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Global Issues in Business - Identifying Global Business Opportunities - Assignment Example

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This paper "Global Issues in Business - Identifying Global Business Opportunities" focuses on the fact that in determining the market and feasibility for Barnes and Noble to open stores in Ireland, the organization must look at the competition, need, and other aspects of book readership in Ireland.  …
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Global Issues in Business - Identifying Global Business Opportunities
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 Global Issues in Business - Identifying Global Business Opportunities Module 1: Identifying Global Business Opportunities In determining the market and feasibility for Barnes and Noble to open stores in Ireland, the organization must look at competition, need, market and other aspects of book readership and sales in Ireland. The largest online and offline bookstore chain in Ireland, Easton and Sons, carries a wide range of books for a wide range of readers and uses. The largest bookseller in Ireland carries college school books, new releases, popular Irish titles, popular titles of American authors, many well known classic British Authors, such as Yeats and even the newest Harry Potter novel, Harry Potter and the Deathly Hallows. Eason and Sons has nearly 60 retail locations throughout the four major regions in Ireland. Barnes and Noble would likely become a formidable competitor to Eason and Sons with similarly locates stores. Books appear reasonably price, with the Harry Potter novel at 13.41 pounds, this converts to 18.09 U.S. dollars. Barnes and Noble sells the same title in the U.S. for 20.99. Competitive pricing is feasible with fewer chain stores in Ireland. Barnes and Noble has more competition in the US from both similar bookstores such as Borders and online booksellers such as USAbooks.com. Ireland has many single location booksellers that also offering most of their titles online. Although selections are not as extensive with booksellers such as The Book Nest, located in Sligo, they are limited sources of competition for Barnes and Noble. Competition in Ireland also comes from Amazon.com and booksunlimited.ie, known for selling books at reduced cost. Strengths for Barnes and Noble come from its American and universally sought after titles, which the company already stocks, Strengths also come from the Bookseller’s features of its online store, such as the individualized shopping cart, customizable searches and customer ratings. Undoubtedly, Eason and Sons has also added as many customizable features as possible within its online store, to compete with Amazon in Slough, England. Barnes and Noble is ready with similar features. Weakness comes in lack of access and knowledge of popular Irish titles. Barnes and Noble must hire managers in Ireland, who are knowledgeable with books that are in demand, must learn the course books and titles that are used in educational institutions and establish relationships with suppliers in Ireland. Internet usage in Ireland is slightly lower than in the U.S. “50.2% of Irish households have internet access,” (Internet World Stats) compared to over 65% in the U.S., which reduces online sales opportunity slightly. The Eason and Sons online storefront is quite a bit more organized and more family friendly than Barnes and Noble’s online storefront. Amazon will need to optimize its online store to compete with Easton and Sons. While online book sales in Ireland may not be comparable, Barnes and Noble does have an opportunity to provide the types of brick and mortar bookstores that are more welcoming and relaxing, such as the Borders café style stores. Barnes and Noble also offers music CDs to its customers. As Easton and Sons does not offer music, Barnes and Noble can take advantage of the opportunity to increase sales in Ireland. Barnes and Noble can take advantage of the current controversy surrounding Amazon’s move of its call center from Slough to the Irish Cultural Center in Cork, due to “superior language skills” (Williams, 2006). Critics point out that Amazon has not been honest in providing reasons for the move. They believe that the move is due to tax breaks and other financial incentives, as fewer people in Ireland are fluent in a second language than in England. Such events open the door further for Barnes and Noble to establish itself and trustworthy and customer-centered. Barnes and Noble must pay close attention to how it conducts its sales in Ireland, as one wrong move, such as that of Amazon, can be a threat to its Barnes & Noble in Ireland 3 success in Ireland. The only other real threat for Barnes and Noble is in failure to meet or surpass the reputation of Easton and Sons. Module 2: Analyzing International Competitors Competition from other bookstores in Ireland is fragmented. Amazon, with its bulk purchasing of popular titles and wholesale or below retail prices does compete with Bookstore chains such as Eason and Sons, but not to the degree that another company such as Price.com in the U. S. will compete. Eason and Sons does not face competition from similar bookstore chains in Ireland, as Barnes and Noble does with Borders. The U. S. bookseller has a competitive advantage in providing the most desirable titles such as the most recent Harry Potter novel due to existing