QUESTION 1

King Kong ltd (KL) is a small family run bookshop chain based in the capital city.it was first opened in 1991 and currently trades from more than 10 shops, on high streets, shopping malls and university campuses throughout the country. These shops rely almost exclusively on the sale of books for their revenue. Most customers are local residents, governments departments who by regularly and tourists (during a limited season in the year).Its reputation is built upon the motivated staff members .KL has always been proud of their wide range of stock, a policy adopted to attract a wide range of customers with a wide diversity of tastes in literature .If customers cannot find the book at an extra cost to the customer. The management team sees this as being a major advantage over their larger rivals.

Retail bookstores have changed radically in the country over recent years. Large national and international bookstores have gained control over the industry. This have achieved through acquisition of smaller independent bookshops and through diversification into new products (magazines , music ,computer games and food )In spite of this ,many customers still seem to prefer the more unique ,individual stores .Many independent ,small bookstores continue to operate successfully by focusing on local needs and ensuring a high qualityof customers .service.

Many of the surviving smaller bookstores are finding it difficult to defend themselves against the marketing techniques being used by larger chains. A number of smaller bookstores have started to sell music, newspapers and magazines and even offer refreshments inside the store. This seems to reflect the general trend to move away from the reliance on the sale of books only. In addition, many of the larger retail bookstores now offer internet sales through their websites and mail order delivery. Smaller independent bookstores are finding it hard to compete against this.

Customers in the country regard the BL stores highly, yet sales have fallen steadily over the past three years. Most of its current individual customers (70%) are over 35 years. All of its stores have a manager and assistants. These have considerable expertise in the book market and the stocks held by BL. On average, there are two (2) assistants per store. The company is seen to be traditional. Few current staff, apart from the younger family members, however are not interested in new developments and are very reluctant to change.

The company has recently obtained three (3) major supply contracts from virtual companies and the top management has felt that the time is appropriate for them to convert its existing information system into a new one and to integrate all its office activities. One of the main objective of taking this exercise is to maintain continuity of business plans even while continuing the progress towards e-governance.

There is little political influence in the industry, apart from the recent change in pricing regulation. This has allowed the sale of books in any retail business at a price determined by that business. There is a general disquiet in the industry about the dominance or large overseas chains entering the domestic market and selling at discounted prices. The industry itself continues to expand with the number of new bookstores openings increasing each year. The main growth in sales in these stores appears however, to be coming from sale of music, magazines, and computer games and in store food and drink outlets. The market is moving towards younger consumers who want more than just to browse books quietly in a bookstore. These customers also want to listen to music, be able to read magazines or have something to eat. The industry calls this "the complete shopping experience". All of the large chains have their own websites and on-line catalogue services. This allows customers to browse and order books, music and a variety of other related merchandise from the comfort of their homes.

In December 2019, a national research was carried out in order to compare BL against its national competitors (a total of 15 companies operate in the industry; 10 0f which belong to international companies). Other details of the findings from the national research are summarized in appendix 1, 2 and 3.

Required:

a) Using PASTEL, analyze the retail book industry, clearly identify the areas of main concern for AL.

(10 marks)

b) Explain the implementation strategies that may be used to change from an old system to a new system. (10 marks)

c) Assess the performance of BL against the other competitors in the national market. (16 marks)

d) Identify from above, the critical success factor/s, which should become the focus of attention at BL. (4 Marks)

[Total 40 marks]

Appendix 1

	King Kong	National competitors
2018	2019	2020	2020
	S000	$000	$000	$000
Sales revenue	2160	2040	1 836	51 750
Total operating cost	1 740	1 713	1 677	37 260
Net profit	420	327	159	14 490
Staff costs	699	735	771	7 080
Marketing costs	69	84	117	7 500
Refurbishment costs	18	18	18	3 600
Technology	*18	*27	*45	6 000

Technology costs consist mainly of expenditures for stand- alone personal computers, software to record stock and electronic cash registers.

Appendix 2

	King Kong	National Competitors
	2018	2019	2020
Sales mark- up%
Books	97	93	90	54
Magazines/ stationery products	-	2	7	14
Music	-	-	-	22
Other (food/ novelty items/toys)	3	5	3	10

Appendix 3

	King Kong	National competitors
	2018	2019	2020	2020
Individual customer profile:
0-20 years	3	3	6	24
21-30 years	27	21	27	153
31-40years	54	60	57	81
41-50 years	153	138	150	30
51+ years	63	78	60	12
Customer per week	2 820	2 754	2 520	51 750