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Amazon Versus Borders - Research Paper Example

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Amazon Versus Borders

However, the winds of change, increased competition, effect of poor investment decisions and other factors hit hard in 2007 when the company begun selling off its international subsidiaries and company stocks fell to a six-year-low of $12.28 per share (Bomey, 2011). Borders never recovered and spiraled to its liquidation in July 2011. Amazon was started in 1995 by Jeff Bezos in a two-car garage in Bellevue, Washington. In May 15, 1997 Amazon.com went public (Amazon.com, 2012a). By end of 1998, the company had opened music and DVD stores and launched international sites in Germany and the UK. in 1999, due the company’s phenomenal growth that saw it include numerous services such as zShops, auctions and an array of products from electronics to toys to home improvement, the founder and CEO, Jeff Bezos was named TIME Magazine “Person Of The Year”. Amazon launched Web Services in 2002, the kindle in 2007 and by 2008 it had over 76 million active customers’ accounts and order fulfillment to more than 200 countries. An interesting fact is that whereas it took Wal-Mart 20 years to realize annual revenues of over US $5 billion, Amazon achieved this feat in 8 years (Amazon.com, 2012b; Chaffey, 2012). Amazon has moved from selling only online books to selling a wide array of products and services. Even though both Borders and Amazon were founded with their core activity being the sale of books, the former chose to focus in its earlier products whereas the latter kept adding two new product categories for almost every year of its existence. However, it is neither the product focus of Borders nor Amazon’s diversified product base that explains there very different fortunes. Of course, one of the more obvious factors that led to the demise of Borders and the rise of Amazon was their management’s approach towards the Internet as a sales outlet as well as a tool for marketing, branding and growth. According to Evans (2011), Borders greatest failed to adequately address the internet sales channel and worse still they opted to outsource what in retrospect turned out to be a game changer in the book selling industry. We however, think it not fair to judge Borders managers so quickly without a deeper understanding of how organizations make strategic change. To begin with, much of the disruptive change to the book retail and publishing industry took place between the mid-1990s to the early 2000s. This implies that whereas Amazon was getting born within this disruptive environment, Borders had already been in operation for two decades. Borders therefore had already within it an engrained culture which dictated how it operated. According to Johnson (1992) managers respond to situation in ways which are in line with the paradigm and the cultural, social and political norms of their organizational life. This way one could argue that while the industry was undergoing a major change, Borders managers did that which is natural for managers in any organization to do, which is to deal with the situation in terms of their existing paradigm. On the other hand, having been founded in such a disruptive environment, Amazon adopted the culture of a learning organization right from the outset. Thus we believe the first reason why Borders, although ...Show more

Summary

Amazon versus Borders The first Borders Bookshop was opened in Ann Arbor, Michigan by two brothers Tom and Louis Borders in 1971 with the core business being sale of books. Within the same decade Louis Borders developed the software system that gave the company its competitive advantage for two decades as it enabled the company to accurately project sales and effectively manage its inventory (Bomey, 2011)…
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