112 100% + BUSINESS PROBLEM SOLVING CASE Can This Bookstore Be Saved? Borders Group (including many former Waldenbooks While publishers fretted that readers would be recon- rebranded as Borders Express) liquidated its assets and ditioned to devalue the worth of the printed word and closed all of its locations in the second half of 2011. The that offline stores would be strained to their limits previous year had already seen the demise of B. Dalton, discounting print books to compete, B&N scrambled. It a Barnes & Noble subsidiary since 1987. Since 1991, took until July 2009 (two months after the Fictionwise eleven major U.S. bookstore chains have been whittled purchase) to finally unveil B&N's e-bookstore. Its Nook down to six, and nearly 3300 stores to just over 2200 in c-reader was released in October, again more than two 2011. years behind Amazon. Ironically, as early as 1998, B&N Still in the lead after over 20 years of domination, had partnered with software companies such as Nuvo Barnes & Noble was often painted as the bully, driving Media to develop a prototype e-reader called the Rocket, both regional chains and small independent bookstores but it had nixed the project in 2003 because there didn't out of business with its aggressive pricing tactics and appear to be any money in it. Now it had to hustle to unbeatable inventory. Before e-commerce reshaped the refashion itself as a seller of e-books, e-readers, and apps landscape, its superstores forced smaller rivals into to enhance the reading experience "most titles offered" wars. As smaller chains struggled Critically well-received, the Nook began to scrape to keep pace, support from publishers was not forth market share from the Kindle when it sparked a price coming. This short-term, bottom-line strategy would war a year later. Dropping the price from $259 to $199 come back to haunt publishers and releasing a Wif-only model for $149, B&N took B&N kicked around the idea of selling books online, wim at the giant, Amazon quickly countered by slashing experiments with Trinter, a 1980. Web retail proto the Kindle to $189 eight hours later and releasing the type, selling books on CompuSery in the mid 1990s, and WiFi-enabled 30 Kindle within a month, again at $10 opening an online shop on AOL However, it was not below the Nook until 1997, fully two years after the arrival of Amazon. With titans such as Apple iPad) and Google (origl that it launched its first Website Data from numerous nally with the River Story and in 2012 with the Nexus emerging e-commerce markets now verifies that books 7) providing additional competition, the tables had been are an ideal initial product to draw first time buyers turned on the former bookstore baron Will B&N be able H&N was already behind the curve to survive against these tech giants Amazon, launched initially as an online bookstore The awer remains to be seen. He was the only best hekseller with the sources to complete the consider Amazon, launched initially as an online bookstore, The answer remains to be seen. B&N was the only upended the titles war. While B&N might be able to bookseller with the resources to complete the consider- offer over 200,000 titles in its bricks-and-mortar stores, able task of developing an e-reader, marketing it, and Amazon offered an inventory limited only by publisher setting up manufacturing and retail operations for the availability. Shrewd financial moves, including selling device. Its closest competitors were already succumbing 50% of its Internet operation to German giant Bertels- to the contraction of the chain bookstore market, victims mann in 1998, kept B&N in the game. It established a of both B&N and the e-commerce revolution. Books-A- new industry standard of 750,000 titles on-hand and Million, with approximately 250 stores compared to bragged that it could procure over 8 million new, out-of- 1,363 (689 retail and 674 college) for B&N, is its closest print, and rare books for customers from suppliers. remaining competitor. However, Amazon continued to trump B&N on innova- While B&N still depends on its physical, brick-and- tion. When B&N launched its online music store in mortar stores to drive its business, the e-book market is 1999, several months after taking barnesandnoble.com a horse of a different color. The economics of e-book public and refurbishing its cash reserves, it was again sales are very different from traditional book sales. playing catch-up with Amazon, which had pioneered the Customers who visit B&N's Web site buy three digital concept a year earlier. books for every one physical book, but booksellers still In early 2009, when B&N purchased Fictionwise, one make more money on print books than e-books. And of the biggest electronic book proprietors in North while having a competitive e-reader seemed essential to America, it was again behind the technology curve. successfully vying for market share, it came at a steep Amazon had already unveiled its Kindle e-reader sixteen cost. Moreover, it is not the pivotal factor in controlling months earlier. What's more, Amazon would offer New the e-book market. Content is. York Times bestsellers and other popular