supply chains. It also may have an advantage with its book club membership program, which offers members 10% to 40% savings on its books, for a fee of $25.00. This is especially desirable avid readers and college students who purchase books frequently. One of Barnes and Noble core competencies is its streamlined and customizable online shopping processes with shopping cart, membership and discount offerings, search option and store locator. Another competency is its streamlined supply ordering process. Barnes and Noble has “deployed the SupplyWorks program in all of its Barnes and Noble Stores,” and “has been integrated with Barnes and Noble’s intranet” (CRM Daily). With the standardization of such processes, the bookseller is able to monitor its supply chain processes and related costs of each individual location from its headquarters. Keeping such measures of standardization, in stores it operates in Ireland, will make decision processes easier on a corporate level. Barnes and Noble does not necessarily need to move its corporate headquarters to Ireland from the start, though it may decide to do so at a later date. Challenges come when overseas suppliers are not able to easily Barnes & Noble in Ireland 4 access or link to Supply Works. Some customization may be required to work with suppliers who provide the Irish titles the bookseller offers. Barnes and Noble offers a standard or typical mix of book and CD titles in its stores. The standard mix that it offers in the U.S. may need to change in Ireland, depending on desirability and taste of its Irish customers. Standardization of online store features is important for Barnes and Noble to compete with both Eason and Sons and Amazon, as both offer many desirable features that make using the online stores easier for customers. Customization may be more desirable for physical store locations, based on the cultural differences and lifestyles among the different regions. For instance, regions with a younger population and located near colleges or universities may include a café in their stores where students can hang out and enjoy coffee, study or listen to music. Other locations where the population is mostly older may want to provide a hot cup of coffee, and where customers might travel farther, some breakfast and/or lunch options. In the U.S., bookstores that include cafes have been operating for about a decade, and are increasing, suggesting they are in the growth stage, but nearing the maturity stage of their life cycle. The typical brick and mortar only bookstore is in the decline in the U.S. Likewise, in Ireland, the brick and mortar bookstore is in the maturity stage, nearing decline, as internet usage increases. Cafes are in the growth stage in Ireland, as the number of students moving to the cities to work and study increases, so cafe style bookstores in Ireland present a new opportunity for Barnes and Noble. The oldest businesses in Ireland, like textile and dish ware manufacturers are more automated, reducing demand for skilled workers. Demand for more educated workers such as managers and automation programmers increases. Location of physical bookstores near colleges and educational institutions become more imperative. Barnes and Noble in Ireland 5 Most new corporate business in Ireland comes from foreign multinational corporations. Many such as Microsoft, Intel and Pfizer also own subsidiaries set up mostly for development, with the patent tax exemption and corporate tax rate of 12.5% in Ireland. Prior to the influx of foreign corporations, “Ireland's economy was known more for its failures: high unemployment, high emigration, and the loss of skills that produced public debts and a general malaise” (Finfacts Team). Though Irish culture is rapidly changing and becoming “Americanized,” the increased American productions in Ireland creates a feeling of pride for Ireland’s contribution to American history, and a new appreciation for Irish historical and cultural traditions. Some skepticism does exist, however, as demonstrated by the feeling of mistrust that many express over Amazon’s reasons given for relocating its call center. Module 3: Assessing the Economic Geographic Environment Barnes and Noble does not need to use shipping ports and waterways as its American titles can be shipped from its warehouses in the United States. As relationships with Irish or British suppliers will be established for Irish titles, shipping of books will likely occur via land. Barnes and Noble will make use of phone lines and other routes for establishing internet service. Wireless and high speed DSL type services are available in Ireland, though more traditional phone lines may be required in some areas, just as in the United States. Despite some skepticism in Ireland, the economic growth provided by American and other foreign companies has provided more opportunities and a better standard of living for most Irish citizens. More of the Irish population is receiving benefits of higher education than ever before. Barnes and Noble physical book stores will create a need for sales staff, managers and technicians by locating physical stores in Ireland. Barnes & Noble in Ireland 6 This will give students and educated professionals more opportunity beyond the call center environment of Amazon. The economy in Ireland has been stable for the past two decades, particularly during the ‘Celtic Tiger’ era of the 1990s and only saw a slight decline just after 