MGMT 4842 – Strategic Management
A Case Analysis of Barnes & Noble
Robert Daigle - Sidney Best - Jack Zeigler - Charlie Smith
Jessica Whitley - Josh Cornwell
Company Background
•The Barnes family's history in the book business started in 1873
•The company revolutionized bookselling by introducing giant, supermarket-style
stores with deeply discounted books in the 1970s
•As of July 2010 B&N operates 717 retail bookstore locations in all 50 states and
633 college bookstores
•These stores stock between 60,000-200,000 book titles
Issue 1
Barnes & Noble needs to address the company’s lack of
effective leadership in its effort to sell the company
Alternative 1: The first
alternative is for the company
to attempt to handle the sale of
the company in-house.
Alternative 2: Another option
to resolve this dissonance in the
boardroom is hire a third party
consultant to handle the sale of
this company.
S.W.O.T Analysis
Strengths
1.
2.
3.
4.
5.
Barnes & Noble is an established brand with a
solid market presence which correlates into a
strong competitive advantage.
Barnes & Noble enters into the digital market and
shows a strong presence with its multi-channel
strategy.
Price conscious customers are attracted to Barnes
& Noble’s discount pricing.
Barnes & Noble offers benefits to their customers.
Barnes & Noble’s acquisition of Barnes &Noble
College has propelled the company into the
college bookstore market.
Weaknesses
1.
2.
3.
4.
5.
Opportunities
1.
2.
3.
4.
Considerable growth expected from the eReader
and eBook areas .
With the acquisition of B&N College, Barnes &
Noble has forayed into the college textbook
market .
Barnes & Noble launches a “go-green” line of
products .
Barnes & Noble will become the leading and
largest retailer of magazines and newspapers in
America.
Barnes & Noble’s profitability has been harshly
impacted by legal proceedings.
Competitors are causing weak margins.
Reliance on a small number of
suppliers.
College textbooks sales shifting to renting
textbooks or digital textbooks.
Falling profit margins cause less investment
opportunities.
Threats
1.
2.
3.
4.
5.
Barnes & Noble’s growth opportunities are
negatively affected by competition and price wars.
Decreasing physical book sales are reported even
though digital product sales increase .
College enrollment is declining due to a decrease
in state funding .
Barnes & Noble embroiled in boardroom issues.
Barnes & Noble sees decline in holiday sales.
Issue 1 Alternatives
Alternative 1
Alternative 2
Pros
Pros
•Less expensive than hiring a
consulting firm
• Non-Bias interpretation
•Would eliminate the 2
controversial parties having direct
contact
•Results produced in a timely
manor
•Shareholders interests in mind
Cons
Cons
•Slower results
• High costs
•Consumes company time and
resources
•Vulnerable to consultants having
access to information
•Bias can still be prominent
•Difficulty in agreement on
consultant
Issue 1 Recommendation
Recommendation: Alternative 2- hire a third party consultant to
handle the sale of this company.
• Addresses the companies need for decisions to be made in a timely
manner.
• Important the decisions be made quickly before the situation
becomes worse than it is.
•
This alternative will also provide stability for the company.
Issue 2
Barnes & Noble faces a reduction in its profit margins. This
is caused by increases in competition, government
regulation, and online sales.
Alternative 1: The first
alternative is to increase
product differentiation.
Alternative 2: The second
alternative is for Barnes and
Noble to market eBooks and
eReaders inside its bookstores.
Issue 2 Alternatives
Alternative 1
Alternative 2
Pros
Pros
•Product differentiation can lead
to increased profit margins
• Using stores to promote new
eReader technology
•Utilizing physical stores
•Provides a one-on-one
experience
Cons
• Hard to establish a truly
“unique” product
Cons
• Can lose traditional book readers
to the eReader
•Can potential make physical
stores obsolete
Issue 2 Recommendation
Recommendation: Alternative 1- Increase product differentiation
• Makes B&N more appealing in the marketplace
• B&N have started this process by introducing its NOOK in a color
version
Issue 3
Barnes & Noble faces is its decline of physical book sales .
This is due to a changing consumer trends towards digital
technology.
Alternative 1: The first
alternative is to expand the
company’s eBook sales with
select and exclusive products.
Alternative 2: The second
alternative is to create special
offers for college students.
Issue 3 Alternatives
Alternative 1
Alternative 2
Pros
Pros
• Offering exclusive products can
build a loyal customer base
•Dramatic increase in repeat
purchases
Cons
•Can be marketed to any level of
education
•Issues with obtaining licenses or
rights
•Shifting to digital media can be
costly
•Can make physical stores
obsolete
•Possibility of renting eReaders
Cons
•Decrease in printed textbook
sales
Issue 3 Recommendation
Recommendation: Alternative 1- Expand the company’s eBook sales
with select and exclusive products.
• Increases customer loyalty and increase brand recognition for the
Nook.
• By increasing brand recognition and consumer loyalty B&N may
be able to beat Amazon for dominance over the industry market
share.
11/29/10
Questions and Answers