Comparing Two Similar Businesses - Research Paper Example

Amazon.Com and Borders Books Business This paper discuses more about the management strategies essentially in Amazon.com and borders books businesses. To arrive at the conclusion of this paper statistical analysis related to the topic of discussion was collected and previous works used. Describe the history and core business of each company Amazon.com is considered the pioneer in online selling. It expanded in the late19990s to sell the world’s largest selection of books, DVDs, videos, CDs, electronics, toys, tools, house wares, and kitchen gadgets. Through intermediaries’ conformities, Amazon.com in addition sells products from renowned retailers like Toysrus.com Incorporated., the Borders Group, Expedia Incorporated., Hotwire, and Virgin Wines (Robert, 2002). On the other hand, borders group incorporated is the largest after Amazon.com in the United States bookstore chains. It is the fastest rising bookstore chain. It runs 354 superstores in the name of Borders Books and Music (Borders, 2012). It features books and special events, like live music, and appearances by artists. The Borders Group contributory, Waldenbooks, leads all additional book businesses in the globe in the mall-based book industry. Waldenbooks operates stores in more than 862 malls. Borders group incorporated was a worldwide music and book business which was based and is based in Michigan. It employed roughly 19,500 workers in the United States. By January 30, 2010, the corporation was running 511 Borders superstores globally, comprising 508 in the United States and three of them bin Puerto Rico (Borders, 2012). Management approach each took to Internet marketing and sales. The biggest way to make one’s marketing strategy supreme is to maintain customers. In this way Amazon.com considers itself a unique customer centric corporation. Among its customer maintenance strategies online are; 1. Innovation- Amazon.com encourages its workers to listen to customers carefully. 2. Ownership: possession matters when one is building an enormous corporation. Owners are supposed think long-term, entreat passionately for their plans and ideas, and are authorized to respectfully confront decisions. 3. Customer Obsession: Amazon.com starts with the customers and works backwards. On the other hand, borders has the best selection of music and books online. The management strategy that it has taken to ensure the well running of its business is by having people who help customers both online and in there selling store. Moreover they have the best online store layout. These permits customers or rather people to browse and search for books without any difficult. Three reasons for Amazons success despite not turning a profit for the first five to six (5-6) years In 1998 Amazon.com begun to grow. By February, the links program had turned up 30,000 members, who now grossed up to 15 percent for recommending books from their web sites. In the next four months, the amount of links had increased by twice to 60,000 (Robert, 2002). The company buyer database continued to raise as well, with increasing customer accounts turning up to 2.26 million in March, a raise of 50 percent in only three months, and of 564 percent more than the previous year (Robert, 2002). Despite not turning a profit for the first five to six years Amazon.com has remained the most successful company in online selling of books worldwide. The following factors have led to its success; giving benefits to employee support program comprising of dependent-care referral offers and financial services giving benefits to dependent-care and health-care flexible spending accounts giving benefits medical, and dental insurance with home partner coverage Time Off reimbursements for salaried workers are the same as two weeks of break time in the first year, three weeks of break in the subsequent and six individual days each year. Savings and retirement repayment comprise of Amazon.com limited Stock Units, 401(k) savings plan with a corporation match and a variety of member of staff discount programs Moreover, Amazon.com as well enlarged its business by using a trio of acquirement in the early 1998. Two corporations were gained to further enlarge Amazon.coms business around Europe. Book pages, one of the widest online booksellers in the United Kingdom, handed Amazon.com permission to the United Kingdom market. In addition, telebook, one of the largest online booksellers based in Germany, also gave access. Both corporations not merely gave Amazon .com entrance to new clients in Europe, but it as well gave the existing Amazon.com clients admission to extra books from around the globe. Furthermore, Amazon.com also acquired the internet movie database. This was their acquisition and it was used to help plans for its advance into online video market. The remarkable properties and information of the IMD worked as a precious asset in the creation of a customer sociable and useful web site basically for video sales (Robert, 2002). In 1999, Amazon lunched an online public sale service known as Amazon Auctions. It too began offering electronics and then separated its product offerings into personal stores on its site to make it easier for clients to shop for certain stuffs. In 1999 during the holiday season Amazon.com used mechanisms that could attract customers. It ordered 181 acres of wrapping paper and 2494 red ribbon. Certain enough, sales increased to $1.6 billion showing that the efforts to make an online powerhouse had really paid off (DATAMONITOR, 2011). Three reasons Borders, although initially successful and profitable, ended up in chapter 11 In 2011, borders applied for chapter 11 in relation to bankruptcy safeguard and started liquidating 226 of its stores that were based in the United States. In spite of an offer from the concealed equity corporation, Najafi Companies, Borders was not in position to find a purchaser prior to its July 17 bidding time limit, and so began liquidating its outstanding 399 vend outlets on July 22, 2011, with the final remaining stores closing their doors on Sunday, September 18, 2011(Borders, 2012). The incidence of chapter 11 was eventually turned to Chapter 7.