9/11 events. The Irish economy ranks second among Eruopean Union nations to number one ranking Luxembourg. Though the Irish economy is booming, economist warn that as construction accounts for a large portion of job growth, “any slowdown in Ireland's vibrant housing market would have ramifications for continued GDP growth”(U.S. Department of State). The per capita GDP for Ireland in 2006 is $44.087, compared to that of the U.S. for the same year at $43,444. The figures indicate that business should be good for Barnes and Noble in Ireland, provided it becomes knowledgeable about Irish readership and purchasing habits, particularly for books and music CDs. Discretionary income, or that left over after paying for essentials, is what will be used to purchase books in Ireland, with the exception of those used for college courses. As indicated by the 2006 per capita GDP, it is likely that book sales will be steady for Barnes and Noble, given no drastic economic changes occur in Ireland in the near future. Module 4: Assessing the Socio-Cultural Environment In Ireland the highest population exists in the 0-14 age range, at 21% of the total population, followed by 17% made up of the 25-34 group. The 65 and older group makes up merely 11% of the population. Those under age 25 make up 43% of Ireland’s population, though the birth rate is declining. The “peak number of births was recorded in 1980”(Ireland-information.com). The largest age group in Ireland will read children’s books, short stories, poetry, novels and will use large quantities of instructional books for their education. In the U.S., Barnes and Noble focus on Barnes & Noble in Ireland 7 the largest segment which is the ‘baby boomers’ born from 1946 to 1964. The largest segment in the U.S. reads novels, mysteries, self-help guides, travel guides, financial and investment topics. This age group also begins to require large print and has a well developed taste for particular authors and writing styles. In many ways they are a more difficult group to please. Barnes and Noble must keep in mind the largest age group it will cater to in Ireland. New authors from the U.S. will be easier to introduce to an age group that has not necessarily developed preferences or favorite authors yet. On the other hand, the book seller will need to increase orders of children’s books and keep up with the latest child authors in the U.K. Barnes and Noble also must carry school books or titles that assist children with their studies. History, Math, Social Studies, Atlas, Encyclopedias and others are used frequently by school age children. Most literature is read in English, as very little traditional Irish language is spoken, though children must learn both languages in school. All children of Ireland are required to attend school from ages 6-15. Public or State-funded schools are the norm, with very few private schools. Children study all subjects in the first and second levels, which are the equivalent to elementary and middle schools in the U.S. Education is of great importance in Ireland and the literacy race equals that of the U.S. and all other nations within the EU. There are two public colleges in Ireland, Trinity College in Dublin and National University of Ireland, with campuses in Dublin, Cork, Galway and Maynooth, The two private colleges are The University of Limerick and Dublin City University. Barnes and Noble must strategically locate its physical stores so that most college students can easily access them by any means. Teens in Ireland love their music and listen to CDs like children in the U.S. Music styles are very similar and the company has Barnes & Noble in Ireland 8 an opportunity to, again, introduce more musical artists from the U.S., while locating popular Irish artists as well. Service sector jobs account for over 60% of jobs in Ireland, though industry is the largest contributor to economic growth. There are well over 600 American companies In Ireland, along with others from Germany and the U.K. Over 600,000 workers in Ireland work for foreign companies located in Ireland and Irish workers are known for their friendliness and hard work. Barnes and Noble will not have much trouble finding skilled, educated workers for their bookstores and even some technology workers to Overseas the technical aspects of its supply chain. Technology jobs are increasing as companies such as Microsoft and Intel have operations and development centers in Ireland. There is also increasing third level, or college level technology programs of study to meet this demand. Ireland is known for its ‘pub culture’ which has not changed much, other than the increasingly younger age of its patrons. Keeping this in mind with setting up its bookstores, Barnes and Noble can easily design café style stores with a pub atmosphere in locations near large industrial and service job centers. Though traditional families are still the norm in Ireland, bookstores need to focus on accommodating the largest groups in each region, while offering something for the other groups as well. Legislative initiatives of the early 1990’s have focused on economic improvement and development for all Irish citizen’s. Ireland welcomes foreign investments and businesses, and relies on them to keep the economy strong. Tax structure for business is lower than in any other offshore location for U. S. companies. Combined with a well educated work force, such environment creates an opportunity for Barnes and Noble to become very competitive and successful in Ireland. Barnes & Noble in Ireland 9 Module 5: Assessing the Political Legal Environment A little bit of The Political History of Israel: WHAT DOES "PALESTINE" MEAN? It has never been the name of a nation or state. It is a geographical term, used to designate the region at those times in history when there is no nation or state there. The word itself derives from "Peleshet", a name that appears frequently in the Bible and has come into English as "Philistine".  