e-books for Since the price war, the reality is that in order to less than $10. compete with Amazon, e-reader hardware must sell at or near cost, with profits derived from the sale of digital and audio books, bring traffic into malls, and serve as content, including e-books, music, videos, apps, and social gathering places. The more visibility a book has, games. Once Amazon had wrung all the profit it could the more likely readers will want to purchase it. With the from Kindle hardware, it quickly maneuvered into demise of B. Dalton, Crown Books, and Borders, B&N is adding apps and app features and aggressively pursuing the only retailer offering an extensive inventory of phys- a cross-platform strategy. It began marketing its e-booksical books. Book publishers need a physical presence for tablets, smartphones, and PCs using Android, Without B&N, the likely candidate to fill the void is Windows, and OS X operating systems. Moreover, Amazon, and publishers are not eager for that to happen. Amazon, along with Apple, and another competitor, Amazon's goal for e-books is to cut out the publishers and Kobo, are global competitors; B&N is not. publish books directly, selling books at an extremely steep Despite spending hundreds of millions of dollars to discount to drive sales of its kindle devices. Editors, compete with Amazon.com Inc. and Apple Inc. in the publicists, and other entities within the publishing busi: market for tablets and e-readers, B&N continued to lose ness view Amazon as an enemy. Selling books at money on the Nook, as well as e-book market share. Amazon's discounted prices is not a tenable business Analysts estimated in 2011 that B&N controlled approxi- model for publishers in the long-term. mately 27% of the U.S. digital book market while If B&N is to survive it must capitalize on its profitable Amazon led with 60%. Since then, Amazon has held retail stores, dovelop small, local community-based shops, steady, and B&N has steadily ceded ground to Apple. expand digital content, lead the digital education market, B&N's digital book market share has dropped to 25%, and and develop marketing techniques to drive e-book readers is still filling to purchase print books. B&N has been experimenting On June 25, 2013 B&N announced that losses at its with ways to drive traffic to its physical stores. For Nook digital business more than doubled in the quarter example, if you connect to a Wi-Fi network in a B&N ending April 27, 2013, wiping out profits generated at its store with your Nook, you can get free extras in many bookstores. As a result, the company decided to stop apps and games like Angry Birds, where you can unlocka producing its own color tablets in favor of co-branded bonus character that normally costs a dollar B&N has dey'ses made by third-party manufacturers. Barnes & also expanded its store space for toys and games, which Noble will continue to design and make its own black have higher profit margins, while reducing the range of and white Nook ereaders, which account for the bxiok titles it stocks. There are also plans to experiment majority of its e-book sales, But with a reader sales with slightly smaller stores in malls. Although that declining, it is unclear how competitive Barnes & Noble strategy is boosting the company's bottom lime, publishers can be long term without its own presence in the tablet worry it may also driwe book lovers to Amazon.com Inc., market, which is forecast to keep growing which says its physical book sales are still growing, What will the future boll Win HAN be able to Nolore closing continued to outpace now store any and the devices made by third-party manufacturers. Barnes & also expanded its store space for toys and games, which Noble will continue to design and make its own black- have higher profit margins, while reducing the range of and-white Nook e-readers, which account for the book titles it stocks. There are also plans to experiment majority of its e-book sales. But with e-reader sales with slightly smaller stores in malls. Although that declining, it is unclear how competitive Barnes & Noble strategy is boosting the company's bottom line, publishers can be long term without its own presence in the tablet worry it may also drive book lovers to Amazon.com Inc., market, which is forecast to keep growing, which says its physical book sales are still growing, B&N retail store closings continued to outpace new store What will the future hold? Will B&N be able to openings as had been the case since 2009. CEO Michael succeed as a digital company and is there a future for its Klipper projected a net reduction of one-third of B&N's brick-and-mortar stores? Is there a way for e-books to help stores over the next decade, reducing the total by about 20 sell print books, just as print books have stimulated stores per year until between 450 and 500 remain. demand for their digital versions? Although B&N has While B&N has its back against the wall, it does have a made a spirited effort to revamp its business and go toe- multipronged strategy for survival. It fnces a principal to-toe with several tech titans, it's possible that it might be opponent with an