Strategic Planning of Foyles Bookstore - Case Study Example

Strategic Planning of Foyles bookstore Table of Contents Foyles 3 Mission and Vision 3 Goals and Objectives 3 Core competencies 4 Ansoff Matrix 5 Porter’s five forces 7 Stakeholders 9 New strategy 9 Alternative Strategies 10 Future strategy 10 Roles and Responsibilities 11 Resources needed for new strategy 12 SMART target achievement 13 Conclusion 14 Reference 15 Foyles Foyles (W & G Foyle Ltd.) is one of the largest bookstores, located in London. The company has a total of seven stores all over London, among which the one at Charing Cross Road is the oldest and largest. Foyles bookstore was mentioned in Guinness book of world records for having the largest shelf area and largest number of books on display. The book store was founded in 1903, by two brothers William Foyle and Gilbert Foyle, as a seller of used books. Over the years their business changed hands and grew up to be one of the biggest and widely known bookstores (Foyles, 2014). Mission and Vision Foyles business is growing towards a modernized brick and mortar bookstore, by using technology to create value for the core customers by improving discoverability and ease of purchase of books. Foyles wants to pitch itself as the world’s largest and best bookstore in the world, and the best bookstore must have the best service quality. The company wants to position itself as more than just a bookseller, it wants to create an interactive environment where the customers can have a discussion within the dedicated in-store space and also interact with authors, publishers and other notable personalities specialized in their field. Overall, the company wants to give its customers a platform for knowledge sharing, not just by offering books but also by offering conferences or lectures within the store space (Bookwarm, 2014). Goals and Objectives Foyles flagship bookstore has moved by few blocks in the 107, Charing Cross road from 113-119. The new book store brings new future goals and objectives for the company. The company is trying to make its new flagship bookstore its centre for future bookstores (Butler, 2014). In the era where digital eBooks are a growing trend, Foyles believes that it can embrace the generation change while still maintaining the tradition of reading a paper book. Foyles want to be the centre for all the conversation about books and stories. The Company also wants to develop a business model that will attract other booksellers to adopt it, which in turn will help the entire industry to grow. Core competencies Foyles is one of the largest and most well known bookstores in the U.K, which is operating for more than a hundred years. The company not only just sells books, but also offers unique customer experience associated with knowledge sharing. Foyels creates a strong long term relationship with their customers, which makes them come back to the same store and not to any others. The largest collection of books on display as well as the interactive customer experience is what defines Foyles’ core competence. The company has not failed to embrace the growing shift toward eBooks, so it has introduced an eBook section in their website. To make purchase easier, Foyles also developed ecommerce to get books delivered at customer’s doorsteps. Overall, Foyles focus on differentiating itself by value addition for the customers (Porter M, 2010). Ansoff Matrix Source: (Kotler et al, 2009) The Ansoff matrix focuses on managing old or new products in existing or new markets. It presents four scenarios, market penetration, product development, market development, and diversification. Foyles business strategy can be discussed based on the Ansoff matrix (Stacey, 2010). Market Penetration: Market penetration is introducing an existing product in the existing market, or penetrating deeper into the existing market (Stacey, 2010). Foyles bookstore only exists in London. Over the time it has established seven book stores, all offering same types of books. Thus it can be said that the company is focusing in market penetration. Market Development: Market development is catering to a new market with existing products. All the physical stores of Foyles are in London; however the company has expanded their market overseas by ecommerce and courier deliveries. Thus, the company has prospects of overseas market development in neighbouring countries as well. Product development: Product development is introducing a new product in the existing market. Foyles’ core products are books, but it also sells a large variety of gifts and stationeries. The product development is related to the core product group, because books and stationeries are somehow supplementary to each other. The company has also developed the intangible part of their products that is customer services. Foyles has introduced reading spaces, discussion forums and it also holds seminars and conferences for the readers (Foyles. 2013). Thus it can be appropriately said that Foyles has opted for moderate amount of product development. Diversification: Diversification is introducing new products in a new market. For Foyles diversification is absent, because it do not offer differentiated products or services in different markets (Allen, K., 2010). Based on the analysis of the Ansoff matrix, it can be stated that Foyles lacks diversification and it has prospects in overseas establishment of bookstores. Overseas establishment will result in global expansion of the company, which will increase its brand value and also open new doors for revenue generation. The Ansoff matrix however does not provide the tools to measure the factors influencing the strategic management process (Johnson, Whittington and Scholes, 2011) An organization must analyze the market environment as well as the competitive forces before formulating any strategic plans. Foyles has successfully implemented its strategic planning to position itself as a niche market bookstore particularly for book lovers. The company has always stayed away from price wars, and differentiates itself only by the service provision and in-store ambience. It offers books at full price, unlike its rivals who offer discounts and as a result Foyles attracts genuine book lovers who appreciate an author’s work and ready to pay full price for it (Allen, 2010). Thus, the company has successfully recognized its target customers and committed itself to provide best services and experience. Porter’s five forces The porter’s five forces play an important role in designing the strategic planning of an organization. It provides a measurement of the competitive forces in the market, which are not only the rival companies but also other factors like buyer’s power, supplier’s power, threat of new entrant and threat of substitutes (Porter, 2010). Buyer’s power: Unlike Foyels, the