The Philistines were Mediterranean people originating from Asia Minor and Greek localities.  They reached the southern coast of Israel in several waves.  One group arrived in the pre-patriarchal period and settled south of Beersheba in Gerar where they came into conflict with Abraham, Isaac and Ishmael.  Another group, coming from Crete after being repulsed from an attempted invasion of Egypt by Rameses III in 1194 BCE, seized the southern coastal area, where they founded five settlements (Gaza, Ascalon, Ashdod, Ekron and Gat).  In the Persian and Greek periods, foreign settlers - chiefly from the Mediterranean islands - overran the Philistine districts.  From the time of Herodotus, Greeks called the eastern coast of the Mediterranean "Syria Palaestina". “The Philistines were not Arabs, nor even Semites, they were most closely related to the Greeks. They did not speak Arabic. They had no connection, ethnic, linguistic or historical with Arabia or Arabs. The name "Falastin" that Arabs today use for "Palestine" is not an Arabic name. It is the Arab pronunciation of the Greco-Roman "Palastina"; which is derived from the Plesheth, (root palash) was a general term meaning rolling or migratory. This referred to the Philistine's invasion and conquest of the coast from the sea. “(Joseph E. Katz, Middle Eastern Political and Religious History Analyst, 2001) Barnes & Noble in Ireland 10 In a country that has so many political and social issues like Israel, a great deal of political study must be made before thinking of any business expansion. Israel does not have a constitution, but it does have a number of basic laws that govern how the government is structured, rights of individuals and similar matters. Attempts to create a constitution have been blocked by religious parties, who do not want to formalize separation of religion and state. “Israel has a parliamentary democracy system with partial separation of powers between the judicial branch on the one hand, and the legislative and executive branches on the other. The President is largely a ceremonial figurehead. The post was created by  David Ben-Gurion to honor Chaim Weizmann”. The President is elected by the Knesset. It is not easy when a country has so many political issues, to think of a business such as Barnes & Noble becoming any sort of success. Barnes & Noble is one of not the largest book store in the world. Having such facts in consideration, we may be able to think of ways to make Israel’s political system to work in favor of this business. We must understand that when taking any business to another country, it is wise to try to adapt the business to the new environment. A new business is not always welcomed and not always meant to be successful. We must first understand how officials and residents of Israel think, using political and legal influences to approach the new market. Module 6: Selecting a Global Company Structure Globalization has come to be seen as a profitable and successful strategy that has arrived for all types of companies, not just the vast multinationals that have been much criticized for their use and abuse of corporate global reach and power. The challenge to business information professionals who are required to research a competitor company with global interests should not be underestimated. “A decade ago, globalization was a Barnes & Noble in Ireland 11 term mainly used to describe the activities of investment banks integrating their securities trading activities across financial centers and time zones around the world. Very few industrial companies could then be said to be truly global in participation across broad or niche markets. Globalization is not a new concept, but in today's terms it represents a radical change in international business”.( James, 1999) I believe any company regardless where it will be located most have a well structured operation plan in order to be successful and meet its objectives. Setting up a structural plan for Barnes & Noble in Israel most follow the same steps as setting it up in the U.S, of course with the exception that we most think on the environment and how well we know it. Since will be operation on a foreign country selling items that will sale well, in Israel is a most taken into consideration. The great advantage that Barnes & Noble has, is that they have established a well known name that foreign countries are familiar with. However, I believe that getting to know the culture and what it is of interest to Israel in terms of reading material books and of course music, is the wisest approach. Knowing the popular culture of Israel will be a tremendous way for of getting marketing advantage. When we consider opening a new business it is not always easy implementation a Global Structure that will work well for the location, as we can see Israel is a very difficult place to do business because of its political and cultural hurdles. Module 7: Financing Sources for Global Business Operations: Barnes & Noble's beginnings can be traced to 1873, when Charles M. Barnes started a book business from his home in Wheaton, Illinois.  