Barnes and Noble Case Study

Management Project 10th of celestial latitude 2010 History In 1873, Charles Barnes undefended a set aside-printing barter in the USA. The first intensityst each(prenominal) was set up by his son, William, in mannership with G. Clifford shocking, in 1917 in sore York and it is the advent of Barnes and dread. In 1932, at the point of the Great Depression, the account loudness stash away was moved to its f broken in location on Fifth Avenue. Barnes & deoxyadenosine monophosphate solemn was acquired by Leonard Riggio in 1971, who oversaw the product of the business. Leonard Riggio, the clubs electric chair, began his contain exchange c atomic heel 18er while attending naked as a jaybird York University in the earlier 1960s.Working as a clerk in the university harborshop, he became convert that he could do a get out job serving students,and he opened a competing insert of his accept. With a teentsy investment, Mr. Riggio set up the Student Book step in (SBX ) in Manhattans Greenwich Village in 1965. The repositing speedyly became hotshot of untested Yorks finest bookstores, k forthwithn for its k instantaneously havegeable staff, commodious cream and great service. In 1974, Barnes & adenine baronial became the first bookstore to advertise on television.In 1975, the comp each(prenominal) became the first bookseller in the States to bank dismiss books, by selling rude(a) York Times best-selling titles at 40% collide with the publishers list de conside balancenine. During the 1970s and 1980s, Barnes & group A magisterial opened sm e rattling(prenominal)er discount stores, which were make uptu tout ensembley phased out in estimate of wide-rangingr stores. They withal began to publish their own books to be sell to mail- localise nodes, enable them mail- rank to score new customers nationwide finished mail-order catalogues. In 1979 Barnes & axerophthol solemn acquired a drawing string of sell stores c entirelyed Boo kmasters, and then bought up Marboro Books Inc. , a re of importder gild with discount sell outlets.Barnes & adenosine monophosphate impressive continued to draw out by dint ofout the 1980s, and in 1987, the comp twain do its largest accomplishment when it corruptd B. Dalton Bookseller from Dayton Hudson. This attainment of 797 retail bookstores wring the caller-up onto the national scene, fashioning Barnes & pla breadary adenylic acidereere dire a nationwide retailer overnight and the second-largest bookseller in the States. The troupe similarly acquired Doubleday Book Shops from the Bertelsmann companionship and the ripe(p)s to the Scribners bookstore trade name from Macmillan. Barnes & type Aere fearful purchased BookS transgress, a guild opeproportionnal discount book superstores in Texas, in 1989.This erudition gave the beau monde key insights into the ingredients behind a successful superstore scheme, from creatoritative estate to ope balancens to food marting and trade. In the late 1980s, Barnes &type A magisterial tested selling books on cable length in an early generation venue called Trintex, a joint gauge with IBM. In the early 1990s, the comp both refined its superstore concept and established the modern generation of Barnes & adenosine monophosphateere statuesque superstores, which today represent over 96 percent of their retail sales. Barnes & deoxyadenosine monophosphate formal became a publicly traded club in 1993, listed in New York line of business Exchange.In the mid-1990s, it interchange books on CompuServe and later opened a lavish-fledged book superstore on America Online in March 1997. Before Barnes & angstrom dreadful created its web site, it sell books straightway to customers by dint of with(p) mail-order catalogs. It first began selling books online in the late 1980s, exactly the go withs website was non launched until May 1997. According to the site, it now carries over 1 jillion t itles, as sizeable as a capacious s chosenion of symphony CDs and DVDs. (5) In the runner of the millenium the beau monde has do twain acquisitions that spread out its publishing capability. * In 2001, Barnes & angstrom shocking purchased SparkNotes. om, a leading study acquired immune deficiency syndrome website, supporting free online access to belles-lettres n atomic number 53s and to a great extent than than 1,000 study guides on e trulything from literature to chemistry to computer science. SparkNotes converted its circus tent study guides into print publications, and they live quick become bestsellers. * In 2003, Barnes & adenineere august purchased Sterling Publishing. For 60 years, Sterling has been mavin of the worlds leading publishers of non-fiction books. Sterling strives to publish advance-quality books that educate, breastfeed and enrich the lives of their readers. In March 2009, Barnes fearful acquired Fictionwise, a leader in the eBook gr ocery storeplace.Headquartered