Describe about the Report for Barnes & Noble, Inc. Versus Borders Group, Inc.
Continuous technological innovation is rapidly overtaking the retail information management that has been in place for years. Holistic information systems that can be used for management and retail at the same time are essential for the success of a business. Companies that create and implement strategic plans on information systems (IS) at the right time have higher chances of doing better and standing out amidst challenges while the others fail. This paper describes two organizations in the book retail industry. Barnes & Noble is an example of an organization that succeeded in gaining competitive advantage via IT. On the other hand, Borders Group is an example of an organization that was unsuccessful in enhancing its competitive advantage through IT/IS.
Barnes & Noble, Inc. is one of the largest book retailers in the United States. It is a Fortune 500 company, previously ranked at position 423. In addition, the organization is a leading digital media content and educational products retailer throughout the country. According to Fortune 500 (2016), the company has 649 stores in all States within America and has 37,000 employees. After a series of bankruptcies and merges of firms in the American bookstore industry in the last two decades, Barnes & Noble still stands as the remaining national bookstores. Barnes & Noble was founded in 1886 under the name Arthur Hinds & Company. The name was changed in 1894 to Hinds & Noble when Gilbert Clifford Noble became a partner. In 1917, Noble bought Hinds and partnered with William Barnes, after which they named the company Barnes & Noble (Barnes & Noble Inc, 2013). The company has been transforming to include information technology in its activities in order to keep the company at the top of the industry.
Currently, the company is well known for NOOK, a suite for e-book readers it developed. The Nook is in competition with Kobo eReader, Amazon Kindle as well as other e-readers such as iBooks that are used in iOS devices. The current version of the NOOK is customer friendly because it has Wi-Fi connectivity, Sudoku games, a dictionary and chess among other things (Rosen, 2015). Barnes & Noble has done all this and much more to gain and maintain a competitive advantage that its competitors were unable to cope up with.
The success of this organization has been as a result of the strategies that have been put in place to embrace Information Technology (IT) as the world advances in technology. Besides the brick and mortar stores the company has established all over the country, IT has enabled it to gain a broad online presence. Different internal and external factors have enabled the company to enhance its competitive advantage as indicated in the subsections below.
Over the years, the company embraced changes that came on the way. For instance, in 1931, the company opened a publishing division and began opening stores in other States. In 1970s, the company was under a good management of Leonard Riggio, who made great changes to revive it after about two years of mismanagement. In order to embrace IT in its marketing strategies, Barnes and Nobles was the first bookseller to make adverts on television in 1974 (Barnes & Noble Inc, 2016). In addition to the television advertisements, the company started selling books on 40 percent discounts so long as the title ranked the bestselling in The New York Times newspaper.
Under its good management, the company purchased Dalton stores in 1986. By 1999, the company became the second-largest bookseller online in the United States. Company critics claimed that the company led to a decline of the other local booksellers (Barnes & Noble Founder, 2016). As a move to integrate more IT to its already existing mail-order catalogs, the company created a website, where it began selling books online by 1980s. The website was launched in 1997. Currently, the site carries more than 2.3 million titles. On October 2007, the company launched an online literary style site by the name Barnes & Noble Review. It featured columns, book reviews and interviews from different authors and critics. The site also provided essays for music critics such as Robert Christgau. The company also ran Gameshop retail outlets, between 1999 and 2004, where video games were sold.
More IT was incorporated into the company as technological advancements continued. In 2010, William Lynch, who was the Website president, became the Company’s CEO. As the Company’s overall manager, he made the company embrace Information systems to a maximum. During his time there, the company launched the electronic book store. Later on, the Nook, an electronic book reader was introduced. It was under his management that the company became famous for its digital books. Lynch resigned in 2013.
Several external factors influenced the success of Barnes & Noble’s. Between 1965 and 1990s book industry was growing at a high rate but companies in the industry were reluctant to grab the opportunity. During the same time, discovery of computers led to innovation of information systems for different industries. In the retail industry, companies like Barnes & Noble got the opportunity to gather customer feedbacks so that they could make improvements for higher customer satisfaction.
Using the information systems, that were available at that time, the company collected data on market in order to determine what the customers needed. It was after this that the company opened small discount stores that were later replaced by the larger stores. In addition, the data collected indicated that more sales would be made if the company published its own books. The started publishing its books. Later on, in order to raise customer satisfaction, the company started selling the books they published to mail-order customers. It was at this time that the company saw the benefits of embracing IT. Books that were sold in mail-order catalogs were affordable reissues that enabled the organization to reach new customers all over the country (Barnes & Noble Inc, 2016). By the end of 1974, Barnes and Noble’s Fifth Avenue store had overtaken London’s Foyles bookshop, making it the biggest bookstore worldwide.
In 2011, the closure and bankruptcy of competitor, Border Group, left Barnes & Noble the only remaining national bookseller in the U.S. A series of bankruptcies and mergers in the American book industry followed. Waldenbooks, Crown Books and B.Dalton, among others were closed down. That trend expanded Barnes & Noble’s market and made it succeed during those tough times. The current biggest physical Barnes & Noble’s bookstore competitor is Books-A-Million, a company that does not operate in the West of U.S. Other companies that currently compete with Barnes & Noble include general retailers such as Amazon.com, independent and regional booksellers (Townsend, 2013). Although the company shares the small market with more technologically upcoming organizations, the company has always embraced IT/IS to enhance its competitive advantage.
