Martha Stewart Living Omni media Inc. MSO

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Martha Stewart Living Omni media Inc. (MSO)

• By Matt Kozera
• Andrew Harsh

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Table of Contents

• What is economics?
• The Company
• Martha Stewart Timeline
• Supply and Demand
• MSOs Share Prices
• Products
• Factors of production
• Target Market
• Types of Markets
• Competitors
• Opportunity cost
• Cost (Revenue and Expenses)
• Specialization
• What is happening to MSO?

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What is Economics?

• A basic definition would be, the study of choice
  under conditions of scarcity.
• Scarcity is defined as, a situation in which the
  amount of something available is insufficient to
  satisfy the desire for it.
• As individuals we have a scarcity of time and
  spending power.

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The Company

• MSO started in 1999
• The company has 544 people employed
• The eight core content areas in the company are
  Home, Cooking Entertaining, Gardening, Crafts,
  Holiday, Keeping, Weddings, and Baby Kids
• Located in New York, New York

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Martha Stewart Timeline

• Born 1941 in a Polish-American family
• 1982 had her first book published, Entertaining
• 1993 she debuts her TV show, Martha Stewart
  Living
• 1999 MSO goes public in the New York Stock
  Exchange
• 2001 Stewart sells almost 4,000 shares of InClone
  Systems stocks the day before the company crashed
• 2001 jury convicted Stewart of obstructing
  justice, conspiracy and lying to investigators
  about the selling of stocks
• June 17, 2004 sentencing is scheduled where she
  could face up to 20 years in prison

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Supply and Demand

• Factors of Supply
• Input prices
• Number of sellers
• Expectations of sellers
• Prices of alternative goods
• Technology

• Example If the Input prices of MSO were to
  decrease this would result in an increase in the
  supply of those goods.

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Supply and Demand Cont.

• Factors of Demand
• Income
• Number of consumers
• Expectations of buyers
• Prices of related goods
• Tastes

• Example If more potential consumers were to
  enter the market that MSO is established in this
  would result in a shift in the demand curve to
  the right.

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MSOs Share Prices

• Blooming or Wilting??
• Wilting- Share prices have dropped from 3.00 in
  2002, and estimated to range from 0.39 0.59 in
  the next year.
• Is Martha Stewart the person, Martha Stewart the
  company??
• Yes- Ever since her involvement in the InClone
  Systems scandal the company has been at the
  bottom of the barrel.

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Best Selling Products

• Slovakian Easter Eggs (29.00)
• Silpat Baking Mats (24.00 -40.00)
• Personalized Heirloom Photo Albums (79.00 -
  139.00)
• Lip Balm Kit (16.00 - 39.00)
• Clear Topped Containers (15.00 - 59.00)
• Wire Tree (69.00)

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Factors of Production

• The Four Factors
• Land
• Labor
• Capital
• Entrepreneurial Activity

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Land

• The physical space on which production takes
  place, as well as the natural resources found
  under it or on it, such as oil, iron, coal and
  lumber.
• The production of MSOs products takes place
  primarily in New York. MSOs sells these
  products at Kmart in the U.S., at Sears in Canada
  and at Seiyu Ltd. Stores located in Japan.

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Labor

• This is the time human beings spend producing
  goods and services.
• There are 544 full time employees at MSO.

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Capital

• The long-lasting tools people use to produce
  goods and services.
• Two Types
• Physical Capital Buildings, machinery, and
  equipment.
• Human Capital The skills and training that
  workers possess.

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Capital Cont.

• Physical Capital
• Most of the physical capital for MSO is located
  in New York City. This includes buildings where
  many business decisions take place (Office
  buildings) and other production
  buildings/factories where most of their products
  are made through the use of machinery and
  tools/equipment.

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Capital Cont.

• Human Capital
• When MSO is in the process of training people for
  their staff they let these new employees follow
  around and work with established workers in the
  company. This gives these newly acquired
  employees a chance to gain enough Human Capital
  through other employees to get started at MSO.
  

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Entrepreneurial Activity

• The process of recognizing opportunity and then
  proceeding to take advantage of that opportunity.
  