estimated value 121 times higher than too tall an order for the storied bookseller. its own (B&N has a market capitalization of $1.062 billion; Amazon's is $121.5 billion). But it also has allies. Source Jeffrey A Trachtenberg. How to Re Barms & Noh Here are de fruenire perts." Wall Street Journal Huly 1, 2013 Lux Kafen, Terms & Publishing companies have a vested interest in B&N's Noble Rethinks its Susty for the Noel," New York Times, bary 21, 2013, Tom survival. Physical book retailers are indispensable for Gara, "Has & Noble Surs Are Bad, Dot E-Books Are Worse," Wall Street effectively mad pasting and selling books, Bookstores spur Journal, February 28, 2013, Jeffrey A Trachtenberg. "BAN Alma Te Whistle Son Yw Years." Wall Strelleuary 21, 2013. Horce Dediu, Apple publisher sales with the browsing effect." Surveys show inos 296. Worldwide Shook Market Share One Analyut Thinks so." Dil that just one-third of bookstore visitors who make a Book World, February 28, 2013, Michal De La Mored and Julie Bomas, "Microsoft Deal Add to Bastle woods. The New York Times, May 1, 2012, purchase walked in with a specific book in mind. Shine Ovide and Jeffrey A. Trachtenberg. "Microsoft Hooks Omo Nook." The Wall According to Madeline McIntosh, Random House presi- Street Journal, May 1, 2012, Julie Hote, "The Bookstore Last Stund." The New York Ti, January 29, 2012, Paul Vign, Boks, Apple, Amazon The Deadly dent of sales, operations, and digital, a bookstore's display Hallows for Publishers, The New York Times, April 11, 2012. Ba X Ches, space is one of the most valuable places that exists for "Barns & Nobles Apps to Lure Customers into Store," The New York Times, communicating to the consumer that a book is a big deal. ary 27, 2017. Atir, Alexandra, "lowing up the book The Wall Street JoelJumaty 20, 2012: Jim Millio, Tracking 20 Years of Bookstore Chain." Brick-and- mortar retail stores are not only essential for ber's Way At 16, 2011, and Jeffrey A. Teacher and Martin Teen selling physical books, but also stimulate sales of e-books "Barnes and Nobile The Next Chapter The Wall Street Journal, anary 6, 2011 Company History Timeline which led to the problem if necessary Any other fact or figure important for introducing the company. Identify and describe all the problems faced by the company You can bullet point the problems (with description) . . Solutions taken by the company to solve the above mentioned problems Your recommendations based on above analysis of the solutions CONCLUSION (15 Points) Conclusion of the case study Summarize the above text in few sentences 112 100% + BUSINESS PROBLEM SOLVING CASE Can This Bookstore Be Saved? Borders Group (including many former Waldenbooks While publishers fretted that readers would be recon- rebranded as Borders Express) liquidated its assets and ditioned to devalue the worth of the printed word and closed all of its locations in the second half of 2011. The that offline stores would be strained to their limits previous year had already seen the demise of B. Dalton, discounting print books to compete, B&N scrambled. It a Barnes & Noble subsidiary since 1987. Since 1991, took until July 2009 (two months after the Fictionwise eleven major U.S. bookstore chains have been whittled purchase) to finally unveil B&N's e-bookstore. Its Nook down to six, and nearly 3300 stores to just over 2200 in c-reader was released in October, again more than two 2011. years behind Amazon. Ironically, as early as 1998, B&N Still in the lead after over 20 years of domination, had partnered with software companies such as Nuvo Barnes & Noble was often painted as the bully, driving Media to develop a prototype e-reader called the Rocket, both regional chains and small independent bookstores but it had nixed the project in 2003 because there didn't out of business with its aggressive pricing tactics and appear to be any money in it. Now it had to hustle to unbeatable inventory. Before e-commerce reshaped the refashion itself as a seller of e-books, e-readers, and apps landscape, its superstores forced smaller rivals into to enhance the reading experience "most titles offered" wars. As smaller chains struggled Critically well-received, the Nook began to scrape to keep pace, support from publishers was not forth market share from the Kindle when it sparked a price coming. This short-term, bottom-line strategy would war a year later. Dropping the price from $259 to $199 come back to haunt publishers and releasing a Wif-only model for $149, B&N took B&N kicked around the idea of selling books online, wim at the giant, Amazon quickly countered by slashing experiments with Trinter, a 1980. Web retail proto the Kindle to $189 eight hours later and releasing the type, selling books on CompuSery in the mid 1990s, and WiFi-enabled 30 Kindle within a month, again at $10 opening an online shop on AOL However, it was not below the Nook until 1997, fully two years after the arrival of Amazon. With titans such as Apple iPad) and Google (origl that it launched its first Website Data from numerous nally with the River Story and in 2012 with the Nexus emerging e-commerce markets now verifies that books 7) providing