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Barnes and Noble

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Nicole Bradley

on 28 April 2014

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Transcript of Barnes and Noble

NYSE: BKS

Industry:
Services
Specialty Retail, Other

Vision

Company Overview
Strategic Group
The companies included in Barnes and Noble's strategic group include:
Amazon
iBooks
Books-A-Million

The variables to compare these companies on a strategic group map are price and availability.
Nicole Bradley, CEO
BUS 491

Barnes and Noble
It is the vision of the Company to be the best and most distinguished booksellers in the industry. With a focus on quality and customer service, Barnes and Noble blazes the way for the book selling market.
Mission
With over 700 retail stores and the largest online library of books, it is our privilege to provide books to all. Staying up to date with current titles and digital media, the Company simplifies the consumer experience with excellent service. Barnes and Noble remains loyal to its customers as well as its employees, placing value in each aspect of the Company.
Financial Objectives
Increased shareholder equity with a competitive EPS
Pay out dividends of $0.25 per quarter
Increase annual revenue by $100 million

Strategic Objectives
Being the first on the market with new titles
Continue to have a strong brand name
Sell and distribute books through every medium available
Cultivate technological advances in e-readers

Core Values: R.E.A.D.
R: Resourceful
The Company will utilize all available resources. We will work with our suppliers to ensure maximum productivity. We will provide tools for success for our employees. Finally, we will provide resources to our customers so that they may find what they are looking for.

E: Ecologically Sustainable
Being entrusted with book printing is something the Company is honored to do. We will continue to minimize our carbon footprint and move towards methods that keep the earth sustainable. Since we use paper to print millions of books, it is our duty to replenish what we have taken. Barnes and Noble will plant one tree for every 1,000 books it sells.

A: Accept
At the Company, we embrace both employees and customers of a wide variety of backgrounds. Our team would not be well-rounded if it were not accepting.

D: Defend
As book sellers and publishers, it is our job to defend our authors. At Barnes and Noble, we champion knowledge and creativity to bring books to the market.

Company Objectives
Barnes and Noble believes in setting attainable goals. Our short and long-term objectives determine our longevity as a corporation.
Macro-Environment
To assess the macro-environment for Barnes and Noble, it is necessary to examine the conditions of the United States.


Demographics
The target demographic is the United States population. 75% of the U.S. population is Caucasian. The median age is 35.3 years, and 65% of the population is between 20 and 64 years old. California and Texas are the most highly populated states, and New York City is the most populated city. 50% of households are married couples, and 25% of those households have children under 18. The most recent data shows that median household income is $50,054.
Social Forces
Over 75% of Americans identify themselves as Christian, while another 16% have no religion.
Political, Legal, and Regulatory Factors
Barnes and Noble must follow all labor laws identified by the U.S. Department of Labor.
Natural Environment
Severe weather conditions can affect distribution of books.
Technological Factors
With the Internet boom of the last decade, retail stores have been moving online in vast numbers. Companies that do not have a strong Internet presence have not survived. Digital media downloads also affect the market for selling books.
Global Forces
The U.S. dollar has an unfavorable exchange rate.
General Economic Conditions
The U.S. unemployment rate is at 6.7%, and consumer confidence is at 82%.
Five Competitive Forces
1. Competition from rival sellers:
Amazon, local and regional booksellers
2. Competition from potential new entrants:
Self-publishing authors
3. Competition from substitute products producers:
Kindle, iPad, e-books, digital downloads
4. Supplier Bargaining Power:
BN has acquired publishing firms, so it has strong supplier bargaining power
5. Customer Bargaining Power:
Price matching books
There is strong competitive pressure in the first three competitive forces.
Price
Availability
Amazon
BN
BAM
iBooks
Strategic Group Map
High Price
Low Price
High
Low
SWOT Analysis
Internal Strengths
Internal Weaknesses
Market Opportunities
External Threats
Strong management team
Largest network of brick-and-mortar bookstores
Largest online bookstore in the United States
College bookstores
Successful partnership with Starbucks in physical stores
Cost of running physical stores
Membership costs deter customers
Expensive books
Expand internationally to build global presence
Hold events in stores
Innovation
Not currently globally recognized
Decreasing need for brick-and-mortar shops
Companies that price match
Value Chain
Five Generic Strategies
Low-Cost Provider:
Striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers
Broad Differentiation:
Differentiating the firm’s product offering from rivals’ with attributes that appeal to a broad spectrum of buyers
Focused Low-Cost:
Concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced product
Focused Differentiation:
Concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members
Best-Cost Provider:
Giving customers more value for the money by offering upscale product attributes at a lower cost than rivals