rival companies like Borders and Waterstone offer discounts, so the customers can be attracted to the low price offerings. Thus the customers have a choice of moving to the rival stores. However, the Foyels also provides a much better service quality and customer experience, which other stores does not have. Moreover, Foyles only caters to niche customers who do not want to compromise on service quality, so a customer who is attracted to that service experience have to visit Foyels only (Allen, K., 2010). Thus it can be said that the customers have medium bargaining power. Supplier’s power: Foyles has collaborated with a lot of book suppliers and publication houses in London, and sources a wide range of books even from different countries. The large number of suppliers has allowed Foyles to enjoy low switching costs and as a result the suppliers have low bargaining power. Thus the suppliers have little control over the product availability in the market. Threat of new entrant: Barrier to entry into the book selling business is low, because it does not require huge capital investment to start a new book store. Thus Foyels faces threat of new entrant from newly emerged local stores. However, in order to offer a service experience like Foyels, a new entrant would need large capital investment and establishment of good customer as well as supplier relationship. Thus, threat of new entrant is medium. Threat of Substitutes: Foyels faces threat of substitutes from local libraries and online free eBooks. Book lovers often go to libraries where they can have access to vintage and expensive books at very low membership charge. Now-a-days most of the popular titles are available as free pirated downloads, that readers can have easy access to. Thus, the threat of Substitute is high. Rivalry among Competitors: The rivalry among competitors is high. Book stores like Waterstones are now trying to offer unique customer experience to stay ahead of Foyels. Book lovers are invited for a sleep over in the Waterstones store, so that they can read books and have a story telling and discussion session (Hutchinson, 2014). The rival companies also provide books at a lower cost to attract price sensitive customers. By analyzing the porter’s five forces it can be stated that Foyels must plan its future strategies in such a way that it stays ahead of its competitors and at the same time their strategy also does not hamper the revenue generation of the company. Implementing a counter strategy against a competitor often back fires because the company ignores its customers and gets busy in fighting a competitive market war. Stakeholders Stakeholders of a company are the ones who are affected and can also affect the business operations of a company. The stakeholders of Foyles are the management teams, investors, suppliers, publishers, employees, customers as well as other booksellers. Every company should design its strategies keeping in mind the stakeholder’s interests. Foyles always keep a good relationship with its suppliers and publishers. It arrangers workshops and seminar for the readers, arrange book launch events and suppliers conferences, thus creating a long term relationships with them. Froyles also maintains a healthy and ethical competitive approach towards its competitors. Thus, all the entities and persons who are anyhow associated with the company’s business activities are kept in mind before designing a strategy (Brusseau, 2011). New strategy Foyles can expand itself to other European countries by establishing its stores there. The company is already well known due to its service quality and large number of titles on display. It can use its brand image to penetrate in other markets. Since, European trade union allows free trade between all the European countries. Foyles can expand its business over to Germany. Foyles can leverage its worldwide suppliers’ relationship to procure books in those countries. The company also has sufficient financial strength to do business overseas. An alternative expansion strategy could be through horizontal diversification (Shiner, 2007). Since, Foyles mission is related to sharing knowledge; it can diversify its business to children’s education by establishing kindergarten or pre-schools (Ghemawat, 2007). Alternative Strategies Since book lovers are Foyles’ centre of business, Foyles can establish its own publication house and it can encourage the customers to write their own stories to get published in Foyles publication. Thus it can start its very own publication house and at the same time it can also create value for the customers. The company will be able to create even stronger long term relationships with the readers. This will also give Foyles a competitive edge over its rivals, by giving the readers a reason to choose Foyles over others. This will be a very unique proposition and will encourage readers to write their own stories. This strategy is also in line with the company’s objective of bringing ‘stories and readers together’ (Foyles, 2013). Future strategy The rapid advancement of technology is gradually replacing paper books with eBooks. In the near future, the company must embrace this technological shift and convert their book collection to the digital version. Foyles can also collaborate with a consumer electronics company to launch its very own eBook reader or tablet. The company can also enhance the user experience by launching a book reader’s blog, which will act as a social media for book lovers, where they can discuss or suggest books to others. In order to reach a wide range of target market, Foyles can also target students of schools and colleges, by offering online educational content and support. This prospective future strategy is in line with the growing market trend and is likely to grow in the future. However, the traditional book store with paper books may still be considered as a vintage product, and can attract a certain group of customers, who will appreciate the experience of reading a paper book. Roles and Responsibilities A proper implementation of a strategic plan requires certain steps taken by the higher management in order to incorporate new changes in the business activity. Foyles’ Chairman Christopher Foyle and CEO Sam Husain need to follow the proper leadership style to motivate all the employees to cooperate with the change management. The need recognition and implementation of a new strategy should be discussed with all the team members and employees. The recent workshops held at two of the Foyles bookstores, involved a brainstorming session on how to improve the user experience of the book store and the future of book retailing (Bookswarm, 2014). The finalized plans are then needed to be broken down into tasks, which are then distributed among different group leaders, each having their own team. The team