Excellence Component for Business Accounting at Full Sail University

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A Risk Analysis for
Scholastic Corporation
Chase Todaro
Full Sail University
Business Accounting
June 23rd, 2021

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EXECUTIVE SUMMARY
This report provides an in-depth analysis at the current risk factors for the Scholastic
Corporation. Areas of analysis include battling COVID-19, maintaining strong relationships with
creative talent, staying relevant with technological trends, retaining and attracting a dedicated
work force, and overcoming competitive pressures. Recommendations include but are not
limited to sponsoring qualifying school districts by becoming “Scholastic Schools”, providing
better benefits and wages to current and new employees, and providing incentives for returning
authors trying to publish a new work with the Company.

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OBJECTIVE
This report was created and compiled to suggest changes and decisions to decrease the
risk factors presented to the Scholastic Corporation.
RESEARCH METHODOLOGY
The information used in this report was gathered on the internet and online databases
from a combination of internal and external sources that measured different qualitative and
quantitative metrics of the company during the year of 2020.
RISK FACTORS (Scholastic Corporation, 2020)
1. “Our business, results of operations and financial condition may continue to be
adversely affected by the COVID-19 pandemic and other infectious diseases.”
2. “The competitive pressures we face in our businesses could adversely affect our
financial performance and growth prospects.”
3. “If we fail to maintain strong relationships with our authors, illustrators and other
creative talent, as well as develop relationships with new creative talent, our business
could be adversely affected.”
4. “If we cannot anticipate technology trends and develop new products or adapt to new
technologies responding to changing customer preferences, this could adversely affect
our revenues or profitability.”
5. “We maintain an experienced and dedicated employee base that executes the
Company’s strategies. Failure to attract, retain and develop this employee base could
result in difficulty with executing our strategy.”

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These five specific risk factors have been selected from the list of risk factors in the 2020
annual report from the Scholastic Corporation because they present challenges the company
would greatly benefit from solving with the most straightforward solutions.
RECOMMENDATIONS
1. A major part of the Scholastic Corporations business depends on book clubs and book
fairs at schools in the United States and other countries. Due to the transition from in-
person classes to virtual environments, there has been very little attention to the
business. According to CDC data on the COVID-19 pandemic, it can be assumed that
the transition back to face-to-face education will not be universal across the US and
abroad. Increasing numbers of fully vaccinated adults and children are rising, (CDC,
2021) but in areas with a slower rollout and increases of anxiety towards returning to
pre-pandemic life is not going to take place as quickly. The recommended solution is
two-fold. First, in school districts where the Company has historically operated with a
verified vaccination rate of 75% or higher of the faculty and student body that will be
fully reopened in the 2021-2022 school year, book fairs and book clubs should be
offered in person as normal. For other districts the Company has historically operated
in that does not have a high enough vaccination rate or is continuing virtual learning,
the company could follow a virtual model and create a curated online store for
participating school districts to continue to hold book fairs. If this proves to not be a
profitable model, seeking a strategic partnership with a company that can cheaply
distribute books (such as Amazon or Barnes & Nobles) could help keep book fairs
active while staying profitable for all parties. The Company should conduct virtual

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book clubs to keep kids connected and reading in places where hosting them in-
person is not yet safe.
2. One of the largest advantages the Company has over its competitors it’s brand
recognition and reputation. Keeping that in mind, one way to effectively mitigate the
risk of losing business to competition is to branch into other markets. (Ten ways to
keep ahead of the competition 2021) The Company largely deals with grades K to 6.
Expanding to Middle and High schools by partnering with schools to sponsor them
with reading materials for grades 7 to 12 could be a profitable way to keep out
competition, contractually acquiring the exclusive business of school districts across
the country by branding it a “Scholastic School.” This branding would provide
participating schools with certain perks such as newer textbooks and current reading
materials for students in libraries and classrooms for a yearly fee to the Company as
well as brand loyalty from students and faculty in about double the amount of grades
currently being marketed towards while simultaneously excluding the competition
from the market.
3. To maintain strong relationships with our authors and creatives, the Company should
implement incentives for creative talent to return for future projects, such as
decreased publishing fees or a higher percentage of the revenue from their newer
titles. In order to attract new creative talent, the Company could host contests and
events around the US for authors and illustrators to submit work with a prize of a
book deal. This deal could involve a contractual agreement stating that the author or
illustrator agrees to submit the next (x) works to the Scholastic Corporation for first
consideration on acquiring the Intellectual Property. Only if the Company decides to
pass on the project can the author go to another publisher for the same work. Due to