Within the specialty retail industry, Barnes and Noble will remain focused on a specific buyer’s need. While focusing on providing the best titles and works out there, it is differentiating its product from its rivals. Therefore, it only makes sense that Barnes and Noble’s generic strategy is Focused Differentiation. Since Barnes and Noble keeps over 700 physical stores throughout the United States, it would be very difficult to compete based on a lower cost. By differentiating its product to a specific niche market, it is giving itself the best probability of success.
Focused Differentiation
Offensive and Defensive Options
Offensive Options
Improve on the good ideas of other firms, such as Amazon.com
With the Kindle store on Amazon.com, it is simple to download books at the press of a button. Barnes and Noble should use this site’s idea to create a similarly simple online store.
Preemptive Strike:
Since a membership is required to receive discounts through Barnes and Noble, the store should provide a membership option to pay a certain amount each month, and get a certain amount of digital books for that one stable price.

Defensive Options
Fight back with the digital media devices and e-readers to make prices and products competitive.
Release new devices and models to gain a competitive edge in the e-reader market.

International Strategies
Multidomestic Strategy:
Varies product offerings and competitive approaches from country to country.
Offering different books and products in each different country. This method would be very costly and would be incongruent with company policy.

Global Strategy:
Employs the same basic competitive approach in all countries where the firm operates.
A global strategy would send all the same books to each country. This approach neglects different cultural and social needs of each country, as well as language differences.

Transnational Strategy:
Incorporates elements of both multidomestic and global strategies.
Provide books to different international sectors, change the language and some product availability when applicable “Think Global-Act Local”


Diversification
Related Business
Barnes and Noble has a long history of diversifying its assets in related businesses, which as the new CEO I would continue to do. While we have already entered the publishing business, the college textbook market, and other various segments of book selling, it would strengthen the company to continue to diversify this way. One related business Barnes and Noble would venture is related to technology. While Barnes and Noble’s key competitor, Amazon.com, competes solely on the Internet, BN continues to operate brick-and-mortar stores. It would be wise to expand more online so as to broaden availability and gain more market share for book sales. Therefore, BN would diversify and expand with the acquisition of a R&D Company to strengthen its technological capabilities.
Unrelated Business
An unrelated business that Barnes and Noble could enter would be other sectors of retail. By acquiring a company that produces clothing for example, Barnes and Noble could expand its product breadth and more people would be entering their stores for various goods.
It is more important for Barnes and Noble to continue to make strides in the bookmaking and selling industry to gain the strongest brand image and competitive advantage possible there. Therefore, BN should continue to diversify into related businesses.
Industry Attractiveness and Competitive Strength
Scope of Operations
Mergers and Acquisitions
Since Barnes and Noble is already a large corporation with a distinguished brand name and image, it would not make sense to merge with another company and take a new form. However, by acquiring rival firms Barnes and Noble can continue to grow its market share and wipe out its competition.
Vertical Integration
Since Barnes and Noble has already purchased a publishing company, it could vertically integrate by purchasing the factories where the books are physically printed. By doing this, they will have secured their position in making and selling books.
Outsourcing
Barnes and Noble could sell off its publishing business and go back to merely selling the books that are provided to them by other companies. However, with this strategy, they lose some of their say in what gets printed and the prices that they are able to charge become more out of their control.
Strategic Alliances and Partnerships
Barnes and Noble should create strategic alliances to make their products more accessible. By partnering with a company such as Microsoft, BN can create an application to market its books through the Microsoft tablet family. Since Kindle already has an application on the Apple store, it would be wise to make a similar move and partner with a technology company. This would help block a competitive threat from Amazon, and Microsoft would benefit as well by getting more customers to buy their tablets.
Corporate Social Responsibility
Code of Ethics
Code of Social Responsibility
Code of Environmental Sustainability
It is important for the Company and all of its subsidiaries to follow a strict code of ethics. These guidelines serve as a foundation for all employees from senior management to the cashiers at the stores.
Equal Employers: Barnes and Noble will not discriminate against any employees on the basis of age, race, gender, sexuality, religion, etc. It is important to have a diverse work force to ensure we are meeting the demands of each of our target demographics.
Harassment: Harassment is illegal and will not be tolerated by the Company. Any compromising situations will be investigated swiftly and thoroughly.
Legality: As a publicly owned and traded corporation, it is imperative that the Company remain legal in all of its business practices. The Company will not tolerate bribery, insider trading, blackmail, or any similar illegal activities.
Stakeholders: Barnes and Noble employees must think of the shareholders and stakeholders in the company with each business decision that is made.