[6]. The last year that borders made profit earnings was in the year 2006. It’s earning per year dropped by $ 1 billion in the next four years. In March 2008, Borders announced the plan to sell the chain for the reason that of financial obscurity. There were gossips of Borders Books move toward Noble and Barnes in anticipations of a takeover. The corporation was in dept, having improved its financial insecurity by borrowing $42.5 million from Pershing square management, to maintain the corporation running through the remaining financial year. The loan that they had borrowed was said to have made an extremely high interest rate of 12percent, which implied that the company would have to make a large profit or turnover to remain afloat in the outlook. When the pronouncement of the loan was made, Borders shares reduced from 28.6% to $5.07. They further continued to reduce in the whole year, and by December 11, 2009, its stocks were selling at $1.30 on the NYSE, which was higher roughly from $0.530 on January 28, 2009 (Borders, 2012). As of February 16, 2011, borders had filled for bankruptcy in chapter 11, listing $ 1.275 billion in possessions and $ 1.293 in amount overdue in its filling. It moreover announced the insolvency and closing 226 stores (Borders, 2012). The Najafi and the Gores group companies showed there interest in buying half of the Borders group stores that had remained. By July, 2011 borders group announced that it had got a bidder. The Direct Brands was the bidder and it would purchase the possessions for $215 million and the statement of $220 million in arrears (Austen, 2011). The extent to which the management of each company adapted to changing market condition After experiencing a financial turmoil borders had to adopt new management strategies to cope up with the varying market conditions. On July 7, 2010, it opened an eBook store to permit books to be easily downloaded to a Borders e-Reader application for the ipad, android, desktop or blackberry (Austen, 2011). Though identified as borders but it was in reality handled by Kobo, Incorporation. On the other hand, Amazon.com applied the following management strategies to adapt to the changing market conditions. During 2001, the corporation paid attention on reducing costs. It reduced the number of employees by 1,300 and stopped up a distribution facility. The corporation furthermore, supplemented price lessening to its company strategy, which had usually been centered on immeasurable selection and expediency. Amazon.com inked profitable third-party contracts with eminent traders like America Online, Incorporation and Target Corporation (Mudambi, & Schuff, 2010). Its strategy or approach worked. By 2001, sales had increased to$ 3.12 billion, a rise of 13 percent compared to the preceding year. During the fourth quarter it attained a landmark that many had termed as improbable; it secured a total profit of $5 million. It further initiated its clothing store in 2002, this store comprised of clothing from the Lands’ End and Gap; it reported a total loss of $149 million in a year, a step up from the $567 million loss detailed in 2001 (DATAMONITOR, 2011). Three ways a company should build in flexibility to back up its decision-making Process so as to adapt to changing market conditions. There are different ways in which corporations can build inflexibility to back up decision-making procedures so as to cope with varying changing market conditions. To begin with, companies should try to incorporate technology in there marketing strategies. At this technological age most people are going online and so the best way for companies to reach many customers is by marketing there products through common or websites with higher number of people visiting it like face book, twitter, LinkedIn among many others. Secondly, companies should try to reduce the number of employees and employ new technological strategies for monitoring and controlling business running, for example, using computers to monitor business activities instead of using the human workforce. This wills assist to reduce the expenditure in salary payment in the long run and make work to be more perfect. Lastly, a company should consider the price of its products against its competitors; if it is higher it should lessen it to avoid losing of customers. In conclusion, in order for a company to flourish in the competitive market environment it should adopt the modern marketing strategies like marketing online, designing there website in a way that attracts many customers. A company can only collapse if it has poor management strategies. References Austen, B. (2011). THE end of borders is not the end of books. Bloomberg Businessweek, (4254): 94-97. Borders. (2012). Borders books. Retrieved 26, Apr. 2012 from http:.barnesandnoble.com DATAMONITOR: Amazon.com, Inc. (2011). Amazon.com, Inc. SWOT Analysis, 1-11. Mudambi, S. M., & Schuff, D. (2010). What makes a helpful online review? A study of customer reviews on amazon.com. MIS Quarterly, 34(1), 185-200. Robert, S. (2002). Amazon.com. Harper: Harper Business publishers. Read More