1. Introduction
R.R. Donnelley & Sons Company (RR Donnelley) is a global printing firm located in Chicago, Illinois. The company employs over 56,000 people and offers a wide variety of services including: document based printing, labels, logistics, digital printing, call centers, color services, database management, publishing, advertising, retail, and technology innovation.
2. Purpose of Report In this report we will examine how RR Donnelley has maintained their global position in a highly saturated and competitive industry by analyzing their financial portfolio, corporate culture and competitive environment. Based upon our analysis we will suggest strategies to maintain a competitive advantage and for future expansion.
3. Mission and Vision RR Donnelley’s mission is to become the industry leader by providing high quality products and services. The company aims to deliver these products and services with a 100% customer satisfaction. This is achieved by RR Donnelley’s superior customer feedback initiatives. The company’s vision is to become an industry leader in the “go green” effort by providing products and services to consumers in digital format and recycled stationary. RR Donnelley also aims to become the leader in the printing industry on a global scale while keeping its competitive advantage in dynamic, hi-tech printing. RR Donnelley’s primary strength is their strong innovative capabilities. These capabilities have allowed the company to be the first to introduce many new products, such as a 60 foot wide speed ink jet digital press which was released in October, 2010 (DataMonitor 2010). Another important strength is a result of the company’s size. With recognition and operations worldwide, RR Donnelley has created a strategic portfolio for nearly every business solution. This allows the company to win more contracts, leading to company stability. The company’s overall debt has increased substantially over the past three years, a result of economic conditions and acquisitions. This debt weakens the firm financially and creates uncertainty in the workplace. RR Donnelley also derives over 77% of its total revenue from the United States which is currently undergoing an economic recession (DataMonitor 2009). The heavy reliance on one country exposes the company to serious financial risks during prolonged or severe economic recessions.
Opportunities exist for RR Donnelley in the form of digital technology and media. The company has added digital printing to its product and service lines but there is an opportunity to expand further into this technology as more consumers become exposed to these technologies.
RR Donnelley is also subjected to several threats such as competition from global leaders and industry trends. Large corporations such as Toppan Printing and Quebecor Inc pose a substantial competitive risk in the marketplace. As the global recession continues, many customers are moving toward alternative ways for delivering messages to relevant parties which will impact the print advertising divisions.
4. Leadership Style From their opening in 1864, RR Donnelley has thrived in the commercial printing industry. Their excellence and outstanding performance has allowed them to gain global recognition and commercial success. Maura Lyons, the vice president of print production for Orchard Brands, states “RR Donnelley's leadership in co-mailing, innovative variable trim binding technology, and postage optimization software tools will continue to deliver enhanced value to our catalog marketing programs” (Todé, 2009). Orchard Brands and many other companies recognize RR Donnelley’s leadership in the industry and their dedication to providing excellent customer service.
5. Business Culture One of the most important characteristics for RR Donnelley is quality in how they do business and in their products. In order to maintain their high level of integrity and quality, the company strives to find individuals who align with their corporate culture and who are enthusiastic, innovative and critical thinkers. The employees are integral for developing a strong relationship with customers, which is an important part of RR Donnelley’s corporate values.

6. Industry and Firm Performance The global printing industry is highly fragmented with a trend of market consolidation. As shown in Figure 2, Competition remains strong with the top four market leaders composing less than 10% of global market share (DataMonitor 2010). The industry is primarily composed of small to medium sized firms that compete on the basis of product differentiation and low costs. Because of the global recession, many businesses have cut expenditures in order to reduce overhead which has slowed the printing industry. As shown in Figure 3, the global industry has grown less than 2% per year until 2009 in which the market decreased by 0.9%. RR Donnelley has not been immune to industry woes despite its strong position. The company is ranked 240th in Fortune magazine’s annual ranking of American companies and second in global market share with 2.4%. As shown in Figure 4, revenues for RR Donnelley increased from $7 billion in 2004 to over $11.5 billion in 2007 before decreasing to $ 9.8 billion in 2009. The decrease in revenues is also reflected in their financial statements. During this time RR Donnelley’s debt-to-asset ratio increased from 53.4% in 2004 to 75.6% in 2008, shed nearly $2.5 billion in assets in 2008, and downsized its workforce by nearly 9,000 employees.
7. Business Strategies
Competition is based primarily on price, quality, and product diversification in the printing industry due to the high levels of saturation and competition. To keep prices low for consumers, RR Donnelley has decreased its costs by managing logistics and the supply chain.
RR Donnelley’s customers require personalized service or customized products. Through its superior customer service and product diversification, RR Donnelley has been able to supply customers with specialized printing. This involves customized stationary, cards, and other various products for consumers that require these specific products and services.
RR Donnelley is further diversifying their products and services in an effort to meet the growing digital demand. They are offering digital printing services and products to consumers that create fast, and highly customized communications (RR Donnelley, 2010). RR Donnelley’s strategic choice to pursue digital media will ensure it keeps its competitive advantage in the printing industry.
8. Key Competitors RR Donnelley has two key U.S. competitors that dominate the printing industry: Quad/Graphics ranked 5th in global market share and Deluxe Corporation. Quad/Graphics is relatively new in the industry having been founded in 1971. Despite its lack of maturity, Quad/Graphics gained significant market share in the industry when it won a contract to print Newsweek in 1978 (Quad/Graphics, 2010). Quad/Graphics primary focus is on the printing of magazines. Deluxe Corporation was founded in 1915 when W.R. Hotchkiss created the flat-pocket checkbook and holder. Since then, Deluxe Corporation has gained a net worth of $1.34 billion and has become a leader in the production of products designed for financial institutions (Deluxe Corp, 2010). RR Donnelley’s primary competitor in the global market is Toppan Printing which has a 4.1% global market share. Toppan was established in 1900 and has expanded itself into eight areas of expertise: securities and cards, commercial printing, publications printing, packaging, high performance components, industrial materials, display related, and semiconductor related printing components (Toppan Printing, 2010).
9. Market Characteristics RR Donnelley’s customer base is highly diversified comprising over 60,000 customers ranging from individual consumers to corporations and governments. For the past several years, no one customer has accounted for more than 10% of the company’s sales (SEC Form 10-K 2009). The customer diversification has resulted in lowering the amount of buying power customers possess, but is offset by the high levels of competition and fragmentation in the industry. RR Donnelley faces multiple competitors and finds ways to create competitive advantages over these companies. According to Patrick Connolly, Executive Vice President and Chief Marketing Officer of Williams-Sonoma, Inc, a key competitive advantage for the company is their ‘innovative skills in the printing industry and ability to dispense it to consumers’ (RR Donnelley, 2010). This is also how they have focused themselves as becoming a company that thrives in the digital era. Their pioneering digital skills have allowed them to compete in this industry. Their expertise in supply chain management and logistics creates synergies among these new endeavors that many other companies cannot emulate
10. Findings RR Donnelley has maintained its competitive advantage through a series of well planned expansions and its commitment to product quality and customer satisfaction. While the global economy has slowed, RR Donnelley continued to expand by acquiring several companies such as Prospectus Central, LLC and Browne & Co, a competitor in the printing industry (SEC Form 10-K 2009). Through these acquisitions, RR Donnelley has gained a larger customer base and expertise through synergies among the acquired companies. Even though RR Donnelley has grown over the past decade, these expensive cash acquisitions are having a negative effect the company’s debt and revenue. The $1.5 billion loss in revenue in 2009 can be attributed to the many acquisitions and current consumer trends to digitalize many products traditionally reserved for print.
11. Present and Future Recommendations It is important to pay close attention to current consumer trends for both short and long term strategies. As newspapers and magazine companies shift their focus online and as the popularity of digital book readers increases, RR Donnelley and other print corporations will need to create more innovative and differentiated products. RR Donnelley’s commitment to customer satisfaction will promote customer trust and long term gains from contracts. The company also needs to focus on incorporating their internet website to facilitate business activities. Allowing customers the ability to create custom prints and order them from the website will make revenue generation easier. The final recommendation for RR Donnelley is to continue to improve their supply chain management. The lower cost and faster shipping times will help differentiate the company further and increase customer loyalty and trust.