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the Company’s reach and reputation, many would likely submit work, increasing the
likelihood of several projects becoming published and profitable while increasing the
pool of creative talent dedicated to the Company.
4. The Scholastic Corporation has been keeping up to date with many different
technological trends. The company website and virtual store are easy to maneuver,
and the Company has several apps on the apple and google play app store to help kids
learn on their phones. There are several verified corporate accounts on Twitter and
Instagram. At the time of writing this report, however, there is no TikTok Account.
As a leading form of social media for young people on the market today and a major
competitor in the digital media market in general, (Tankovska, 2021) the Company
should take advantage of the seemingly rampant usage of the platform and start
creating short form content as well as continuing to maintain its presence on Twitter
and Instagram. An inability to do this before another platform comes along could be a
major detriment to staying relevant in the digital space especially as the world relies
more on these environments.
5. As the work shortage across the United States holds firm, it’s important for the
Company to attract and maintain a dedicated workforce so business can proceed as
planned. Reputation alone isn’t enough to solve this problem, even though it likely
does help attract people to the company. It’s important to keep senior management on
board, as it would not be good for the company if there was not strong leadership at
the top. However, it’s worth noting that a company as large as the Scholastic
Corporation cannot possibly run successfully without the lower level management
and average employees doing the day to day duties. It’s these workers that would
quick and move elsewhere that could really affect the Company in a negative way. To

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prevent this from happening, management of all levels should be provided with
extended benefits to keep them dedicated to the Company. Any jobs being paid
minimum wage should be increased to at least $15, in alignment with the talks from
the federal government and working class. (Morath, 2021) If people are treated with
respect and paid fairly, they will work harder and stay dedicated to the company,
allowing the Scholastic Corporation to remain relatively unaffected by the current job
shortage and any potential similar societal discussions.
CONCLUSIONS
The Scholastic Corporation is in good standing for the foreseeable future. While not
without risks, the Company has many different options to pursue to mitigate these risks in a
quick and semi-cost efficient manner while maintaining and preserving their mission of giving
kids access to reading while making a profit. Addressing and tending to at least one of these risks
has the potential to help the company for years to come and could prove to have been a valuable
investment in the future.

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REFERENCES
Centers for Disease Control and Prevention. (n.d.). When You've Been Fully Vaccinated. Centers
for Disease Control and Prevention. https://www.cdc.gov/coronavirus/2019-
ncov/vaccines/fully-vaccinated.html.
Morath, E. (2021, February 3). Biden Wants a $15 Minimum Wage. Here's What People Say It
Would Do to the Economy. The Wall Street Journal. https://www.wsj.com/articles/biden-
wants-a-15-minimum-wage-heres-what-people-say-it-would-do-to-the-economy-
11612348201.
Scholastic Corporation. (2020, May 31). Scholastic Corporation Annual Report and 10-k. New
York, New York; Scholastic.
Tankovska, H. (2021, April 19). Social networks to connect among Gen Z and Millennials in the
U.S. 2020. Statista. https://www.statista.com/statistics/1218052/leading-social-networks-
among-gen-z-and-millennials-in-the-us/.
Ten ways to keep ahead of the competition. Marketing Donut. (n.d.).
https://www.marketingdonut.co.uk/marketing-strategy/ten-ways-to-keep-ahead-of-the-
competition.