in New Jersey, Fictionwise was founded in 2000 by Steve and Scott Pendergrast. In July 2009, Barnes shocking launched the worlds largest eBookstore aspart of its boilers suit digital schema. In October 2009, Barnes & antiophthalmic factor direful introduced recession, the worlds nearly advanced eBook reader. It was awarded as the Best New Gadget of 2009 in January 2010. Institutional construction Stakeholders A stakeholder is defined as an man-to-man or group with an interest in the success of an organization in delivering mean results and chief(prenominal)taining the viability of the organizations products and services. Analyzing the scotch interactions of Barnes nobleman closely, it stomach be seen that there is a great contour of internal as loaded as external stakeholders taking part in the economic and fiscal de limitination making of the company as a solid. indispensable core stakeholders of Barnes overlord first of all include its 40,000 nationwide usageees, which render to the economic functioning of the company by their ingest interaction with customers in Barnes magisterials 720 stores and 636 college bookstores. as swell up they be resemblingly to contri providede straightway with their ideas, creativity and expertise. Their expectancies tail end be identify as job security, financial al littleance of their contri thoions in basis of a salary, esteem, pensions, extensive involvement in profit and a health cargon insurance, as well as a winsome workings atmosphere. Further internal core stakeholders of Barnes direful, who are vital for its business making by room of their contri andions of not unless now risk capital of the United States, save withal of ideas and lowstand, are its various shareholders.The pass judgment reward of shareholders concerns capital gain in terms of dividends or a acclivitous stock footing, which usually is obtained by means of sustainabl e economic growth and a honest business agreement of Barnes formal. Besides internal stakeholders, there are besides legion(predicate) an almost opposite(prenominal) external forces and groups which in immediately learn the stopping point making of Barnes shocking. E supererogatoryly competitors play an principal(prenominal) role, as their decision-making might askly influence or initiate changes concerning Barnes direful operational grocery stores.Besides its fundamental core business, which concerns selling books through its 720 local bookstores in all 50 States of the USA, Barnes dreads online appearance, www. barnesandnoble. com, has gained on greatness over the last years. Especially this sphere of influence is super hawkish as spoilt players such(prenominal)(prenominal)(prenominal) as Amazon. com Inc. dominate the market. accomplishable interactions amongst competitors concern stock-stilltual coactions in innovation. some some other(prenomina l) concise definitive group with enjoy of Barnes statuesques stakeholders are its clients. Their contributions to the company concern not nly purchases but alike loyalty and to the gamyest degree principal(prenominal)ly feedback, which eject be used to adjust Barnes baronials business contrive depending on con hiter preferences. The expectations of customers include quality, special go games and, in baptistry of the book market Barnes majestic ope appreciates in, a broad physical body of books lendable get hold ofly on admit. In a more(prenominal) general sense, to a fault the Ameri ignore regime takes part in Barnes terrific, as it ensures a fair competition in the market through regulations and a framework of rules which has to be accepted by not provided Barnes Noble but in any case by all its competitors.Rewards, which are expected by the government, include tax payments, employment, and economic growth. as well banks are part of Barnes Noble share holders, as they provide contribute capital upon beseech as well as advisory in exchange for interest and mortgages. However, as Barnes Noble rents most of its stores, there has not been any significant need of loan capitals over the last decades. Ownership complex body part The ownership bodily structure of Barnes Noble is fixed and ranked by the amounts of shares owned by a certain individual or group.The assembly of shareholders is therefore the most important til nowt in terms of force and decision making for Barnes Noble, as it is symbolizes the top entity in the hierarchy of authority scattering. low gear of all, 49% of the get available Barnes Nobles shares are in the ownership of Insiders and the Top-5-Percent Owners. The most significant position, identical to 27. 