powerpoint presentation

Rafique singh – Rafd1401

Sarpreet singh – Sar1d1401

Sukhpreet sandhu – Sansd1303

Jobanjeet singh – Dhad1303

Sukhjeet singh –Sukd1303

Team case study

Barnes and Noble Company

Questions

1. Describe B&N’s business model and strategy as it has changed since its creation.

Business model is defined as a plan implemented by a company to generate revenue and make a profit from its operations. It includes the components and functions of the business Burns, (1999, P. 243). B&N Company has been the gigantic bully in the earlier period that drove small autonomous bookstores out of business with aggressive pricing tactics and an unbeatable inventory of books. It has been serving its customers through selling of physical books as their model for many years but it has faced a fierce battle recently to survive in the inevitable era of e-books. The company still depends on physical, brick and mortar stores in driving the business.

B &N currently has undergone rigorous transformation to salvage its reputation and to salvage customers who have been shifted drastically to the upcoming ways of learning that is e-book and e-learn. It has then put a lot of energies on developing and marketing the Nook series of e-readers and tablets to salvage the deteriorating marketing of the physical books and adapt to the current new environment and to escape the wrath and fate as its competitors; Borders, B. Dalton and crown. This model has gained ground in achieving a successful market share though it has a very high cost since it faces great competition from Amazon, Apple and google. This is proven in its market capitalization of $ 1 billion with that of top competitor having $98 billion.

The company has also used various business strategies to survive in the current environment. Business strategies according to Gartside, (1991, P. 234) is the art, science and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives that will enable an organization achieve its long term objectives. At first B&N company had aggressive pricing tactics and an unbeatable inventory of books which used to intimidate its competitors and thrived able to be the cost leaders in the industry. But due to changing environment and the stiff competition it’s currently them who are thriving to survive in the industry. Use of electronic books and learning has put B&N Company at the verge of danger since it is still under the physical book selling which has drastically fallen out of market.

The company has designed a Nook series of e-readers and tablets to salvage the current situation. This strategy is unique from those of competitors as it proven by the current success in the market share but it has been affected by the high cost. Nook series of e-readers and tablets have been branded well in the market with its high expenditure incurred in advertisement to gain popularity to the readers and new customers in the industry.

Further the company has set up manufacturing and retail operations for the device to increase the production volume and be able to meet the target and win more new consumers. This is shown by the market share the company has grabbed from the Amazon thus controlling approximately 27% of the digital book market from that of 60% held by Amazon.

B$N company cancelled its stock dividend as a strategy to survive from the loss it incurred in 2011 of $73.9 million as compared to a $36.7 million profit the previous year. The stock dividend which could have been shared by stockholders will be used to energize the company financially. It will involve using for further expenses and to finalize installation of Nook system which is believed will bring in revenues that will compensate the high cost it has incurred. Further Nook system is expected to help drive traffic to B&N’s brick and mortar stores.

B$N Company enjoy the monopoly market in the inventory of physical books since the closure of the B Dalton, Crown Books and Borders and thus gain support from publishers since it is also for their survival in marketing their books and to sell effectively through B&N. Amazon is seen by publishers as an enemy in the industry as its goal in the industry is to cut out publishers and be able to publish books directly, selling books at a lower discount to drive to higher sales. B&N Company has retained its brick and mortar retail stores in selling physical books to take advantage of the current monopoly it is enjoying. In addition it’s used to stimulate sales of e-book and audio books thus the B&N has gained a steady growth of the market share though with a high cost.

Lastly, B&N company to enhance its financial stability and survive the current environment which could lead to winding up their business, it has made a deal with the Microsoft investing $300 for a 17.6% stake in the new company consisting of the Nook tablet and e-readers and the college division. Moreover the deal involves inclusion of Nook application in Microsoft’s windows 8 operating system which will aid in distribution of the application to a greater and vast number of window users around the world. This will promptly spin the company off the survival radar and acquire high revenues with dominance in the market share.

1. Use the value chain and competitive forces models to evaluate the impact of the Internet on book publishers and book retail stores such as B&N

Value chain and competitive five forces model was provided by Michael porter and explains how to edge over rival firms in the industry. Value chain helps in identifying ways to create the best value for the customers and it’s a 3 step process: activity analysis, Value analysis and lastly evaluating and planning. Five forces of competition according to Michael porter are: threat of substitutes, rivalry, supplier power, buyer power, and barriers to entry. B$N Company, publishers and other book retailers thrive to survive in the current competitive environment and with the internet posing all this challenges.

Internet has enhanced development of e-books and e-learn which have become substitutes to physical books. This has threatened existence of both publishers and book retailers since people have adapted to using the current means which is of low cost and easy to access. Moreover, internet existence has brought greater rivalry like never before. For example Amazon Company has been using e-book and e-learn to which B&N has also shifted to the same segment with them developing an application Nook system and tablet for electronic learning and books. This has caused great rivalry in terms of market share dominance which has lead to Amazon losing some of its customers to the B$N. publishers have also been seeing Amazon as enemy since Amazons’ goal for e-books is to cut off publishers and publish books directly with provision of high discounts on sales thus putting competitors at risk of losing their clients.

