Pearson's strategy
Pearson’s goal is to help people make progress in their lives through learning. We aim to be the world’s leading learning company, serving the citizens of a brain-based economy wherever and whenever they are learning. In financial terms, we measure our progress against three key measures: earnings, cash and return on invested capital.
Our strategy for achieving these goals has four major elements, which are common (though applied somewhat differently) to all our businesses:
- Long-term organic investment in content: Over the past five years, we have invested £4bn in our business including: education programmes; authors for Penguin; FT Publishing’s journalism. In 2010, that content investment reached an all-time high of approximately £900m. We believe that this consistent investment is critical to the quality and effectiveness of our products and that it has helped us gain share in many of our markets.
- Digital products and services businesses: Our strategy is to add services to our content, usually enabled by technology, to make the content more useful, more personal and more valuable. These digital products and services businesses give us access to new, bigger and faster-growing markets. In 2010, our digital revenues were £1.6bn or 29% of Pearson’s total sales. Our worldwide educational testing businesses have increased their revenues almost 70% over the past five years to $1.7bn.
- International expansion: We are already present in more than 70 countries and we are investing to become a much larger global company, with particular emphasis on fast-growing markets in China, India, Africa and Latin America. Over the past five years, our international education business has grown headline sales at an average annual rate of 18% through strong organic growth and acquisitions, generating more than £1.2bn of revenues in 2010.
- Efficiency: Our investments in content, services and new geographic markets are fuelled by steady efficiency gains. Since 2006, our operating profit margins have increased from 12.7% to 15.1% and our ratio of average working capital to sales has improved from 26.3% to 20.1%.
We believe this strategy can create a virtuous circle - efficiency, investment, market share gains and scale - which in turn can produce sustainable growth on our financial goals and the value of the company.
