Strategic Choice and Evaluation Paper: Barnes and Nobles - Essay Example

? Strategic Choice and Evaluation Paper: Barnes and Nobles Connie Johnson July 10, of Phoenix Barnes and Nobles is a great company that has enjoyed tremendous success in the book industry. The firm as of 2010 was the market leader in the industry with over $7 billion in revenues in an industry that generates approximately $24 billion in revenues each year. Despite the success of the company the firm has to realize that the book industry is in decline. In 2009 book sales went down 1.9% and during the last few years a lot of book stores have gone out of business including the popular book selling chain Borders. Barnes and Nobles has a lot of good things going for the company including a variety of over 2 billion books and e-books. The firm has done a good job of combining the traditional physical book store operation with its online offering. The firm also had the foresight to diversify into other product lines including toys, video games, and movies. Despite the good things the company has going for itself it is imperative for the managers of the company to implement a new strategy to ensure the long term success of the company. The firm has to consider all strategic options including value disciplines, generic strategies, and grand strategies in order to find the optimal solution for the company. Valued Discipline The three main value disciplines available to marketers are operational excellence, customer intimacy, and product leadership. The operation excellence strategy entails improving the operation of the company in order to achieve world class results. This strategy is better suited for implementation for companies in the manufacturing sector. A company that achieved tremendous results using operation excellence is the Japanese auto maker Toyota. The use of operation excellence allowed Toyota to become the market leader in its industry. Barnes and Nobles on the other hand runs a bookstore. There are simply not too many things that Barnes and Nobles can do to improve the efficiency of its 1341 bookstore network. A potential solution associated with the operational excellence for Barnes and Nobles is to improve the quality of customer service the company offers. This can be achieved by investing money in training and development for all its employees. Due to the dispersion of employees it would be hard for the company to organize training and development efforts for all its employees at once. A potential solution to implement this strategy is for the firm to develop an online customer serving training seminar. The firm could offer a cash incentive for the employees so that the employees can complete the online customer service training during their own time. The use of the value discipline of customer intimacy may also not be suited for Barnes and Nobles. When a person walks into a bookstore the last thing they want is to get hassle by an employee trying to push a sale on them. Book readers take their time evaluating a book prior to making a purchase. As far as product leadership the firm already has in place a strategy to offer its customers the greatest variety of book titles selection. Barnes and Nobles has the highest selection of books and e-books in the world. Being the company with the greatest product selection should not prohibit the company from looking for ways to improve their product offering. Some ideas on how to improve the product offering of the company will be further discussed in the grand strategy segment of this term paper. Generic Strategy Generic strategies are often used by managers to improve a business operation. The three types of generic strategies are cost leaderships, differentiation, and focus (Kotler, 2002). The cost leadership strategy is achieved when a company is able to lower its structure more than the competition therefore being able to offer its customers lower prices than the competition. A firm that achieved tremendous success implementing this generic strategy is Wal-Mart Corporation. Unfortunately the low cost leadership strategy is not well suited for Barnes and Nobles. The company has high overhead costs due to the fact that the firm has over 1300 stores that must pay for expenses such as utility, rent, and payroll costs. If Barnes and Nobles ran solely an online operation like some of its competitors for example Amazon the company might consider a low cost strategy. A differentiation strategy entails the development of a product or service that offers unique attributes that are valued by the customers of a firm which the customers perceive to be better than the competition (Quickmba, 2011). The third generic strategy is the focus strategy. The focus strategy is geared to have a special appeal to one or more groups of customers by focusing on either their cost or differentiations concerns. The generic strategy that is best suited for the company is the focus strategy. Barnes and Nobles has effectively targeted the college student book marketplace by establishing 636 college bookstores across the nation. A way for the company to increase its business in the college book sector is by offering a greater variety of e-book textbooks for college students. The firm can offer e-book textbooks at a much lower price than traditional textbooks to college students which would be very appealing for these customers. To achieve that goal the firm should contract various employees that would travel to universities to create alliances with universities that want to transition from traditional textbooks to e-book textbooks. The use of textbooks in the form of e-books is a proven method that is already being use by the leading online universities including the University of Phoenix. The firm can serve as an intermediary between the publishers and the academia to facilitate in the designing of more textbooks for classrooms in e-book format. The focus strategy would emphasize on the needs of college students by offering e-books to be used in their courses which they will be able to acquire at a much lower price point. Grand Strategy There are a variety of grand strategies that a firm can use to improve the long term prospects of an enterprise. Some of the grand strategies available to managers include concentrated growth, market development, innovation, horizontal integration, divesture, and liquidation (Slidesshare, 2011). In the book industry there are rarely any innovations. The biggest innovation in the book industry in the 21st century has been the rise of the e-book. Barnes and Nobles has already capitalized on this opportunity and the generic strategy segment of this paper illustrated a way for the firm to further capitalize on the e-book marketplace. An opportunity for the firm to bring innovation into the industry is by forming a strategic alliance with the firm Papyrus Australia. Papyrus Australia is a company that invented a new type of paper made out of the truck on banana trees called banana ply paper. The firm patented technology for the product. Papyrus Australia is a public company traded in the Australian Securities Exchange. The firm should acquire the company in full, start a joint venture, or form a strategic alliance with this firm. Once the company gains exclusive rights for the distribution of banana ply paper the firm could start a revolution in the industry in which the firm would have exclusive rights to sell books sold using banana ply paper. The company could market the books as an environmentally friendly green product. The innovation of selling books made of banana ply paper would add a new product line that can make the company a lot of money. A lot of people in the United States and abroad are very concern with the problems associated with deforestation. Optimal solution The optimal solution for the company is a combination of solutions using the generic strategy and grand strategy options. The focus generic strategy of targeting college students by offering a better variety of textbooks created in e-book format could help boost the e-book sales of the firm, while at the same time satisfying the desire of college students to spend less on books for school. The innovation grand strategy is also part of the optimal solution. The firm should target the acquisition of Papyrus Australia in order to offer a new attractive green product that would have mass appeal among book readers. It is a perfect time to acquire Papyrus Australia due to the fact that the firm is still in its start-up phase and because the common stocks of the firm are still penny stocks. References Fowler, G., Trachtenberg, A. (2010). ‘Vanity’ Press Goes Digital. Wall Street Journal. Retrieved July 4, 2011 from http://online.wsj.com/article/SB10001424052748704912004575253132121412028.html Kotler, P. (2003). Marketing Management (11th ed.). New Jersey: Prentice Hall. Slidesshare.net (2011). Chapter 6: Formulating Long-Term Objectives and Grand Strategies. Retrieved July 10, 2011 from http://www.slideshare.net/kumaravinash23/chap006 Quickmba.com (2011). Porter’s Generic Strategies. Retrieved July 10, 2011 from http://www.quickmba.com/strategy/generic.shtml Read More