Implementation Strategies - Barnes and Nobles - Essay Example

? Implementation Plan: Barnes and Nobles Connie Johnson July 15, of Phoenix Barnes and Nobles realized that the firm had to make changes in order to keep the company profitable in the long term. The book industry has experienced stagnant sales during the past few years. The success of the strategies companies formulate depends on the implementation, strategic controls and contingency plans that the managers of the firm develop. The proposed implementation plan includes objectives, functional tactics, action items, milestones, deadlines, tasks, task ownership, and resource allocations. The plan also includes financial cost breakdowns and forecasts. The organization is going through a transitional period that requires innovative solutions. The objectives of the company are to maintain profitability and to continue its market leadership in the book industry. The diversification strategy that the firm used in the past helped the company increase its revenues, but the long term sustainability of that approach will not help the firm stay on top of the book industry. The firm has identified two alternatives that are aligned with the firm’s objectives. The first strategy involves creating close relationships with universities and publishers in order to persuade colleges to switch from textbooks to digital books for classroom purposes. The second strategy is based on the acquisition of Papyrus Australia (PPY) to use the firm’s patented technology to create new books made out of banana ply paper. Barnes and Nobles has to revamp its human resources to be able to achieve its new strategic goals. The company must immediately start a recruiting round to get the required personnel for the plan. The recruiting action item must be completed in a span of six weeks. The company has to hire specialized sales representatives. The credentials required for this job include having writing experience, a graduate degree, and superb interpersonal and negotiation skills. Barnes and Nobles needs 20 sales representatives. The United States will be divided into ten geographic regions. Two sales representatives will be assigned per region. These representatives will be traveling on the road all the time to different universities looking for business. They will be assisted by the marketing department of Barnes and Nobles. When a salesperson convinces a university to pursue the digital textbook idea an expert negotiator from the marketing department will assist the salesperson in closing out the deal. Once the six week recruiting period is complete the next step is to train the sales staff. The human resource department in alliance with the marketing department will develop the training sessions for the salespersons. The sales personnel will also received independent training from a consulting firm that specializes in e-book technology. These two training initiatives will take 30 days to complete. The final training will be implemented while the sales representatives start their job duties. The third training consists of other aspects of the job including organizational culture, business ethics, and additional sales techniques. The total elapsed time for implementation of the alternative solution is 90 days. The alternative solution requires sufficient budget for the option to have a chance to work. The sales staff will cost much more than your traditional sales staff because the job is very demanding and the firm requires employees with graduate degrees. The minimum educational requirement for the job is a master’s degree, but doctorate degrees or PhD are preferable. In order to attract top candidates the firm must offer a very good salary. The basic starting salary for the position is $150,000 plus commission. The travel expenses per employee are estimated at $50,000 consisting of lodging, diet, and car rental. The training costs for the staff are estimated at $100,000. The project cost is approximately $4.1 million without taking into consideration commission expenses which is a variable cost. The digital textbook marketplace is about $1 billion a year with sales expected to increase by 18.8% by the year 2014 (Reynolds & Ioffe, 2010). The strategic approach of the company will help the firm penetrate this market. The goal of the company is to achieve a market share of 40% of the digital textbook marketplace within 3 years. This type of penetration will give the firm annual revenues of $480 million from digital textbooks. The second alternative solution identified by Barnes and Nobles involves gaining access to the technology to create banana ply paper which is currently owned by the firm Papyrus Australia. The first step of the implementation plan is to hire an investment firm to perform an assessment of the value of Papyrus Australia. The company is currently a publicly traded company. The consulting firm will be given two weeks to complete the assessment. The purpose of this consulting work is to get an appraisal of the value of the company. The results from the consulting firm will be used as a source document for internal negotiating purposes. The second step of the plan is to have a personal meeting with the board of directors at Papyrus Australia. The chairman of the board is Ted Edwards and its founder and managing director is Ramy Abraham (Papyrusaustralia, 2011). The purpose of the meeting is to inform Papyrus Australia of the company’s interest in the firm’s technology. Barnes and Noble will be open to all possibilities including strategic alliances, joint ventures, and acquisition of the firm. Barnes and Nobles will establish a firm objective of gaining exclusivity of the product for the production of books. The founding team of the company has been working for over a decade on their project and it is possible that they might be hesitant to form alliances with big companies that will inevitably try to exploit the technology for their best interest. Barnes and Nobles needs a contingency plan in case of resistance to change from the Papyrus Australia executives. When a company becomes public the firm’s shareholder are the ones who have decisional power in terms of what is in their best interest when other companies make an offer for their investment. Papyrus Australia currently has 109.2 million shareholders and these shareholders own a penny stock that is currently valued at $0.09 share (Businessweek, 2011). The firm’s valuation has been going down during the past several quarters. During the last year the highest market price the shareholders have seen is $0.30 a share and the current value of the firm is only $0.04 off its rock bottom price of $0.05 a share. The market capitalization of the company is $9.6 million. Since the company has limited financial resources it has been very tough for the firm to get the company’s product off the ground. The shareholders are losing their patience. Based on these circumstances the optimal tactical move for the firm is to make a tender offer to acquire the company using a hostile takeover. Since all the shares of the firm are worth less than $10 million making an offer of $50 million would be hard to refuse by the shareholders. The shareholders would obtain more than five times the value of the stock. If the plan is successful and Barnes and Noble is able to acquire Papyrus Australia through a hostile takeover the firm has a long road ahead before it can achieve its intended purpose of introducing books made out of banana ply paper. PPY does not have the manufacturing infrastructure in place for a massive rollout of the product. The company should establish a large manufacturing site in the continent of Africa. Africa has 53% of the world’s banana tree supply. The cost of labor in Africa is very low and the firm would be implementing a sound social responsibility strategy that could eventually generate thousands of jobs in a region that is in dying need of foreign investment. The investment for the first large scale manufacturing plant is $5 million. The Papyrus Australia acquisition is a long term project that will generate revenues for Barnes and Nobles in a lot of ways. Some of the other products that can be manufactured using the firm’s patented technology include plywood components, laminates, cartons, boxes, containers, structural veneers, plates, bowls, cartons, and furniture (Businessweek, 2011). A conservative goal for the company by the year 2015 is to capture 5% of the book marketplace using banana ply paper. The estimated revenue the company would generate within this timeframe is approximately $1.2 billion. The implementation plan the firm has established to put the two alternative solutions into action are realistic and reachable. Large businesses such as Barnes and Nobles have to plan for longer periods than one year. Having strategic plans for the long term can help improve the chances of the business succeeding. The acquisition of Papyrus Australia is a strategic move that will increase the value of the company. Barnes and Nobles made the necessary plans to bring innovation to an industry that needs changes due to the expectations of its customers. The two implementation plans have the potential in the near future to increase the revenues of the company by over $1.6 billion. In order for companies to stay on top of their industries they must innovate and take risks. Companies that don’t adapt to market changes are the ones that run out of business and seize to exist. References Businessweek.com (2011). Papyrus Australia LTD (PPY:ASX). Bloomberg Businessweek. Retrieved July 15, 2011 from http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=PPY:AU Papyrusaustralia.com (2011). The Board. Retrieved July 15, 2011 from http://www.papyrusaustralia.com.au/the-company/the-board/ Reynolds, R., Ioffe, Y. (2010). Digital Textbook Sales in U.S. Higher Education – A Five Year Projection. Retrieved July 15, 2011 from http://blog.xplana.com/reports/digital-textbook-sales-in-u-s-higher-education-%E2%80%93-a-five-year-projection/ Read More