Moreover internet has enhanced the bargaining power of suppliers since the products are just advertised via the internet and thus their accessibility is easy. Unlike the retail booksellers they depend on publishers to provide them with the supply of the products which is not guaranteed since the price can vary. Publishing companies have been strained to adjust their allocations of printed books and new titles for stores and books are beginning to be released as apps in addition to physical books. Internet has through Apps for books provides addition of more features all the time, including the ability to manipulate and enlarge images, flip through photo albums, watch videos, read instant messages and listen to the music of characters within the book which have not been the case to the book sellers of physical books.

Further internet has enhanced the bargaining power of buyer such that for e-book and e-learners it costs a lower price. For example Customers who visit B&N’s web site buy three digital books for every one physical book thus posing a threat to the booksellers of physical books though they make profits.

It has provided barrier to entry to the publishers and the booksellers of the physical books. Internet has been linking customers directly with the e-book sellers and e-learners without any physical contact. Publishers and retail book sellers have been barred from meeting the vast population around the world unless they provide various distributors of the books which is not the case to the e-book and e-learners who access it globally with an ease.

2. How are B&N and the book publishers changing their business models to deal with the Internet and ebook technology?

The current new environment if B$N company and the book publishers do not take stringent measures then they might wind up their businesses in the industry. B$N company was depending on physical, brick and mortar stores to run their business but with the stiff competition from Amazon who transformed to e-books and e-learning they have shifted and put a lot of energies in developing and marketing Nook system and tablets to enable them venture into e-book and e-learn industry.

They have further both made a deal with the Microsoft investing $300 for a 17.6% stake in the new company consisting of the Nook tablet and e-readers and the college division. Moreover the deal involves inclusion of Nook application in Microsoft’s windows 8 operating system which will aid in distribution of the application to a greater and vast number of window users around the world. This will aid in gaining a greater market share.

Book publishers on the other hand have been forced to adjust their allocations of printed books and new titles for stores and books are beginning to be released as apps in addition to physical books. In addition they have developed book application which provides addition of more features all the time, including the ability to manipulate and enlarge images, flip through photo albums, watch videos, read instant messages and listen to the music of characters within the book which have not been the case to the book sellers of physical books.

3. Will B&N’s new strategy be successful? Is there anything else B&N and the book publishers should be doing to stimulate more business?

The new strategy for B&N will succeed since Nook system it will capture more consumers globally due to its addition in the windows 8 operating system and financial status has been provided support by the Microsoft Company. Further B&N has a wide segment to provide their services to they will be able to capture consumers who have interest in e-book and e-learn and provide services to those who still require physical books. Physical books will be able to be acquired from bricks and mortar stores which are also used to provide e-book and e-learn services.

B&N and the book publishers should engage in promotions and provide extreme discounts to challenge their competitors in the industry. Moreover, number of employees should be reviewed and determine their cost incurred in their salary payment. If it’s high retrenchment or salary cut off can be implemented to reduce the company expenditures.

Lastly, regular customers should be awarded various gifts and provide various competitions to the customers on ways to acquire certain products. Also provision of support to the communities living within the environs of the companies like building libraries which can be freely accessed aid in gaining support from the government through reducing the tax imposition thus building a stable growing business environment and having a good corporate image.

4. How Do Barnes And Noble Communicate Their Strategy To Employees And The Public? Would The Modes Of Communication Be The Same? Explain Your Answer.

Communicating strategies to employees and the public varies because both have a varied objectives required from them. When communicating to the employees the executive director need to convene a meeting or a training session with the subordinate and express the strategies he/she has towards the company and their views heard about the strategy at hand. Employees should know why, what and how the strategy will be achieved.

Moreover, Barnes and Noble have linked their strategy with the vision and mission of the organization thus employees will be able to link their individual work and how the strategy is depended on them. Through use of the social media to get close with the employees for example use of internal communication systems like the emails and internal corporate blogs would be successful since a reliable feedback can be obtained.

Top management should walk the talk. They should inspire employees by showing commitment and direction toward executing the strategy. Ensure appropriate resources are available and identify members of the leadership team who will be most likely be committed and design a specific roles for them. Individuals and teams who come up with smart solutions and positive change should be recognized and rewarded.

Synergy need to be established among the departments. Strategy management team should comprise people from different departments to achieve its success. Lastly, employees should be well informed about the progress towards carrying out the strategy. Subordinates and other senior and middle level managers should make strategy reviews and update their team members regarding the same during the team huddles and inform any apprehensions from employees to the top management.

On the other hand Barnes and Noble Company communicate to the public through the following means: through understanding their buying behavior provides the required products and services. For example provision of the Nook system and the tablet for e-book and e-learn captures their buying behavior which will transform to a high market share since will be purchasing the products.

Continual branding of their products and having a good corporate image creates a good impression to the public and thus the company gains more customers. Nook system and tablets and the use of bricks and mortar have been branded well to the public such that they perceive it to be the best. This is proven by the growing market share of the B&N .Also their products and services they provide are of greater quality than that of the competitors since their Nook system and tablets are the best.

Moreover staying in contact with the customers keeps them closer. Through use of postcards, newsletters, hosting customer only promotions for example if you connect to a Wi-Fi network in a B&N store with your Nook, you can get free extras in many apps and games like Angry Birds where an individual can unlock a bonus character that normally costs a dollar.

References

Burns, T. (1999). Break the curve: the entrepreneur’s blueprint for small business success. London: International Thomson Business

Gartside, L. (1981). Model business letters: a classified selection of modern business letters for use in schools and in business (3rd ed.). Plymouth [England: Macdonald and Evans.