Strengths
The firm is well established and has a market capitalization of more than $ 2 billion. It’s selling of DVDs, CDs, magazines, e-books and books makes it a one-stop outlet for media. It is among Fortune 500 companies. The firm uses several channels to distribute products – online and stores. It also has a strong financial position (Barnes & Noble, Inc., 2013).
Most stores are within U.S. meaning that the market is limited.
Ecommerce is growing. The firm should use internet to cover a larger area than the U.S. market. The spending of consumers is also increasing. The company can take over and jointly venture on the small significant firms that have best brands.
Firms such as Amazon, and public libraries are a threat to this firm. Online competition and book store retails are increasing. Books are substituted by ebooks at a high rate (Barnes & Noble, Inc. SWOT Analysis, 2013)
Borders Group is a good example of a company that failed because it did not fully incorporate information technology or information systems as its competitor was doing so. Borders Group, a global book retailer was founded in the year 1971 by two brothers and Michigan graduates, Tom and Louis Borders. The two established the organization when they failed to interest booksellers that were already in the industry, in their inventory and sales tracking system (PR, 2015). Their Information system could predict demand in certain communities. The failure of other booksellers to be interested with their innovation prompted them to start a firm, Border Group. The company had a good start because it was based on an IT idea that no other bookseller was interested in.
Borders was not any other book retailer that occupied a large retail area. The individuals who started it were also the managers that saw its success several years that followed. In the first two decades, the employees were devoted to the job that they did. They had pride on the knowledge of the sections that they were assigned. To customers, the store had transformed into a library and a refuge, where they would get in and were “lost” (Grossman, 2016). All these changed when the Borders was acquired by Kmart and the management changed.
In 1992, Kmart acquired Borders Group. The firm, Kmart, had also acquired Waldenbooks in 1984. Waldenbooks was a mall-based book chain. Kmart had been struggling with book division ever since it acquired Waldenbooks. One factor that led to the failure of Borders Group was change of management and merging an area of struggle. Kmart merged Waldenbooks with Borders with the hope that Walden’s book division would be revived by Border’s senior experienced management that were doing well. However, the senior management team resigned before they could do much.
Several external factors accelerated the failure of the company. First, there was high competition in the book retail market. Border Group competitors, Crown and Barnes & Noble were aggressively expanding to cover up a wide market. Borders was facing pressure from stakeholders, and it was also experiencing its fiscal problems. As a move to try and strategize, the management named the new merge, Borders-Walden Group (Cody, 2012). However, before the year ended, the company was renamed Borders group. Border Group Company’s story is full of irony and a lot of slap-your-forehead missteps. By 1990s, it was clear that both competing companies, Barnes & Noble and Borders Group dominated the books industry. The missteps for Borders began immediately it achieved dominance.
First, the company engaged in an aggressive expansion that made the company acquire long-term leases that later proved the company’s bankruptcy. The company should have assessed performance in each new store it opened by collecting information through the IS that were available at that time. Secondly, Borders focused on creating selections that were more superior to those of Barnes & Noble. They were ignorant of the fact that customers were not aware of those selections and they were not interested by them. The company should have used IT/IS to collect customers’ view of the selections. Thirdly, the company lost the control of internet sales channel. According to Valdés (2012), the company negotiated a deal, in 2001, to allow Amazon control Border’s online business. A lot of time was wasted before the company launched its website in 2008. Figures indicate that the sales dropped by nearly 34% between 2001 and 2008 (Rosen, 2015).
Again, instead of the company focusing on its product, books, it increased its focus on DVDs and CDs. At this time, book retailer competitors were focusing on how they would digitally deliver their products using IT. Borders lost the opportunity of delivering e-books in time to its customers. This led to a loss in market niche. When the company launched Kobo, the e-reader, it did not gain traction because it had insufficient support. When introducing a certain technology, it is important to ensure that it is released at the most opportune time. On 2005, the firm wasted valuable finance of $600 million on the stock buyback program (Johnston, 2015). The end of Borders was an ugly one. In the last years, the company did not have money and it was burdened by long-term leases for its big stores that were located very far. The firm filed for bankruptcy when it was too late. Its creditors concluded that the best option was to maximize recovery through total liquidation.
Strengths
The firm was recognized for being the best bookstore. It had bookshops all over the globe. The company had diversified to books, music, CDs and DVDs.
It provided the easiest products to customers- paperback books. It outsourced online sales to Amazon. The company ran from market trends, leaving the opportunity to Barnes & Noble. It misread signals within the market and ended up diversifying products, thus losing focus on real deal. There was poor management within the firm (PR, 2013).
The firm could have partnered with universities to supply textbooks. With ebooks introduction, the firm could have reduced its costs because the books do not require much space. The market had few players and the company would have remained as the leader.
