The primary issue facing Harlequin is the steady loss of share in a growing women’s fiction market due to the growing popularity of single-title novels. With the volume sales dependence that is inherent in series publishing, the unit sales stalling that occurred in the late 80’s and early 90’s acted as a warning signal to Harlequin. A change in pricing strategies enabled revenues to continue to rise, but this was a short-term solution and Mira has the potential to become a long-term solution. However, there are a number of issues surrounding the launch of Mira.

Harlequin made efficiency and certainty a part of their everyday business, in an industry where low profit margins and risky releases were the norm. Harlequin has been able to create high barriers to entry in the series market through the development of brand loyalty and excellence in product quality and supply chain management. In regards to Porter’s Five Forces, Harlequin can be analyzed as such. There is a possibility that other publishers will develop competitive romance novels and imitate their marketing strategy, and in fact Bantam has been fairly successful in doing so.

Consumers have considerable bargaining power, as there is a plethora of new books being introduced each month, and may not only switch publishers, but genres as well. Harlequin’s suppliers have little bargaining power, as they are considering internalizing their sales force, and have the capacity to switch printers, or even bring printing in house as well. There is a high barrier of entry into the industry for newcomers, which works in Harlequin’s favor. In addition, there are few rivals to their corner in the romance industry.

Strengths include a stable of 100 authors and editors who have the ability to produce a consistent product. Weaknesses include no internal sales staff or printing. Opportunities include internalizing outsourced functions such as sales and printing, as well as diversification. Threats come in the form of possible competitors entering the market, as well as the inability to effectively manage diversified interests, so different from their unique romance production. A VRIO analysis identifies skilled editors who are able to produce a consistent product.

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These are valuable, rare and being utilized efficiently by Harlequin. Yet, they could be imitated by competition, with some work. Their physical assets are not as valuable nor are they rare. As physical assets are minimal they are being utilized, but are imitated by competition. Their cash reserves of $20 million, with little debt are very valuable, and also very rare. They are beginning to be utilized with the purchase of diversified entities, and are not easily imitated. As such, Harlequin has several courses of action they can consider.

First, they can do nothing, and simply continue on the course they have been. Second, they can aggressively seek to purchase more diversified entities, which have a history of being profitable. Third, they can seek to purchase diversified entities without a history of being profitable, yet hold the opportunity for development and a profitable future. Fourth, they can develop their own diversification in house, entering into new genres. Fifth, they can seek to increase profits by bringing in house activities, which are currently being outsourced, or they can seek to utilize a combination of these courses.

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