Describe the history and core business of each company.
Traditional book stores have been around for ages. Evidently, public libraries and private stores like Barnes and Nobles, Waldenbooks, and of course Borders are often the main places where people go to purchase or borrow their books. Nowadays, with the rise of technology, many more options are available to readers. For instance, we now have the choice to go online to look for volumes we might want to read or buy; thus, one of the leading companies captivating the attention of many is Amazon which alone with Borders constituted two of the most prolific book organization in America.
According to research, Borders started in as a small used bookstore in Ann Arbor, Michigan by Tom and Louis Borders who initially intended to help supplied academically the University of Michigan (Borders Group Inc., 97). Over the years, after several movements and stores being opened, the company was acquired in 1992 by K-Mart which happened to own the chain of Waldenbooks as well. Unfortunately, the relationship did not last long because three years later Borders book became 100% publicly owned and still conducting business that way (Borders Group Inc., 97).
Meanwhile, propel by electronic commerce, Amazon which started in 1995 is considered the pioneer of online book selling (Press, 2004). Being the first internet retailer securing one million customers, Amazon, kept on progressing as the years go by. It got into the music and video business in 1998 and acquired some companies in England and Germany that same year; started to sell toys, electronic tools, and hardware in 1999; and finally, made some profit in 2001 (Press, 2004). 2- Compare and contrast the management approach each took to Internet marketing and sales. Most people would agree that a company’s success or failure has a lot to do with the way they conduct their business from top to bottom. For instance Henri Fayol, a managing director of a large steel company stated the following, “The success of an enterprise generally depends much more on the administrative ability of its leaders than on their technical ability (Williams, 2010).”
In this regard, it is important to try to understand the management approach of Borders and Amazon.com. The principle surrounding Borders’ success is due to its roots as an independent company focusing on strong educational values. First and foremost, Borders target a wide and complete variety of books and titles appealing to real readers and buyers (Borders Group Inc., 97). In addition to the comfortable setting allowing readers to enjoy their visit, its customers would find actively marketed document allowing them to always have an upgraded view of things. Secondly, the company shows its flexibility by trying to accommodate its environment (Borders Group Inc., 97). For instance, the setting of a store located near colleges may not be the same as that of an elderly neighborhood because of the fact that their interests are totally different. Lastly but not least, servicing the customer to the utmost has been the company’s motto.
Thus, being proactive and responsive propels Borders’ management to be very successful despite the company’s previous set back. On the other hand, Amazon.com started its business online meaning their initial approach is to reach everyone. Despite not being profitable for more than five years, the company continued to invest in infrastructures. For instance, over $750 million were spent in state-of-the –art material in order to handle many new distribution facilities’ systems in the United States with similar investment to come in Europe (Amazon.com inc., 2000). Evidently, this is an approach of spending money in order to make more (Amazon.com inc., 2000). Also Amazon.com believes in personalizing its online stores to be exclusively set to meet each customer’s need. With that in mind, each customer is able to create his or her own virtual store according to interests, and needs.
As far as solving certain problems like recommendation, the company uses the following algorithm approach: traditional collaborative filtering, cluster models, and search-based methods (Linden, Smith, & York, 2003). 3- Analyze 3 reasons for Amazon’s success despite not turning a profit for the first five to six (5-6) years. Successful companies often use similar strategy to captivate and maintain their customers. Thus, major online companies like Amazon.com provide their clients the type of products and services envision by many. Amazon.com remains attractive despite the lack of profit for more than half of a decade. Its user friendly website is one of the reasons for such success where customers don’t need to beat themselves up in order reaching their destination (Hogan, 2011).
Furthermore, the search engine allows customers to sort their request accordingly and find what they are looking for quickly. Another reason for such success would be attributive to the payment system used by Amazon (Hogan, 2011). Users are enchanted to know that most form of electronic payments are accepted on the company’s site and can easily be cancelled (Hogan, 2011). Being a thriving organization may not easy; however, with good work ethic, great method, and dedication, it is hard not flourish even in today’s economy. 4- Discuss 3 reasons Borders, although initially successful and profitable, ended up in Chapter 11.
The current world economy has affected many businesses. Chapter 11 of the bankruptcy code would be viewed as a way for a company to restructure itself by having some kind of agreement with its creditors which is monitored by a court (Moran Law group, 2008). The series of events causing the reorganization of Borders started back in 2001 when the company decided to enter a partnership with Amazon.com. In quest of an effective business online, Borders decided to allow its customers to purchase books from amazon.com which basically controlled everything (Norris, 2011). The relationship escalated internationally where Borders and Books teamed up this time with amazon.co.uk in 2004 (Norris, 2011). Unfortunately for Borders, Amazon had the control of both its customers and Borders’ (Norris, 2011). Therefore, there was no reason for Amazon to encourage or promote relationships for Borders.
Also, the company despite having a free membership could not compete with the like of Barnes and Nobles and Amazon.com. Even tough, those other two companies charged $25 and $79 for their respective memberships, customers felt that they were well taken care of and they could get whatever they need contrarily to Borders’ (Norris, 2011). Lastly but not least, Borders’ Sony reader was not well connected with the customers (Norris, 2011). The association with its manufacturers was never in sink. Comparatively to the Nook released in 2009 by Barnes and Nobles, the Sony reader has been around since 2006 with limited knowledge of the e-book business.
That is the reason why, the device did not look appealing to many (Norris, 2011). 5- Discuss the extent to which the management of each company adapted to changing market conditions. Change may be extremely challenging for any company in pursuit of prosperity. Evidently, management needs to be very proactive by considering all the factors or obstacles surrounding the existence of a business. Certain things like economic set backs, technological advancement, are inevitable. With the globalization of business, it is imperative for an organization to show its strength pertaining to adapting with new ways of life.
Research states, “The purpose of adaptive strategies is to choose an industry-level strategy that is best suited to changes in the organization’s external environment (Williams, 2010).” As far as Borders is concerned, its management team was not ready for the 21st century. It took them too long to establish the online presence with Amazon.com which may not even make a difference considering the fact that Borders had no shot at building relationship with its customers. The e-commerce world was apparently too much for Borders and the competition was already a few steps ahead. According to research, “Borders was slow to adapt to the changing industry and lost book, music, and video sales to the internet and other competition (Msnbc.com staff and news service reports, 2011).”
Meanwhile, being an already establish online company made easier for Amazon to remain competitive. Indeed, its management just had to keep being vigilant and practical by continuing to achieve both the awareness and the loyalty of its customers. Contrarily to Borders, Amazon always remains positive and innovative. For example, Amazon is building for the future by spending a lot of money in creating new infrastructure for a better future (Amazon.com inc., 2000). 6- Recommend 3 ways a company should build in flexibility to back up its decision-making process so as to adapt to changing market conditions.
The importance of building flexibility to back up a company’s decision-making is extremely vital to its existence. An organization is often measured by its competitiveness, its dynamicity, its turbulence, and its complexity (Brown, 2011). Often time, a decision may not be the right one for a company; therefore, adjustments must be made in order to fix the problem even when it may pertain to bend a little the company’s policy and procedures (Noble, 2007). For instance, if a company’s policy is not to smoke in its premises causing lost business. It would not be a bad idea to create a smoking section for those who wish to do so. In addition, exceptional measures can be taken on a case by case basis to fulfill the necessary (Noble, 2007). Finally, an organization must always allow itself to create new ways of being operational (Noble, 2007). Such initiative would often show positive results.
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