Newer competitors in the online field were using technology rapidly. Globalization threatened the firm because customers were expected to stop going for the books but acquire the ebooks online. The firm’s competitor, B&N collaborated with the best brands and increased their competition worldwide (PR, 2013).
The two retail firms which were at one time dominating book retail industry took different strategies at some point. One was successful and still stands out in the industry, while the other one failed and had an ugly ending. Various lessons can be drawn from the cases. First, its hurts when people fail to foresee a revolution, but to companies, it is fatal (Books Industry Profile, 2015). When managers fail to predict the future through the changes that take place, they are treated as failures in their lives whereas the companies they lead die without hopes of resurrection.
Another lesson that can be learned is that the marketplace has the ability to swiftly punish those who delay to adapt to new digital realities. While Barnes & Nobles created a website and started working with it until its full launch, Borders started online book selling but later stopped it because the online business was not profitable. Later on, in 2001, the firm made a deal with Amazon so that it could maintain its online presence. Getting into that deal was a form of delay because the firm later launched a website in 2008 where it continued with online retail. It is important that retailers make strategies once they notice opportunities on their way.
In the modern times, distribution channels are sophisticated and technology driven. The next step after gaining a competitive advantage should be to carefully observe the trends and act accordingly. For instance, since more people currently rely on content they can access on their handheld devices, it is important to make products and services readily available and easily accessible on such platforms. This makes distribution to be customer-friendly. Current trends should be monitored closely because they determine the future of a business.
Once a firm gains a competitive advantage through IS/IT, it should strive to maintain it. This should be done by conducting continuous assessments and evaluations that indicate the performance of the company. Performance indicators should be clear enough so that any slight changes can be observed and worked on (Gilbert, 2015). Borders lacked indicators that discretely indicated that the firm was headed to a fall. If such indicators were in place, better timely strategies might have been utilized.
Research and development (R&D) is an important division in firms that gained competitive advantages through IT/IS. Research should continuously be carried out so that ways of improving the IS can be discovered. R&D should always focus on customer satisfaction and how to remain ahead of competitors (Johnston, 2015). Borders was established after Barnes and Noble had already established. However, the innovation that Border’s proprietors introduced propelled the company to make it the best in that industry.
Conclusion
In conclusion, as markets enlarge and become complex, the retailing process that was once simple changes. In order to cope with the trend, retailers need to employ more intelligent and sophisticated information systems (IS) where all transactions are involved. The key to maintain a competitive advantage in this globalized retailing industry, is to efficiently control information, data and knowledge of the market. It is important that retailers invest in and exploit information management that is available. Barnes and Noble were always open-minded such that the most crucial book retail information did not pass them by. The company new the exact moment it was required to open new stores in certain locations. In addition, the company knew the exact Information Technology (IT) to use at different times in order to enhance its competitive advantage. Borders, on the other hand, started well, and it was once at the same dominance position with Barnes and Noble. The company failed to maintain its competitive advantage by doing miscalculations and applying the right IS/IT at the wrong time.
References
‘Barnes & Noble Founder: Retail Environment Is Worst in Years’, 2016, Investor’s Business Daily, 8 September, Business Source Complete, EBSCOhost, viewed 3 December 2016.
‘Barnes & Noble, Inc’ 2016, Barnes & Noble, Inc. Marketline Company Profile, pp. 1-31, Business Source Complete, EBSCOhost, viewed 5 December 2016.
Barnes & Noble, Inc. SWOT Analysis’ 2013, Barnes & Noble, Inc. SWOT Analysis, pp. 1-10, Business Source Complete, EBSCOhost, viewed 4 December 2016.
Books Industry Profile: United States’ 2015, Books Industry Profile: United States, pp. 1-31, Business Source Complete, EBSCOhost, viewed 3 December 2016.
Cody, T 2012, ‘Borders CEO Recalls the Moment it was over’, Mergers & Acquisitions: The Dealermaker’s Journal, 47, 1, p. 8,
Fortune 500, (2016). Barnes & Noble. Fortune. Available at: https://beta.fortune.com/fortune500/barnes-noble-427 [Accessed 4 Dec. 2016].
Gilbert, RJ 2015, ‘E-books: A Tale of Digital Disruption†’, Journal of Economic Perspectives, 29, 3, pp. 165-184,
Grossman, L 2016, ’64. The Death of the Bookstore Was Greatly Exaggerated’, Time, 188, 2/3, pp. 54-55.
Johnston, N 2015, ‘How Borders’ demise is a crucial lesson in data’, Campaign, p. 42,
PR, N 2013, ‘Online Retailers Gained, While Brick-and-Mortar Lost In Wake of Borders Exit’, PR Newswire US, 6 August, Regional Business News, EBSCOhost, viewed 5 December 2016.
Rosen, J 2015, ‘Filling the Void’, Publishers Weekly, 262, 7, pp. 1-3,
Townsend, M 2013, ‘The Barnes & Noble End’, Bloomberg Businessweek, 4340, pp. 52-55.
Valdés, RD 2012, ‘Life after Borders’, Shopping Centers Today, 33, 5, pp. 42-44.
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