members need to be motivated to make them realize how the new strategic implementation will improve the business activities which in turn will also benefit them. The tasks should be broken down and schedule in a time table, so that the progress is measurable and the tasks are completed within the stipulated time. The team members should also be made aware of the consequences of the plan’s failure, so that they understand the importance of the change that is taking place. This will create a sense of urgency among the members and as a result it will avoid any delay in the process. The implementation of a new strategic plan is a dynamic process, and its progress should be monitored constantly. Any deviation if found, should be modified immediately by the management in order to avoid the plan failure. The management needs to identify when each phase of the planning is complete and then the transition to the next phase needs to be initiated. After completion of the entire process the changes should be identified and any necessary modification should be made. Foyles’ overseas expansion to other European countries should be done following the above mentioned steps. The management should first recognize the need to expand its operations in order to stay ahead in the globally competitive environment. This is followed by recognizing the new market environment and the competitive forces of the host country. These analyses will help the company to device appropriate implementation strategy which is compatible with the culture and environment of that country. The company must identify the type of reading habits and trends of that culture, and accordingly offer them book titles and services. In order to be popular among the new culture, Foyles must be able to communicate with the book lovers at an intimate level and offer them experiences which they have not received from the existing bookstores. Thus the role of the management is of extremely high importance when it comes to implementing a new strategy, because they are the governing force which drives the entire business operation. Resources needed for new strategy In order to establish business in a new country, Foyles need to perform extensive research in the new market. Since, the company has no experience in overseas operations; it should hire a third party market research company to gather accurate market data, including the competitive forces and the market environment. Depending on the data, the company has to select a proper location for their store. After that the company needs to buy or hire a store space with reasonable price or rent. In order to spread proper brand awareness, Foyles should invest extensively on advertisement campaigns, like billboards, television commercials, etc. The campaigns should target all the bibliophiles in that country by addressing the unique experience they would get when they visit their store. The book collection needs to be sourced by establishing proper distribution channel with the suppliers, which should not be a problem for Foyles, as it has good relationship with a lot of suppliers overseas. The company also needs human resources as a major part of its workforce, so it must start recruiting employees from the local areas. Depending on the task distribution, the company can hire employees of different skill set. Managing the new employees should be done in accordance with the country’s labour laws and regulations. SMART target achievement SMART target achievement describes a business operation measurable by five factors which are, Specific, Measurable, Attainable, Realistic and Timely. Specific defines the actual goals of an organization. For Foyles, it includes the stakeholders involved, like the management, customers, suppliers, competitors, etc. This is followed by the the company wants to accomplish, in this case the company wants to provide a unique experience to its customers. After that comes the requirements to achieve the accomplishment, in this case Foyles need to modify the stores to facilitate easy discoverability, introduce reading and writing spaces, hold workshops and book launches, encourage discussion about books among the readers, etc. This is then followed by the specific reasons for the activities, for Foyles the reason is to take the book retailing business to the next level by adding more values to the customer, so that they can stay ahead of the competitors and also sustain in the changing industry for a long time (Kim and Moubborgne, 2009). Measurable: The progress should be measurable in terms of revenue or footfall conversion. The implementation of a new strategic plan is only considered successful when it adds revenue to the company and also increases profitability in the long run. Realistic: The goals set by the management should be attainable by the team members. So before setting up a goal, the company must recognize the capacity of its work force. Unrealistic goals may turn up to be a failure and a reason of demotivation for the team members. Timely: All activities should be set in a time frame; otherwise there can be indefinite delay in completion. Conclusion Foyles is the largest and well know book store in London, however the company should not be complacent about its leading position as its competitors are constantly trying different ways to overtake its position. Foyles should also consider new ways to cope up with the shifting trend of book reading, by embracing the technological advancements. Foyles usually targets the niche market and does not compromise on the service and customer experience quality, so in order to compensate the cost of the service provision; it sells books at full prices. The rival companies on the other hand offer discount, which can be a threat to Foyles, as a significant number of customers are price sensitive. Foyles has successfully made a tight grip in the existing market and should employ necessary measures to hold its position in a highly competitive environment. Reference Allen, K., 2010. The full-price strategy that is making bookshop Foyles thrive. [online] Available at: [Accessed 5 November 2014] Bookswarm. 2014. The Future of Foyles. [online] Available at: [Accessed 5 November 2014] Brusseau, J., 2011. Business Ethics Workshop. Flat World Knowledge. New York. Butler, S. 2014. Foyles pins hopes on old-fashioned books with new literary temple. [online] Available at:< http://www.theguardian.com/books/2014/jun/06/foyles-books-new-flagship-store-london > [Accessed 5 November 2014] Foyles. 2013. #FutureFoyles. [online] Available at: [Accessed 5 November 2014] Foyles. 2014. Our Bookstores. [online] Available at: [Accessed 5 November 2014] Ghemawat, P.2007. Managing Differences the Central Challenge of Global Strategy. Harvard Business. Boston Hutchinson, J. 2014. 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