Borders Books Fights for Survival - Essay Example

?Borders Books Fights For Survival The case study d “Borders Books Fights For Survival” (Neary presents a brief overview of the current situation in the US book market. The position of Borders Books is compared with that of the company’s major competitor - Barnes & Noble. Furthermore, much attention is given to the developing market of electronic books, where Amazon.com plays a significant role too. It can be clearly seen that, though Borders Books has a wide presence all over the United States, this company’s sales are outweighed by the recent success of Barnes & Noble (Neary 2011, 1). It can be even stated that, in general, both companies have rather similar marketing strategies and that the major sales tool of both is physical indoor sales. However, the reason for which Barnes & Noble has a leading position is its e-reader called the Nook. Surely, Borders Books, just like its rival, has some online presence. However, this online presence was present via Amazon.com only. In addition, the Nook, together with Kindle of Amazon, has opened a qualitatively different era in the development of the book and e-book market. Having created and market these electronic devices, Amazon and Barnes & Noble have, actually, created a totally different from traditional one niche of the book market. Selling electronic books involves working with a different market segment and target audience. This, in its turn, calls for much time and resources of the company. While spending on developing new technologies and broadening the range of prospects was a new concept for Amazon, Barnes & Noble, being a representative of traditional – paper – publishing, had to invest much into developing and implementing the change. However, this change, finally, became a competitive advantage of the company. This change can even be called a breakthrough innovation on the basis of using and improving existing technology, plus “departure from the existing market segment” (Benner and Tushman 2003, 239). Thus, having adopted or redesigned the newest technologies available in the industry, Barnes & Noble have created new benefits for their clients and, in such a way, might have even attracted new clients (Zhou, Yim, and Tse 2005, 43). This, according to Zhou, Yim, and Tse (2005, 42) shows that Barnes & Noble has managed to remain competitive because it is more market oriented: market orientation, according to the scientists’ research “facilitates innovations that use advanced technology and offer greater benefits to mainstream customers” (Zhou, Yim and Tse 2005, 42). Therefore, since the market is changing and is becoming more technologically advanced, the companies working in the industry must adapt to the changes and change themselves. This statement is also supported by Goksel Yalcinkaya, Roger J. Calantone, and David A. Griffith (2007), who outline that “firm capabilities related to product innovation are central to continued corporate survival” (Yalcinkaya, Calantone and Griffith 2007, 63). The major problem of Borders Books, therefore, is that it didn’t pay enough attention to the changes that took place in the market and, as a result, did not respond in a timely and effective manner. It should also be remembered that, in addition to Barnes & Noble and Borders Books, there is another huge player in the market – Amazon.com. This company can be said to be the most technologically advanced and, as a result, the most successful in the e-book market. Borders Books, according to Neary (2011, 4) was for many years relying heavily on Amazon to handle their e-commerce function. This shows that, while Borders Books were working on expanding its physical world presence, not enough effort had been given to building online presence. This can be named one of the major mistakes of the company because, considering the recent growth of virtual marketplace, the niche should not have been overlooked by a company willing to grow and develop. A good lesson from history on this matter is presented by Utterback (1994, 8), who writes that in many industries new radical technologies have shown to overwhelm and replace the traditional and well-established ones. As a result, companies that failed to adopt innovations did not survive in the changed marketplace. It is possible that, due to the continuous changes of managerial personnel, Borders Books did not sense the need for change and, consequently, did not respond to that need when it was most needed. Doing business in traditional ways is effective as long as the external environment of the business is stable. The growing popularity of e-books, as well as e-book reading devices, should have forced Borders Books to respond to the market trend. Technological change, according to Srinivasan, Lilien, and Rangaswamy (2002, 48), “is a principal driver of competition - destroying monopolies, creating new industries, and rendering products and markets obsolete.” Technological change, therefore, became a competitive advantage of Barnes & Noble who, following the examples of other companies did take their time to invest into the development of an own e-book reader – the Nook. The Nook became not only a new digital product of Barnes & Noble, but also a tool for selling more paper books: “People buy the Nook at retail and then they go and buy digital books, but because they're in the retail location, they might pick something else up while they're there” (Neary 2011, 4). So, the time and money spent by Barnes & Noble for creating and marketing the Nook gave the company both the sales of the Nook and an increase in paper books sales. Furthermore, this was a planned strategy: the Nook is being sold in Barnes & Noble superstores and the Nook became just another attraction that is supposed to make the prospects come in and buy. So, it can be seen that, unlike Borders Books, Barnes & Noble uses the emergent approach to change. The company did, first of all, realize that the market was changing. Then they are likely to have analyzed what in particular was taking place and developed a strategy to deal with those changes effectively – to adapt through innovation. This was made in attempt to align and realign the organization with its external environment (Collins 1998, 61). At the same time, as the emergent model of change implies, the change that was implemented by Barnes & Noble might be unsuccessful as well, because, as Collins (1998, 61) outlines, “emergent model of change does not pretend that long-term and careful planning will lead to successful change”. This ideas is also supported by the fact that such products as Plastic Logic Que or Bookeen Orizon, which both had similar to those of the Nook functions, were never sold. Furthermore, a newspaper and magazine reader Skif, though was released, did not sustain the competition. So, the success of Barnes & Noble’s Nook was not in a timely response to the new market conditions only. The successful implementation of the innovation