In 1917, his son, William, went to New York to join G. Clifford Noble in establishing Barnes & Noble Through the 1980s, Barnes & Noble experimented with different store formats and sizes, seeking to develop a suburban superstore version of the original Barnes & Noble store, In Barnes & Noble in Ireland 12 1987, the company made its largest acquisition when it purchased B. Dalton Bookseller from Dayton Hudson.  This acquisition of 797 retail bookstores thrust the company onto the national scene, making Barnes & Noble a nationwide retailer overnight and the second-largest bookseller in America” (The Original Barnes & Noble) Now that we have decided to open a new store in a Israel, we must think how this will be financed, and the overall cost of importing books from the US to Israel. I think these facts have to be into place before building and opening takes place. It happens that many times a store opens outside of his country of origin and it ends up being nothing but a loss to the corporation. I will estimate that the total cost of this new store will be within $ 10,000,000 dollars. It may seem like a lot of money, but we need to consider building a location that will be three stories high and proximately 25,000 square feet. How are going to use the money to meet the requirement, that will lead to opening this new store and Israel. The decision to open a retail store is explored. I would like to estimate that 6,000,000 dollars will be utilized in opening the store that includes, but not limited to the following: Research is initiated. Building the new location $3,000,000. The store will need products to sell, in this case books, DVDs and other items that will be of interest. The hiring and training of new personal. Strong advertising campaign. We don’t know how much the government will charge in taxes, so we need to estimate that to approximately 500,000 as of the next coming year. Operating cost for a new business should also be included, particularly when we do not or can not expect any return on investment for the next months to come. These costs will be calculated as time goes by, but should not exceed the estimated cost, or we can be forced to close location. One thing must be clear, a location that will turn into corporate Barnes & Noble in Ireland 13 loss, where profit seems impossible must be closed down. As exciting as it is to open a new business in a foreign country, we also have to look at the whole picture. We can not put the global business in financial problems for a dream or an ideal. If the numbers do not meet the expectations, after all effort has been put into the new global strategy, the decision to close should be made. Module 8: Creating a Global Management Information System Creating a Global MIS for Barnes & Noble will take a lot of implementation and extensive research. We must understand that we need to create an entirely different database, that may or may not be linked to any database in the U.S, but rather a central and large MIS that will be controlled locally in Israel. This is the major part of getting the new location started successfully. A highly developed Information system will provide manager with the tools they need to analyze overall corporate success. In this section we will discuss ideas to and concepts of a Global MIS for Barnes & Noble. How well we know our customer is critical in developing a system that will categorized products by popularity. We must separate our customers by category, such as sex, age group, location and religion. Making use of the information we gather is what will determine whether we will be heading in the right direction or not. “Opportunities in marketing increase when segmented groups of clients and customers with varying needs and wants are recognized. Markets can be segmented or targeted using a variety of factor. The bases for segmenting consumer markets include: Demographical bases (age, family size, life cycle, occupation), Geographical bases (states, regions, countries), Behavior bases (product knowledge, usage, attitudes, responses) and Psychographic bases (lifestyle, values, personality)” Lake, Laura, Market Segmentation for the Small Business. Barnes & Noble in Ireland 14 A business must analyze the needs and wants of different market segments before determining their own niche. To be effective in market segmentation we should keep the following things in mind: Segments or target markets should be accessible to the business. Each segmented group must be large enough to provide a solid customer base. Each segmented group requires a separate marketing plan. Although each business has a different way to implement each one of this marketing segmentation strategies, for a book store database the concept that follows is more or less the same. It is important to consider cultural differences when implementing this Global MIS, we may think that we have all figured out but it really takes a very in depth cultural research of Israel pass history so we can advertise and sale the right books and products. Module 9: Identifying Human Resources for Global Business Activities The average industrial wage in Ireland has rose by 3.5 percent in the first nine months of 2006. The economy is now employing almost five thousand more industrial workers. The average