Exhibits

Figure 1 Printing Industry Competitors | Rank | Company Name | Sales USD (m) | Employees | Market Cap USD (m) | Net Income USD (m) | Net Profit Margin | | | | | | | | 1 | TOPPAN PRINTING Co., Ltd. | 18268.06 | 47,650 | 5636.81 | 141.95 | 0.89% | 2 | R.R. Donnelley & Sons Company | 9857.40 | 56,800 | 3502.97 | -27.30 | -0.22% | 3 | Quebecor, Inc | 3762.75 | 15,710 | 2404.67 | 276.36 | 14.18% | 4 | Transcontinental Inc. | 2236.45 | 12,500 | 1253.33 | -79.73 | -3.55% | 5 | Quad/Graphics, Inc. | 1788.50 | 11,600 | 0.00 | 52.80 | 2.62% | 6 | NISSHA PRINTING CO., LTD | 1520.99 | 3,728 | 1005.23 | 83.09 | 5.46% | 7 | Kyodo Printing Co., Ltd. | 1240.46 | 3,102 | 199.48 | 4.00 | 0.32% | 8 | Consolidated Graphics, Inc. | 990.86 | 5,343 | 592.53 | 14.09 | 1.42% | 9 | Roularta Media Group NV | 962.50 | 2,815 | 436.54 | -5.70 | -0.65% | 10 | De La Rue plc | 872.68 | 3,946 | 1306.39 | 108.72 | 12.55% |
(Factiva, 2010)

Figure 2

Global Printing Market Share | Company | Market Share | Toppan Printing (Japan) | 4.10% | R.R. Donnelley & Sons (USA) | 2.40% | Dai Nippon Printing (Japan) | 1.40% | Quebecor Inc (Canada) | 0.20% | Other Companies | 91.90% | Total: | 100% |

(DataMonitor, 2010)

Figure 3 Global Commercial Printing Market Value 2005 - 2009 (In Billions) | | Year | $ Billion | % Growth | 2005 | 375.7 | - | 2006 | 383.1 | 2.00% | 2007 | 391.7 | 2.30% | 2008 | 397.3 | 1.40% | 2009 | 393.7 | -0.90% |

(DataMonitor, 2010)

Figure 4 RR Donnelley Historical Revenues USD (Millions) | | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 1 Q | 2,415 | 2,456 | 2,997 | 2,793 | 2,267 | 1,926 | 1,289 | 2 Q | 2,409 | 2,356 | 2,924 | 2,796 | 2,274 | 1,932 | 1,843 | 3 Q | 2,488 | 2,463 | 2,865 | 2,910 | 2,309 | 2,184 | 1,913 | 4 Q | N/A | 2,583 | 2,796 | 3,088 | 2,467 | 2,388 | 2,112 | Total: | N/A | 9,858 | 11,582 | 11,587 | 9,317 | 8,430 | 7,157 |

(Standford & Poor’s, 2010)

References

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RR Donnelley Company & Sons Co. (2009, December 31). Form 10-K. Retrieved November 28, 2010 from http://www.sec.gov/Archives/edgar/data/29669/000119312510038962/ d10k.htm

(2010, March 23). RR Donnelley Awarded Multiyear Agreement by Williams-Sonoma, Inc. RR Donnelley. Retrieved from http://investor.rrd.com/releasedetail.cfm?releaseid=454241

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