happened due to such factors as effective planning, targeting and marketing. In addition, the Nook helped Barnes & Noble in the attempt to increase sales because this e-book reader appeared to satisfy the newly emerged customers’ needs – to have an easy-to-use practical device fro reading digital texts. On contrast, Borders Books showed no response to the market changes at all. The company, according to Neary (2011, 2) was “ill-prepared to compete in the digital book market”. In addition, no radical steps were taken to cope with the existing problems. As a result, sinking in the ongoing troubles, Borders Books misses the moment at which it can do anything to get out of problems, and continues following the old ways of running business. While the whole world is going online, the only online presence of Borders Books is through Amazon. The failure to invest into innovation may, of course, be explained by the financial problems the company had. However, as Sood and Tellis outline, technological change, if implemented, would be the most powerful engine of growth for the organization (Sood and Tellis 2005, 152). The company decided to solve the existing problems first. However, this have cost Borders Books the precious time they needed for designing a change that would help the overall situation. In addition, as Neary states (2011, 4), Borders Books have not even managed to work on developing its own infrastructure. They made no difference between managing their superstores and managing online sales. This lead to a situation when both businesses, though are totally different and should be run in different manners, work as one. So, the company has overlooked some important aspects of organizational development and, as a result, does not have resources or additional sources of income to solve its existing financial problems. that means the organization lacks diversification – though selling books might seem to be a rather narrow area of operations, it is easily seen on the examples of other companies that diversifying the range of offers being marketed to the clients gives a company much more opportunities for development. Among the problems that might have influenced such a strategy of Borders Books is the fact that their managers were changing all the time. Changing a leader, unfortunately, is not the most positive thing in a situation when a company – on the contrary – needs stability and, consequently, permanent leadership, as well as clear and consistent vision. The transfer of leadership is, according to Counselman and Weber (2002, 373), a very significant event in the group’s or organization’s operations because attachment and authority issues arise for both employees and other managers (Counselman and Weber 2002, 385). Furthermore, a leader that works with an organization for a long time knows its needs and challenges better. As a result, such an individual is more likely to take initiative to respond to the arising challenges with new ideas and new vision of the company’s place in the market. On this matter Craig Eric Schneier (1994, 278) writes that effective leadership is a key to an effective system-wide change. This is exactly what made Barnes & Noble more successful. The company managed to develop a clear vision of how it wants to position itself in the new market environment. Barnes & Noble decided they wanted more of the prospects to come into the stores and made that wish come true with the help of the Nook. The foot traffic is believed by Barnes & Noble to be the key to their success. That is their vision and the target for future developments. The company’s leaders have managed to communicate that vision to the whole organization and this, consequently, resulted into the company’s reaching the set goals (Kotter 1996, 85). However, it is clear that the success of Barnes & Noble, just like the problems of Borders Books, will not last forever. Though Barnes & Noble does have a competitive advantage over Borders Books now, market is continuing to change. Therefore, it is essential for the company to continue being highly responsive to the external environment and work on design of new changes that will ensure the company continues being successful in the future. The world in going online, so Barnes & Noble has to develop offers that will continue attracting customers to the superstores and making them buy both digital and paper books. Furthermore, the digital devices market is predicted to finally get saturated. That’s why Barnes & Noble should ensure their paper book sales do not go to zero by that time. With that purpose in mind Amazon is marketing its Kindle, which, with time, has become one of the most popular e-readers in the market. Having given the customers an opportunity to read nearly all of the Amazon books on Kindle the company has ensured that their overall sales remain relatively stable, no matter, which source of income is the major – paper or electronic books. To sum up, it can be said that all the industry leaders, including Barnes & Noble and Amazon, should remember that market conditions are continuously changing and in their particular niche are heavily influenced by technological advancements. Therefore, it is important to be always aware of those innovations and respond to them in a timely manner. In addition, diversification of offers marketed to the clients will provide each with another competitive advantage. References: Benner, Mary, and Michael Tushman. 2003. “Exploitation, Exploration, and Process Management: The Productivity Dilemma Revisited.” Academy of Management Review 28 (2): 238–256. Collins, David. 1998. Organizational change: sociological perspectives. Routledge. Counselman, Eleanor, and Robert Weber. 2002. “Changing the Guard: New Leadership for an Established Group.” International Journal of Group Psychotherapy 52(3): 373-386. Kotter, John P. 1996. Leading Change. Harvard Business Press. Neary, Lynn. 2011. “Borders Books Fights For Survival.” MC300 Case study 2011 Semester 2: Extracted from http://www.npr.org. Schneier, Craig E. 1994. The training and development sourcebook. Human Resource Development. Sood, Ashish, and Gerard Tellis. 2005. “Technological Evolution and Radical Innovation.” Journal of Marketing 69(July 2005): 152–168. Srinivasan, Raji, Gary Lilien, and Arvind Rangaswamy. 2002. “Technological Opportunism and Radical Technology Adoption: An Application to E-Business.” Journal of Marketing 66(July 2002): 47–60. Utterback, James M. 1994. Mastering the Dynamics of Innovation. Boston: Harvard Business School Press. Yalcinkaya, Goksel, Roger Calantone, and David Griffith. 2007. “An Examination of Exploration and Exploitation Capabilities: Implications for Product Innovation and Market Performance.” Journal of International Marketing 15(4): 63–93. Zhou, Kevin, Chi Kin Yim, and David Tse. 2005. “The Effects of Strategic Orientations on Technology- and Market-Based Breakthrough Innovations.” Journal of Marketing 69(April 2005): 42–60. Read More