industrial wage in Ireland stood at over 600 pounds per week. Of all the industrial jobs included in the CSO’s figures, mining and quarrying workers put in the longest hours, with an average of almost 46.5 hours per week. Workers in electricity, gas and hot water supply jobs earned the highest hourly rate of the industrial trades at 29 pounds per hour. In Ireland, the labor market turnaround has encouraged a return migration of workers from the United Kingdom and other countries. Almost all of the workers have come back to jobs and they now contribute more than 0.6 percentage point to annual Irish labor force growth, reinforcing the declines in unemployment and no employment. The most significant initiative in the early period was a three-year national wage pact, the Programme for National Recovery. It’s supported by employers, trade unions and the Barnes & Noble in Ireland 15 government. The pact limited annual wage increase to 2.5 percent between 1988 and 1990. As part of the pact, the government agreed to offset the limits on wages by cutting income taxes and increasing spending for welfare, health and housing services. Overtime, unemployment declined and GDP growth rose. Module 10: Managing International Financial and Business Risks Barnes & Noble competitors are primarily in the Music, Video, Book & Entertainment Retail industry. Barnes & Noble also competes in the Nonstore Retail and Publishing sectors. Amazon, Walden, B.Dalton, Costco, Wal-Mart, Books-A-Million and Borders are some of the competitors. The retail book business is highly competitive. The Company competes in the superstore business with Borders Group, Inc. The Company also faces competition from mass merchandisers, such as Wal-Mart and Costco. As the largest U.S. and global retailer, Wal-Mart may have greater financial resources. It is also well-known that Wal-Mart has developed relationships with some of the lowest priced suppliers. Barnes and Noble may not be in a position to do likewise with suppliers of its British titles. The online bookselling business is highly competitive. The nature of the Internet as an electronic marketplace may render it inherently more competitive than traditional retailing formats. With respect to the sale of music and movies, Barnes & Noble.com competes with numerous merchants including other Internet-based companies, such as Amazon.com and traditional retailers. However, with a well-designed global strategy, it can help a firm to gain a competitive advantage. This advantage arises from economies of scale with access to more customers and markets. In addition, operation flexibility shift production such as costs, exchange rates and change over time. Module 11: Product Target Market Planning for Foreign Markets Barnes & Noble in Ireland 16 Barnes & Noble is the largest bookstore chain in the world. The brand name has superior brand recognition, which is a key factor in attracting customers to both online and bricks and mortar stores. Its current strategy is to increase its market share of the consumer book sales, as well as to increase the size of the market. Continual efforts are planned for improvement to the design, layout and navigation of the website. Expanded product offerings for the website and strong alliances are a key part of their strategy. It is recommended that Barnes & Noble leverage their brand name and capitalization on its strength in distribution capabilities. This allows the company to align its online business and ultimately create additional brand loyalty. Barnes & Noble is working hard to create a more consistent and integrated experience for its customers across channels and hopes to become the best bookstore across all channels. It has created a Readers Advantage Loyalty Program to better manager its customers as they shop online and offline. The company’s objective is to build a database of customers that will help it identify, profile and target the highest- value customers. Most in-store purchases are cash transactions and therefore difficult to track, so this program is a significant step forward. To better serve its growing number of multi-channel customers. Barnes & Noble is also planning to accept in store returns of products purchased online. And it plans to install internet service counters or Web kiosks so that customers can order products not available in the store and specify delivery preferences. Such steps, combined with a focus on ‘getting it right’ with high-value customers, can have a significant impact on the company’s bottom line. Barnes & Noble can do even more to deepen its relationships with customers, while increasing profits. For example, the bookseller could try to increase its share of its high- Barnes & Noble in Ireland 17 value customers’ wallets by 10 percent. Barnes & Noble can also capitalize on the thousands of customers who buy books on its Web site but don’t visit its physical stores. If the retailer can persuade the most valuable of those online customers to shop in its offline stores as well, it can effectively increase its base of high-value customers. Module 12: Designing a Global Distribution Strategy Today, the global marketplace for Barnes & Noble is more competitive. Designing a global distribution will help identify the best number and location of facilities. Customers often changes their buying patterns. This changes order size, shipment size, freight rates. Changes in demand change the costs of delivery and the need for