Given the great responsibility of presenting knowledge in the form of books, it is important to ensure these works make it to everyone. To make this happen, Barnes and Noble has a guide for social responsibility to guide the actions of the Company.
Giving Back: The Company will donate books to underprivileged communities that we serve. It is important to provide the youth of the country with the tools they need for success, and Barnes and Noble prides itself on lending some of the necessary tools.
Charitable Contributions: Barnes and Noble will give out 5% of its earnings each year out in the form of charitable contributions.
Community Service: Barnes and Noble is happy to be a part of the communities in which we operate, and we want to give back what we can. Employees of all levels are encouraged to engage in community service.

Barnes and Noble strongly believes in protecting the environment to preserve the earth for future generations. To help play our part in preserving the environment, we have a code of environmental sustainability.
Planting Trees: In order to give back what we take from the land, Barnes and Noble will plant one tree for each 1,000 books that we sell.
Reuse: The Company will use recycled materials as much as possible, and encourage bookmakers to do the same.
Utilize Technology: Barnes and Noble will no longer give out paper receipts, but will instead email receipts to customers. We will minimize printed publications and newsletters and utilize all available technology to remain more environmentally friendly.

Staffing Requirements
Without a strong team, Barnes and Noble has no long-term future. It is imperative to combine leaders with a variety of skill sets to effectively plan and implement the security of the future of the company. Necessary positions include:

Strong executives comprised of:
CEO
CFO
COO

Diverse Management Team who will implement key ideas of the executives.

Staff who will effectively execute ideas and changes to secure the future of the Company.

Front line employees who carry out important daily functions of the business.

The Company also requires a Board of Directors since it is a publicly owned and traded corporation.

Core Capabilities
With its own publishing sector, Barnes and Noble has the capability of gaining exclusivity of novel selection.
By partnering with a technology company such as Microsoft, Barnes and Noble has the capability to expand its online selection.
Barnes and Noble has a strong management training program that retains key employees longer and cuts out dead weight.

Organizational Structure
Barnes and Noble will use a functional organizational structure with the CEO at the head. This centralized plan will ensure that the company as a whole is following the strategy that the headquarters prescribes. With competition tight in the industry, it is important that decisions are made quickly to stay competitive in the market.
Policies and Procedures
The policies and procedures of Barnes and Noble support the company’s strategic goals.

Attendance Policy:
Proper attendance is necessary to successfully complete tasks. Late arrivals and excessive absences will be recorded and investigated by Human Resources.

Incentives Policy:
It is important to recognize employees who go above and beyond to further the interests of the company. Therefore, an incentive policy is in place to encourage this behavior.

Open Door Policy:
With so many levels within our Company, communication between levels becomes more difficult. It is the goal of Barnes and Noble to eliminate some of this difficulty with an open door policy. Executives and managers of all levels recognize the importance of open discussion, and therefore have adopted an open door policy.

Promotion Policy:
When positions open up within the Company, existing employees will be given extra consideration.

Benchmarking
Total Quality Management
Company Culture
Healthy Culture
Management goals are congruent with the goals of the shareholders
Cultivating a safe environment for diverse employees
Following company policies and procedures
Fostering an environment of continuous learning and training

Unhealthy Culture
Executives and managers who do not listen to their subordinates
With the policies and code of ethics in place, it is the task of managers and executives to foster and encourage these actions. With incentives for exceptional service and ideas, it is important to actively search for employees displaying this and publicly thank them.
Nine-Cell Matrix
College Bookstores
The college bookstore division of Barnes and Noble remains to be very cost efficient and profitable. The Company will use this sector as a benchmark for performance within its retail stores.
Best Practices
Retail
Within the physical store locations, it is important for employees to use the company's best practices. The best practices will promote a work climate which is productive. Employees will receive a best practices handbook, which covers customer service topics as well as strategy execution.
From our corporate offices to a retail setting, it is important for the Company to employ TQM. Being in the specialty retail industry, it is the job of the Company to continue to make the Barnes and Noble experience a positive one. Therefore, on all levels, it is imperative to continue to strive for better results. Each department of the Company is an invaluable asset, and it is important to utilize these assets positively.
Conclusion
In conclusion, Barnes and Noble will move towards a Focused Differentiation Strategy with a Transnational International Strategy. Since we will not be competing based on low cost, it is important to make up for it with other benefits.

In order to remain competitive in the current market, Barnes and Noble will become more innovative in their product lines and we will form a partnership with a technology company such Microsoft.

Furthermore, Barnes and Noble will utilize its considerable advantage in the brick-and-mortar stores by hosting book signings and releases.

To properly execute this vision for the company, Barnes and Noble must strictly follow its vision, mission, values, and code of ethics to guarantee success. Employees must be properly trained and incentivized. A healthy culture is crucial to ensuring our success.
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