The Digital Division
Presented by James Grasty
Company & Background
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Founded in 1864 printing catalogs for
Montgomery Ward, by 95’ they were the largest commercial printer with 41k employees in 22 countries Privately held chicago based company for almost a century until they went public in 1956
Generated 60% of its revenues from; directories, catalogs and magazines
Major customers included; telephone companies, retail and direct mail, and publishers of books, magazines and software
Organization &
Incentives
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Manufacturing & Sales were core functions “You either make it or you sell it” n 95’ they had 38 divisions, in 8 business groups, part of 3 sectors: Commercial Print,
Networked Services, and Information Resources
Due to pressures and incentive structure in a typical group, the salesforce sold 80-95% of its volume to its own plants
Changing of incentives “What is the most profitable way to run this job for Donnelley?”
Organizational Chart
Traditional Print
Business
• Traditional Print business; “heavy iron”
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offset/web (used film & plates, cost effective for
25k-500k runs), and Gravure (Used Etched
Copper Drums, Cost effective for 500k plus) printing presses, $12 million+ per press,
Gravure even more
“You get an emergent strategy based on opportunities, as opposed to selecting the right opportunity based on a strategic assessment of alternatives” - Allen Cubell
Long term relationships with customers o 70% based on contracts that ran 3-10 years
Major R.R. Donnelley
Customers
Industry Shifts & New
Technology
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Digital in 95 ' was forecast at 16% growth, while traditional printing was expected to grow at only 3%
Trends were moving increasingly towards local, targeted communication, often called “mass customization” - they printed 66k different versions of the farm journal
Filmless printing technology: digital four-color, and computer-to-plate expected to have larger impact with reduced cycle times and
References: 1. R.R. Donnelley & Sons: The Digital Division http://rolnitzky.com/iSchool_UC-Berkeley/iSchool-Fall -09/INFO_290_managing_info_cos/lec2/Donnelley_case.pd f 2. http://www.rrdonnelley.com/ 3. http://investor.rrd.com/secfiling.cfm? filingID=1193125-13-77082&CIK=29669 4. http://en.wikipedia.org/wiki/RR_Donnelley