segment is affected)
Key Partners 60% of this segment is affected .(Printers, bookshops and transportations or distribution network) ( 600 x 21/100 = 126 = 12.6% of this segment is affected.) 60% of this segment is affected .(Printers, bookshops and transportations or distribution network) ( 600 x 57/100 = 342 = 34.2% of this segment is affected.)
Channels 100% of this segment is affected. (1000x 21/100= 210=21%) 100% of this segment is affected. (1000x 57/100= 570=57%)
Key Resources 50 % of this segment is affected. (500 x 21/100= 105 = 10.5% of this segment is affected) 50 % of this segment is affected. (500 x 57/100= 28.5% of this segment is affected.)
Cost 40% of this segment is affected. (400x 21/100= 84 = 8.4% of this segment is affected) 40% of this segment is affected. (400 x 57/100 = 228 = 22.8% of this segment)
Appendix Table 5 – Impact of GST
Segments Outcome 1 Outcome 2
Customer Segments 100% of this segment is affected. (1000 x 20/100 = 200 = 20 % of this segment is affected) 100% of this segment is affected. If books come under GST then the publisher’s will get tax credit and need not pay GST which has already been paid.
Customer Relationships 100% of this segment is affected. (1000 x 20/100 = 200 = 20 % of this segment is affected) 100% of this segment is affected. (1000 x 20/100 = 200 = 20 % of this segment is affected). If GST is implemented then concession can be got from input tax credit.
Revenue Structure 100% of this segment is affected. (333 x 5/100 + 333 x 12/100 + 333 x 12/100) = 96.59= 9.65 % of this segment is affected) 100% of this segment is affected. (333 x 5/100 + 333 x 12/100 + 333 x 12/100) = 96.59= 9.65 % of this segment is affected) . Exemption can be got.
Key Partners 100% of this segment is affected. (1000 x 12/100 = 120 = 12 % of this segment is affected) 100% of this segment is affected. (1000 x 12/100 = 120 = 12 % of this segment is affected)
Channels 100% of this segment is affected. Assuming 25% of 75% of this segment is e-books. (750 x 25/100 x 5/100 + 250 x 12/100 + 750 x 50/100 x 12/100)= (9.38 + 30 + 45= 84.38 = 8.43 %) 100% of this segment is affected. Assuming 25% of 75% of this segment is e-books. (750 x 25/100 x 5/100 + 250 x 12/100 + 750 x 50/100 x 12/100)= (9.38 + 30 + 45= 84.38 = 8.43 %)
Key Resources 100% of this segment is affected. (500 x 12/100 + 500 x 18/100) = 150 = 15 % of this segment is affected) 100% of this segment is affected. (500 x 12/100 + 500 x 18/100) = 150 = 15 % of this segment is affected)
Cost 100% of this segment is affected. (800 x 12/100 + 200 x 18/100) = 132 = 13.2 % of this segment is affected) 100% of this segment is affected. (800 x 12/100 + 200 x 18/100) = 132 = 13.2 % of this segment is affected)
REFERENCES
Deborah Cornelious. (2018,July 25). “GST cut for e-books, but publishers are not elated”
Publisher’s Weekly . ( 2014,July 8). “College Students still prefer Print Textbooks”
Natsuko H. Nicholls, Ph.D. (2012, June) . “Demographic Data on Textbooks and Usage Statistics: Implications for Textbook Cost-saving Analysis”
Aishwarya Mukundarajan, Notion Press. (2016, July 1) “the changing landscape of the publishing industry”
Timber Haaker Harry Bouwman, Wil Janssen and Markde Reuver. “Business model stress testing: A practical approach to test the robustness of the business model”
Fortune India, Debabrata Das. ( 2017, February 15). ” Reading the trends right”
Hindustan Times.( 2017, December 27) “CBSE directs schools to sell only NCERT books in their shops”
Bachelor’s degree online titled “10 Textbook trends transforming the industry”
Scroll.in .( 2018, September 5th). “Booksellers and publishers are feeling the heat of GST. Will they pass on the burden to the reader?”
David Murphy .”Transforming the Textbook Publishing Industry with Digital Print”
Scholastic. (2014) “Survey on Preference of Children for e-books”