• In 1993 Martha had her debut T.V. show called,
  Martha Stewart Living, she then proceeded to
  take advantage of her success when she took her
  company public in the New York Stock Exchange.
  (1999)

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Target Market for MSO

• The target market for a company depends upon the
  items theyre selling and to whom they wish to
  sell these items.
• The most productive area of Martha Stewarts line
  of products happens to be in her Martha Stewart
  Living section. This section is made to appeal
  to primarily college-educated women between the
  ages of 25 to 54. This is the primary market for
  the majority of Martha Stewarts products.

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Types of Markets

• Monopoly - A monopoly is a single seller of a
  good or service that has no close substitutes.
• Monopolistic Competition Many firms that are
  selling differentiated products, but are still
  close substitutes. Free entry and exit.
• Oligopoly A market structure in which there are
  a few dominate firms.
• Perfect Competition The most common type of
  market where there are many buyers and sellers of
  a standardized product and there are no barriers
  to enter or exit.

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What market is MSO in?

• MSO is in a Perfectly Competitive market. MSO is
  comprised of 4 business segments which happen to
  be highly competitive. Those segments are
  Publishing, Television, Merchandising and
  Internet/Direct Commerce. It is through these 4
  segments that the merchandise in the 8 core
  content areas of MSO is created and distributed
  to its consumers.

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Competitors of MSO

• (MDP) Meredith Corporations
• -Edwin Thomas Meredith founded the company in
  1902 when he began publishing Successful Farming
  magazine. Since then, the company has grown to
  employ more than 2,800 people throughout the
  country, with corporate headquarters located in
  Des Moines, Iowa.
• (TWX) Time Warner Inc
• Time Warner Inc. is the world's leading media
  and entertainment company, whose businesses
  include filmed entertainment, interactive
  services, television networks, cable systems and
  publishing.

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Opportunity Cost

• The true cost of something is what you give up to
  get. This includes not only the money spent in
  buying something, but also the economic benefits
  that you did without because you bought that
  particular something and thus can no longer buy
  something else.

• Implicit Costs The cost of inputs for which
  there is no direct money payment.
• Owners land (foregone rent)
• Explicit Costs Money paid out for the use of
  inputs.
• Employees wages, cost of raw materials.

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Other Costs and Revenue

• As of June 30th, 2003 these were MSOs total
  expenses
• Operating Costs and Expenses
• Production, distribution and editorial 35,473
• Selling and Promotion 13,724
• General and Administrative 13,028
• Depreciation and Amortization 2,054
• TOTAL 64,279

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Costs and Revenue Cont.

• As of June 30th, 2003 these were MSOs total
  revenues
• Revenues
• Publishing 39,617
• Television 6,588
• Merchandising 11,768
• Internet/Direct Commerce 7,814
• TOTAL 65,782

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Specialization

• A method of production in which the company
  chooses to concentrate on a limited number of
  activities. Most often these are the activities
  producing the most profit for the company.
• MSO has selected 8 core areas in which they
  specialize and concentrate their efforts towards.
  

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MSO Specialization

• Home Decorating, collecting and renovating.
• Cooking and Entertaining Recipes, techniques and
  indoor and outdoor entertainment.
• Gardening Planting, landscape design, and
  outdoor living.
• Crafts How-to projects and similar family
  activities.

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MSO Specialization Cont.

• Holidays Celebrating special days and special
  occasions.
• Keeping Home-keeping, organizing, pet-keeping,
  clothes-keeping and restoring.
• Weddings All aspects of planning and celebrating
  a wedding.
• Baby and Kids Cooking, decorating, crafts and
  other projects of celebration surrounding infants
  and children.

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What is happening to MSO?

• On March 15th, of the current year Martha Stewart
  was convicted on all four counts in her
  obstruction to justice trial. This graph is a
  representation of MSOs stock on that day. You
  can see that MSO had its stock tumble 22 after
  the verdict was in. The future is not bright for
  this company. They will in the very near future
  continue to see the number of shareholders fall
  and advertisers pull away. Martha is currently
  appealing the decision that could have her locked
  up.

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Any Questions???????