optimizing the distribution network. It is important to list the number of target customers in the region and use direct sales. This method will efficiently deal with all aspects of target customers needs and follow up after the sale. Barnes & Noble offers worldwide shipping and a variety of delivery options to suit every schedule and budget. Services available and cost of shipping depend on location, order size and order content. Module 13: Planning a Global Promotion Strategy Based on the current marketing mix of the move to Ireland, Barnes and Noble has to focus on the marketing mix of this nation. “The marketing mix is the set of choices the firm offers to its targeted markets” (Global Business Today). Barnes and Noble can offer free coffee and free books to first time visitors of its Irish locations. Barnes and Noble can complete with other bookstores by offering lower prices on books than any of their new competitors. The population of Ireland is 4,109,086 (July 2007 est.). Based on the population of Ireland, Barnes and Noble can segment the market by focusing on the 15-64 age range. This age range in Ireland is 67.5% of the total population. Based on the literacy rate in this nation, Barnes and Noble can offer book clubs for each age group Barnes & Noble in Ireland 18 and /or offer study groups for the 15-25 age range. Barnes and Noble has an advantage over other markets, based on its long standing business history in other nations. Barnes and Noble can also offer books based on the interests of this particular nation. Barnes and Noble can also promote the purchase of books online or in retail locations by promoting its presence in Ireland. Barnes and Noble can also create commercials to be broadcasted on radio and TV stations, based on the market segments. Ireland has 9 AM channels and 106 FM channels. Ireland also has 4 television networks to broadcast on. I believe the push strategy will fail in the long run, based on the personal sales challenges. Personal sales will be very costly and ineffective. Based on the millions of book choices, the personal sales representative will be unable to learn every book title offered by Barnes and Noble. The pull strategy will be more effective by advertising to the selected market of consumers. This strategy should also welcome the consumers not in the segmented markets. Module 14: Selecting an International Pricing Strategy The international pricing strategy should be based on the region and the primary competitions. “Ireland is a small, modern, trade-dependent economy with growth averaging 6% in 1995-2006. Agriculture, once the most important sector, is now dwarfed by industry and services. Industry accounts for 46% of GDP, about 80% of exports, and 29% of the labor force” (CIA World Book). Although exports remain the primary tool for economic growth, consumer spending, construction and foreign business investment have also helped. “Per capita GDP is 40% above that of the four big European economies and the second highest in the EU behind Luxembourg. Ireland joined in circulating the Euro on 1 January 2002, along with 11 other EU nations”(CIA World Barnes & Noble in Ireland 19 Book). The inflation rate is 3.9% in Ireland. Based on the rise in consumer spending, the new locations in Ireland are economically wise. Based on the price elasticity of demand, Barnes and Noble will determine if price discrimination is an option. Ireland’s consumer spending is increasing, but it does not necessarily suggest that the consumers can afford unreasonable prices. It is best to set prices competitively with other bookstores, both online and offline. If the competitor charges 5 euros for a particular product, Barnes and Noble should charge 3 or 4 euros for that product. I set a low margin of profit for the first few years after this move. This strategy will introduce the consumers to the business, lower competitor’s profit margin, and determine if the demand is elastic or inelastic. Predatory prices should be used where the competition with a local bookstore is greatest. Module 15: Determining Organizational Financial Results While choosing a distribution strategy, Barnes and Noble should sell products to both the consumer and business markets. Barnes and Noble should expect a lower profit margin during the first 5 years, based on new entrance to the Irish market. It is expected that the return on investment will also be lower in this market. Based on the move to Ireland, “the historical cost principle dictates that most assets and liabilities should be recorded at their historical cost.” Historical cost is the actual purchase price plus incidental costs incurred in preparing the fixed asset for initial use. commercial production. Land: Purchase price + legal fees + costs on leveling, grading, draining, clearing + mortgages, liens, encumbrances + additional permanent improvements (e.g. pavements, sewers, landscaping) - any proceeds from getting the land ready for its intended use (e.g. sale of cleared timber or materials from demolished buildings). Barnes & Noble in Ireland 20 Building: Purchase price + legal fees + and costs incurred in respect of major improvements / alterations / betterments. However, when building is self-constructed, historical cost will be computed as follows: All direct costs (material, labor, expenses) + professional fees + legal fees + interests + appropriate share of overheads (fixed and variable) [basically, all costs from