additional competition, the tables had been are an ideal initial product to draw first time buyers turned on the former bookstore baron Will B&N be able H&N was already behind the curve to survive against these tech giants Amazon, launched initially as an online bookstore The awer remains to be seen. He was the only best hekseller with the sources to complete the consider Amazon, launched initially as an online bookstore, The answer remains to be seen. B&N was the only upended the titles war. While B&N might be able to bookseller with the resources to complete the consider- offer over 200,000 titles in its bricks-and-mortar stores, able task of developing an e-reader, marketing it, and Amazon offered an inventory limited only by publisher setting up manufacturing and retail operations for the availability. Shrewd financial moves, including selling device. Its closest competitors were already succumbing 50% of its Internet operation to German giant Bertels- to the contraction of the chain bookstore market, victims mann in 1998, kept B&N in the game. It established a of both B&N and the e-commerce revolution. Books-A- new industry standard of 750,000 titles on-hand and Million, with approximately 250 stores compared to bragged that it could procure over 8 million new, out-of- 1,363 (689 retail and 674 college) for B&N, is its closest print, and rare books for customers from suppliers. remaining competitor. However, Amazon continued to trump B&N on innova- While B&N still depends on its physical, brick-and- tion. When B&N launched its online music store in mortar stores to drive its business, the e-book market is 1999, several months after taking barnesandnoble.com a horse of a different color. The economics of e-book public and refurbishing its cash reserves, it was again sales are very different from traditional book sales. playing catch-up with Amazon, which had pioneered the Customers who visit B&N's Web site buy three digital concept a year earlier. books for every one physical book, but booksellers still In early 2009, when B&N purchased Fictionwise, one make more money on print books than e-books. And of the biggest electronic book proprietors in North while having a competitive e-reader seemed essential to America, it was again behind the technology curve. successfully vying for market share, it came at a steep Amazon had already unveiled its Kindle e-reader sixteen cost. Moreover, it is not the pivotal factor in controlling months earlier. What's more, Amazon would offer New the e-book market. Content is. York Times bestsellers and other popular e-books for Since the price war, the reality is that in order to less than $10. compete with Amazon, e-reader hardware must sell at or near cost, with profits derived from the sale of digital and audio books, bring traffic into malls, and serve as content, including e-books, music, videos, apps, and social gathering places. The more visibility a book has, games. Once Amazon had wrung all the profit it could the more likely readers will want to purchase it. With the from Kindle hardware, it quickly maneuvered into demise of B. Dalton, Crown Books, and Borders, B&N is adding apps and app features and aggressively pursuing the only retailer offering an extensive inventory of phys- a cross-platform strategy. It began marketing its e-booksical books. Book publishers need a physical presence for tablets, smartphones, and PCs using Android, Without B&N, the likely candidate to fill the void is Windows, and OS X operating systems. Moreover, Amazon, and publishers are not eager for that to happen. Amazon, along with Apple, and another competitor, Amazon's goal for e-books is to cut out the publishers and Kobo, are global competitors; B&N is not. publish books directly, selling books at an extremely steep Despite spending hundreds of millions of dollars to discount to drive sales of its kindle devices. Editors, compete with Amazon.com Inc. and Apple Inc. in the publicists, and other entities within the publishing busi: market for tablets and e-readers, B&N continued to lose ness view Amazon as an enemy. Selling books at money on the Nook, as well as e-book market share. Amazon's discounted prices is not a tenable business Analysts estimated in 2011 that B&N controlled approxi- model for publishers in the long-term. mately 27% of the U.S. digital book market while If B&N is to survive it must capitalize on its profitable Amazon led with 60%. Since then, Amazon has held retail stores, dovelop small, local community-based shops, steady, and B&N has steadily ceded ground to Apple. expand digital content, lead the digital education market, B&N's digital book market share has dropped to 25%, and and develop marketing techniques to drive e-book readers is still filling to purchase print books. B&N has been experimenting On June 25, 2013 B&N announced that losses at its with ways to drive traffic to its physical stores. For Nook digital business more than doubled in the quarter example, if you connect to a Wi-Fi network in a B&N ending April 27, 2013, wiping out profits generated at its store with your Nook, you can get free extras in many bookstores. As a result, the