Introduction
Barnes and Noble started off its operations in early 1970s after being established by New York undergraduate University student by the name Leonard Riggio. In its initial years of operation, the company enjoyed an almost monopolistic environment as there were no fierce competitors.
As a result, the company used these early opportunities to get involved in offering discounted books and acquiring new markers ventures such as BookMasters and Marboro Books which enabled the company to expand its retail chains (Barnes and Noble, n.d, par.1).
During the early years of 1990s, the company’s operations were subjected to fierce competition as other firms received licenses to operate as retail bookstores. This saw other companies like Borders Group Inc., Amazon. com, Books-A-Million, Crown Books and Media Plax, become major competitors to Barnes and Noble (Barnes and Noble, n.d).
These companies developed and pursued detailed strategies that centered on increasing their marketing advantages. At the same time the competitor companies possessed vital resources and strategies such as: sophiscated inventory management system in the retail book industry, strong brand position, provision of outstanding value to customer together with superior shopping experience and massive sales volumes (Modi, Durkin, Kass and Ulin, 2000).
Barnes and Noble external environment
Firms constantly interact with their outside environment and suggestion has been that firms need to participate in continuous assessment of their environment (Cowper, 2006). External environment that a firm conducts its operations in include: competitive forces, demographic forces, social and cultural forces, economic forces, legal and governmental forces and technological forces (Cowper, 2006).
Established literatures postulate that every firm or organization is shaped by the external macro and micro environment with possibilities of internal environments being controllable. However, it has been seen that firms have limited influence over their external environment and in reality firms are always advised to align their internal environment with the necessary changes in the external environment which in turn result in modifying the firm’s mission and shifting priorities and goals (Lussier, 2008).
Competition from Amazon
Amazon.com was started in1994 by Jeff Bezos and in 1995 the company opened its virtual doors before going public in 1997 through an Initial Public Offer-IPO (Modi, Durkin, Kass and Ulin, 2000). As part of its strategy, Amazon.com has identified certain key factors in its overall business model.
The key success factors include: “a strong brand position, providing customers with outstanding value and a superior shopping experience, massive sales volume and realizing economies of scale and scope” (Modi, Durkin, Kass and Ulin, 2000, p.11). Amazon.com operations are centered on these key success factors (KSF) and the vision of the company’s founder Jeff Bezos is for the company to become ‘the earth’s biggest bookstore’ (Modi, Durkin, Kass and Ulin, 2000).
According to report by Media Metrix, Amazon.com is the only bookselling company in the world to appear in the world’s top 500 websites while at the same time the company is estimated to possess an estimated 80 per cent online bookstore market (Modi, Durkin, Kass and Ulin, 2000).
Amazon.com further possesses certain resources and capabilities that have leveraged it against other competitors. These resources and capabilities include: every year Amazon.com continue to realize enormous growth and the growth is largely as a result of strong sales in Amazon’s new consumer electronic stores; at the same time Amazon possess capability to inspire analyst confidence and create investor excitement an opportunity the company has exploited to lure more investors enabling the company to access huge capital hence fueling growth (Modi, Durkin, Kass and Ulin, 2000);
Amazon.com possess a strong brand name that continue to exert strong presence in the online-retail market. In accordance to its strong brand name the company has formulated its strategies based on the brand name with focus of realizing market growth and expansion in the future (Modi, Durkin, Kass and Ulin, 2000); lastly Amazon.com is seen to possess excellent world-class work environment that has been conducive to innovation and growth.
Amazon’s work culture has been described to be centered on simple theme of, “work hard, have fun, make history” (Modi, Durkin, Kass and Ulin, 2000,p.13) that has resulted into creation of productive work environment that is dynamic in nature; lastly Amazon.com vital capability is the ability to transact business over the internet and, “create an environment that facilitates even novice users of the web to very easily buy over the web” (Modi, Durkin, Kass and Ulin, 2000,p.14) which in reality has made the company to be the pioneer in revolutionalize online buying of books.
Barnes and Noble strategy plan
As a result of increased competition, many businesses have realized the imn0portamnce of strategic planning; however, complexity and formality among them vary considrerably. Strategic planning in simple terms refers to “analysis of the current and expected future situation, determining the direction of the firm and developing means for achieving the mission” (Koontz, 1990, p.107).
In real sense, this is viewed as an extreme and more complex process that in essence requires systematic approach that includes identifying and analyzing factors that are external to the organization and pairing them with the firm’s capabilities (Koontz, 1990). To effectively confront accelerated competition from Amazon, Barnes and Noble has had to continuously enhance its strategy policy which has depended on the company’s resources and capabilities.
In addition, the company has superior brand recognition which has acted as a strong motivating factor in attracting customers. At the same time, the company possesses extensive experience in bookselling that spans for almost 40 years, which has enabled the company to create a culture that “breeds outgoing, helpful and knowledgeable booksellers” (Modi, Durkin, Kass and Ulin, 2000, p.15).
Further, the company has a strong management that has been essential in providing necessary leadership for the company’s success. In terms of capabilities, the company has established a dedicated brick and mortar expansion programs through online development strategies that offer diverse sales opportunities and allow customers necessary flexibility in their purchasing plans.
With regard to competitive advantages, Barnes and Noble has a strong brand recognition; strong established store design and ambiance that has gradually become a symbol of trademark; and possession of core competency in operations (Modi, Durkin, Kass and Ulin, 2000). As part of its strategy, the company envisions to increase its share of the consumer book market while at the same time increase its market size, enhancing the browsing and shopping in its online stores and making it a pleasurable experience to its customers.
This is in addition to concerted efforts of strengthening and expanding strategic alliances with third-party websites and other content providers and lastly creating and pursuing innovative marketing strategies to increase selling opportunities (Modi, Durkin, Kass and Ulin, 2000).
Conclusion
External environment for Barnes and Noble has largely been dominated by Amazon.com as its key competitor in retail bookselling. To have an edge over competitors, Michael Porter developed three main generic strategies namely: cost leadership strategies, differentiation strategies and focus strategies (Tools Limited, 2010, p.1).
Primarily, cost leadership strategies are pursued with aim of “increasing profits by reducing costs, while charging industry-average prices” (Tools Limited, 2010, p.1). These strategies involves minimizing costs but at the same time providing quality products and services to consumers. Differentiation strategies on the other hand involve establishing a unique difference in the company’s products as compared to those offered by the competitors.
For Barnes and Noble, it needs to carry out an “effective research, development and innovation, ensure delivery of high-quality products and services, and ensure effective sales and marketing strategies” (Mind Tools Limited, 2010, p.1). With regards to focus strategies, emphasis is on concentration on particular and specific niche markets. Barnes and Noble can pursue this strategy by creating low-costs and unique products for consumers as compared to Amazon.com.
References
Barnes and Noble Company. Barnes and Noble History.
Cowper, J. (2006). Sales and marketing for small businesses. Sydney: Pascal Press. Web.
Koontz, H. (1990). Essentials of management. New Delhi: Tata McGraw-Hill. Web.
Lussier, R. N. (2008). Management Fundamentals: Concepts, Applications, Skill Development. OH: Cengage Learning. Web.
Modi, T., Durkin, M. A., Kass, C. and Ulin, M. (2000). Strategic Audit: Barnes and Noble. Web.
Tools Limited. (2010). Porter’s Generic Strategies: Choosing Your Route to Competitive Advantage. Web.