Application of BCG Matrix and Grand Strategy Matrix - Assignment Example

University Affiliation

Question One: Barnes and Noble

The current deterioration of Barnes and Noble regarding sales is due to lack of good strategy that can counter the big competitors in the market such as Amazon. Technology is growing very first, and the people are currently shifting their attention to online books and the internet. However, the use of physical books is still in demand and marketable among and children and elderly whose ages have demanded the use of physical books. The woes surrounding Barnes and Noble are relatively evident on the shift to e-books and online sales which currently has a lot of competition (Barnes & Noble, 2014). Amazon has invested heavily in the digital books, and they have now dominated the market. For Barnes and Noble to continue to succeed and continue with business in this sector, a grand optimal strategy is necessary.

Currently, Barnes and Noble is considered as having a weak competitive position and trading in a slow market growth. The assumption that Barnes and Noble’s competitive position is weak in the book industry is due to the giant companies that are currently in the market which Barnes and Noble has failed to compete with. The dominance of Amazon in the field of the e-book has made the efforts made by Barnes and Noble in the e-book have little impact. Even though Barnes and Noble has made efforts to become one of the bigger players in the digital books, its efforts of introducing Nook e-reader has also flopped and increased its woes. The book industry in which Barnes and Noble trades is also not considered a rapid market growth even though it is growing. This assumption is also based on Hall & Gupta (2010) quotes of Professor Wharton admitting that the book industry is only growing slightly above the inflation rate. It is also considered that other factors like the increased use of internet materials and piracy of books contribute to the slow growth of the book industry (Williams, 2013). Piracy alone is estimated as taking away over $ 600 million from the book industry. Therefore, according to the grand strategy matrix, Barnes and Noble is categorized at guardant three where the company has a weak competitive position in a slow market growth (Hall & Gupta, 2010).

The position of Barnes and Noble at quadrant three means that it should make some quick dramatic changes to avoid possible liquidity and demise like Borders. One of the strategies that are relevant to Barnes and Noble is to embrace the concentric diversification by shifting their resources from the current business venture of e-books into the old and known area of physical books. Other concentric diversification are through engaging in the publications of the books, partnerships with best writers, mergers and acquisitions with other publishers and bookstores. Due to the current competitive which is very high in the book industry, the Barnes and Noble have shown that they cannot compete favorably in the e-book; therefore, their continuous venture in the e-book should be minimized. History has shown that Barnes and Noble can do better in the print or physical books due to the emergence of mega-churches and the increased attendance in the churches who boy print versions. Also, the rise of hot titles of books such as Harry Potter could drive people to Barnes and Noble for the titles thereby increasing sales (Barnes & Noble, 2014). Another important strategy for Barnes and Noble is to reduce their workforce and overhead through the use of applications that reduce the works of clerks and increase the customer access to the books without the help of the clerks. When the Barnes and Noble reduces their overheads, there will be no need of extensive reduction and closure of some stores as a way of reducing cost. Therefore, sales will be maintained or improved at lesser costs (Hall & Gupta, 2010).

The Assessment of Barnes and Noble in a BCG Matrix (Boston Matrix) also gives us a picture of the company by deciding to use booth the brick-and-mortar stores and Internet for on-line books. According to the BCG Matrix, the use of the brick-and-mortar stores should be considered a Cash Cow for Barnes and Noble. Even though Barnes and Noble gives this idea of brick-and-mortar another angle of online sale, it is recommended as the best option for them. This is because there is little competition by giant companies in the brick-and-mortar even though there is little growth experienced. The releases of new hot titles have always increased the sales of Barnes and Noble. In 2010, “Harry Potter” was estimated to drive the sales of kids sector to about $6.8 billion while "Go Set a Watchman" by Harper Lee also helped the sales of the last quarter of 2012 financial year to rise by 1% (Hall & Gupta, 2010). Barnes and Noble should continue to put more funds in the brick-and-mortar stores but should couple it with technology concerning advertisements and promotions to do better (Barksdale & Harris, 1982).

The idea of Barnes and Noble to venture in the on-line books was considered a good idea because it was meant to compete with Amazon in the e-sector. According to the BCG Matrix, it is viewed as a Question Mark for Barnes and Noble. This is because it has a low market share compared to the dominance of Amazon even though there are expectations that it will grow. Barnes and Noble has tried by made efforts to become one of the bigger players in the digital books by introducing Nook e-reader to compete with Amazon's Kindle and Apple's iPad (Hall & Gupta, 2010). The hope that this gamble will pay off is slim because it has led to a continuous loss. However, has a Question Mark, it is expected that some setbacks will arise, and a close watch should be kept. A continuous loss in this area of e-reader, Nook, by Barnes and Noble should be discontinued, or a careful decision making is carried out (Hall & Gupta, 2010). However, the wider picture of internet business is still considered to grow and pay off and should not entirely be discontinued to avoid the overbalancing of the risk model that will eventually make the company to tip over (Barksdale & Harris, 1982).

In conclusion, BCG Matrix supports my choice of grand strategy as selected by the Grand Strategy Matrix. My consideration of Barnes and Noble to embrace the concentric diversification of old physical book selling, a partnership with best writers, merger and acquisition of other bookstores and publishers is due to weak competitive position in the e-book sector. This is supported by the idea of the BCG Matrix considering the brick-and-mortar stores as a Cash Cow (David, 2013). It will mean Barnes and Noble shifting back to their old strategy of physical book selling and doing more book production for best sellers and concentrating their resources from the current business venture of e-books. Therefore, the grand strategy of concentric diversification of their resources will continue to be a solution for the woes of Barnes and Noble (Harding & Long, 1998).