company decided to stop apps and games like Angry Birds, where you can unlocka producing its own color tablets in favor of co-branded bonus character that normally costs a dollar B&N has dey'ses made by third-party manufacturers. Barnes & also expanded its store space for toys and games, which Noble will continue to design and make its own black have higher profit margins, while reducing the range of and white Nook ereaders, which account for the bxiok titles it stocks. There are also plans to experiment majority of its e-book sales, But with a reader sales with slightly smaller stores in malls. Although that declining, it is unclear how competitive Barnes & Noble strategy is boosting the company's bottom lime, publishers can be long term without its own presence in the tablet worry it may also driwe book lovers to Amazon.com Inc., market, which is forecast to keep growing which says its physical book sales are still growing, What will the future boll Win HAN be able to Nolore closing continued to outpace now store any and the devices made by third-party manufacturers. Barnes & also expanded its store space for toys and games, which Noble will continue to design and make its own black- have higher profit margins, while reducing the range of and-white Nook e-readers, which account for the book titles it stocks. There are also plans to experiment majority of its e-book sales. But with e-reader sales with slightly smaller stores in malls. Although that declining, it is unclear how competitive Barnes & Noble strategy is boosting the company's bottom line, publishers can be long term without its own presence in the tablet worry it may also drive book lovers to Amazon.com Inc., market, which is forecast to keep growing, which says its physical book sales are still growing, B&N retail store closings continued to outpace new store What will the future hold? Will B&N be able to openings as had been the case since 2009. CEO Michael succeed as a digital company and is there a future for its Klipper projected a net reduction of one-third of B&N's brick-and-mortar stores? Is there a way for e-books to help stores over the next decade, reducing the total by about 20 sell print books, just as print books have stimulated stores per year until between 450 and 500 remain. demand for their digital versions? Although B&N has While B&N has its back against the wall, it does have a made a spirited effort to revamp its business and go toe- multipronged strategy for survival. It fnces a principal to-toe with several tech titans, it's possible that it might be opponent with an estimated value 121 times higher than too tall an order for the storied bookseller. its own (B&N has a market capitalization of $1.062 billion; Amazon's is $121.5 billion). But it also has allies. Source Jeffrey A Trachtenberg. How to Re Barms & Noh Here are de fruenire perts." Wall Street Journal Huly 1, 2013 Lux Kafen, Terms & Publishing companies have a vested interest in B&N's Noble Rethinks its Susty for the Noel," New York Times, bary 21, 2013, Tom survival. Physical book retailers are indispensable for Gara, "Has & Noble Surs Are Bad, Dot E-Books Are Worse," Wall Street effectively mad pasting and selling books, Bookstores spur Journal, February 28, 2013, Jeffrey A Trachtenberg. "BAN Alma Te Whistle Son Yw Years." Wall Strelleuary 21, 2013. Horce Dediu, Apple publisher sales with the browsing effect." Surveys show inos 296. Worldwide Shook Market Share One Analyut Thinks so." Dil that just one-third of bookstore visitors who make a Book World, February 28, 2013, Michal De La Mored and Julie Bomas, "Microsoft Deal Add to Bastle woods. The New York Times, May 1, 2012, purchase walked in with a specific book in mind. Shine Ovide and Jeffrey A. Trachtenberg. "Microsoft Hooks Omo Nook." The Wall According to Madeline McIntosh, Random House presi- Street Journal, May 1, 2012, Julie Hote, "The Bookstore Last Stund." The New York Ti, January 29, 2012, Paul Vign, Boks, Apple, Amazon The Deadly dent of sales, operations, and digital, a bookstore's display Hallows for Publishers, The New York Times, April 11, 2012. Ba X Ches, space is one of the most valuable places that exists for "Barns & Nobles Apps to Lure Customers into Store," The New York Times, communicating to the consumer that a book is a big deal. ary 27, 2017. Atir, Alexandra, "lowing up the book The Wall Street JoelJumaty 20, 2012: Jim Millio, Tracking 20 Years of Bookstore Chain." Brick-and- mortar retail stores are not only essential for ber's Way At 16, 2011, and Jeffrey A. Teacher and Martin Teen selling physical books, but also stimulate sales of e-books "Barnes and Nobile The Next Chapter The Wall Street Journal, anary 6, 2011 Company History Timeline which led to the problem if necessary Any other fact or figure important for introducing the company. Identify and describe all the problems faced by the company You can bullet point the problems (with description) . . Solutions taken by the company to solve the above mentioned problems Your recommendations based on above analysis of the solutions CONCLUSION (15 Points) Conclusion of the case study Summarize the above text in few sentences