excavation to completion]. Machinery: Purchase price (net) + freight + shipping + loading & unloading + installation charges + commissioning (expenses on trial run and experimental production). Furniture & Fixtures: Purchase price (net) + installation charges” ( Wikipedia). I believe Barnes and Noble will be successful, following the time period which includes initial start up costs. Module 16: Measuring International Business Success Based on the size of Barnes and Noble, we will offer the same benefits to these employees as we do anywhere else. “The Health Benefits include Major Medical and Hospitalization; Vision Care; Preventive Care; Well Baby Care; and Dental Care. The Financial Benefits include Life Insurance; Business Travel Accident Insurance; Short- Term Disability Insurance; Long-Term Disability Insurance; 401-K Plan with Full Vesting. The Other Benefits include Vacation Days; Personal Days; Tuition Assistance; Book Loan Program; Merchandise Discounts; Transit Benefits” (Barnes and Noble, Inc.). The social costs for the Citizens of Ireland are relative low. The current pollution will not be contributed to factors from Barnes and Noble. The primary pollution source is “water pollution, especially of lakes, from agricultural runoff ” (CIA World Book). There are several benefits of expanding to Ireland. One of the primary benefits is that Barnes & Noble in Ireland 21 “Ireland has one of the lowest levels of additional labor costs relative to wage costs among industrialized countries” (Fortas). Another benefit includes an inflation rate below that of the UK overall, in the late 1980s and early 1990s. “The significantly higher inflation differential in the UK of the late 1980's and early 1990's was eliminated by 1994. The inflation performance of the Irish economy in 1995 is particularly encouraging” (Forfas). A disadvantage expanding to Ireland, is their current tax system. “Ireland's tax system imposes a greater burden on employers of single workers in particular, than in the UK. At the average industrial wage, the Irish tax wedge is almost 19% higher than in the UK, for single workers” (Forfas). Based on the facts we have obtained, I believe expansion to Ireland will greatly increase Barnes and Noble profit and market share internationally. Barnes & Noble in Ireland 22 References Anderson, E. (2006). Tru Group. Retrieved 23 May, 2007 from http://trugroup.com/ TRU-distribution-strategy.html. Barnes and Nobles (2007). Retrieved May 27, 2007, from http://www.barnesandnobleinc.com/jobs/benefits/benefits.html The Original Barnes & Noble. Retrieved 22 May from http://www.barnesandnobleinc.com/our_company/history/bn_history.html Barnesandnoble.com. Accessed 22 May, 2007 from http://search.barnesandnoble.com/booksearch/isbninquiry.asp BooksIrish.com. Accessed 21 May, 2007 from http://www.BooksIrish.com Booksunlimited.ie. Accessed 21 May, 2007 from http://www.booksunlimited.ie The Boston Consulting Group. (2001). Targeting High Valued Customers. Retrieved 22 May, 2007 from http:// www.bcg.com/publications/files/ Targeting_High_Val_Customers_Report_Nov01.pdf The Central Intelligence Agency (May 17, 2007). The World Fact Book. Retrieved 27 May, 2007 from https://www.cia.gov/library/publications/the-world- factbook/geos/ei.html. Eason and Sons, online. Access 23 May, 2007 from http://www.eason.ie Finfacts Team, (2005). US Multinationals Overseas Profits: Ireland’s patent income tax-exemption may fund over 5% of Irish Government annual spending in 2006. Finfacts Business News Center. 21 Nov. ed. Forfas (2007). Retrieved June 8, 2007, from http://www.forfas.ie/publications/ archive/cost/index.html. Hill: Global Business Today, Fourth Edition, The McGraw-Hill Companies, 2005. Internet World Stats (2003). Accessed 22 May, 2007 from http://www.internetworldstats.com/eu/ie.htm Ireland-Information.com Accessed 23 May, 2007 from http://www.ireland- information.com/reference/educat.html Ireland-Compensation and Benefits Legislation. Retrieved 23 May, 2007 from http://www.erieri.co.uk/freedata/HRCodes/IRELAND.htm James, S. (2000). Focus on Global Competitive Intelligence. Retrieved 22 May, 2007 from http://www.sla.org/content/Shop/Information/infoonline/james.cfm. Barnes & Noble in Ireland 23 Lake, L. Market Segmentation for the Small Business. Retrieved from http://marketing.about.com/cs/sbmarketing/a/smbizmrktseg.htm Martin, M. (2006). Address by Minister Martin at the Launch of “Small Business is Big Business” the Report of the Small Business Forsum. Accessed 09 June, 2007 from http://www.entemp.ie/press/2006/20060516a.htm Pay Scale. Salary Survey Report for Job: Trainer, Employee/Human Resources. Retrieved 23 May from http://www.payscale.com/researcg/IE Quick MBA.com. Retrieved 22 May, 2007 from http://www.quickmba.com/strategy/global/ Tilly, C. and Yi, K. (2001). Curbing Unemployment in Europe: Are There Lessons from Ireland and the Netherlands? Retrieved 23 May, 2007 from http://www.ny.frb.org/ researcg/curret_issues/ci7-5/c7-5html. U.S. Department of State, Bureau of European and Eurasian Affairs, (2007). Retrieved 22 May, 2007 from http://www.state.gov/r/pa/ei/bgn/3180.htm. Wikipedia (2007) Retrieved May 27, 2007, from http://en.wikipedia.org/wiki/ Historical_cost. Williams, C., (2006). Amazon in Ireland? More like Amazon in Liarland! The Register. 06 Mar.ed. Wrolstad, J. (2001) Barnes and Noble Deploys Supply Works System. CRM Daily. Read More
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