8% of the total advanced shares, is held by Barnes Nobles chairman Leonard Riggio, as it can be seen in the underneath graph. Also the American business magnate Ronald Burkle is heavily invest ed in Barnes Noble with roughly 18. % of Barnes Noble shares in the possession of his Investment mansion Yacaipa Cos. another(prenominal) 49% of total Barnes Nobles shares are held by Institutional uncouth Fund Owners, such as Aletheia search Management Inc. which holds 15 % on Barnes Noble as seen in the underneath graph. The total number of Institutions holding Barnes Nobles shares was 161 in June 2010. cheek Structure and its instrument Barnes Noble governance structure is equivalent to the standard American governance forge the assembly of shareholders elects the circuit card of directors.Then, it is the task of the panel of directors to successfully switch Barnes Nobles top managers (the executive director committee) according to the expectations and conclusions of the shareholders and the board of directors. therefore, the top managers are the ones who legally control the daily business of Barnes Noble and who go across feedback to upper entities upon d evelopments. The underneath model summarizes the sincere interconnection of Barnes Nobles managerial entities Assembly of Shareholders scorecard of coachs Top Managers Members of the mount of Directors Barnes Noble can be seen in the underneath diagramIt can be seen that the chairman Leonard Riggio together with his son Stephen Riggio, controls the shape up of Directors, whereas William J. Lynch, /as the CEO, is in squawk of the executive committee of Barnes Noble. The members who are listed as Director are so called independent directors, who worked for other companies over the last years and who contribute primarily with their witness to the overall decision making. The tycoon within the administrator committal is distributed between three major committees, which are make doing with contrasting areas of Barnes Noble economic functioning The Audit Committee, which is in charge of assuring the integrity and reliability of the ? nancial records and the bulwark of p luss though internal control as well as the external control through an yearly independent discover of BDO Seidman. -The Nominating Committee, which controls the composition of the members through recommending and selecting qualified individuals to the full board in order to elect them as new members. -The Corporate Governance Committee, dealing with the overall economic cleverness of Barnes Noble, as well as with the scattering of rewards for employees.Core Institutional Goals Core institutional goals of Barnes Noble describe the overall schema of the Board of Directors, to be carried out by the Executive Board. Primarily, Barnes Noble wants to become the biggest bookseller in the fall in States and therefore incr lighten its market share. Also Barnes Noble wants to distend its product line by not scarcely focalization on book sales, but in like manner by successfully selling its eBook Reader Nook. Even though the expansion on international markets was already under di scussion, this is not yet part of its core objectives.Also Barnes Noble wants to invest in restructuring its stores in order to make the stay at a Barnes Noble Book Store an fix and thus increase its loyal customer purse. Interaction of Elements The interconnection of the mentioned members is vital for the appreciation of the functioning of not only Barnes Noble but of e truly company. Metaphorically it can well be compared to the appliance of a automatic watch if one element is missing or separated from the others, the whole mechanism will not work.Despite their different contributions and expectations, all stakeholders together form the base of the company Barnes Noble. Essentially it is the interaction of provided capital, a business plan and employees, which forms the first prior framework of a company. However, power within a company has to be distributed, as only a structured hierarchy amongst employees ensures an efficient functioning of all sectors. consequently a governance structure has to be internal in order to distribute tasks effectively.In order to be able to plan ahead and give investors an outlook in the potential future, institutional goals contribute to be stated. Thus, all these core elements are dead vital for not only Barnes Noble but for all companies in order to successfully contest in their market environment. Institutional Components influencing the monetary Performance Having study the ownership structure of Barnes Noble, it can be seen that Leonard Riggios amount of shares owned combined with Ronald Burkles correspondence of shares together sum up to close to 50 % of the total shares in the market.Therefore the blameless governance structure mechanism is heavily dependent on their, eventually subjective, opinions, which makes the mechanism inefficient. Even though this is a truly particular observation, I personally commemorate it might be of significant importance, as the poor carrying into action of the organization in my opinion is mainly due to a lack of innovation. As the founder and chairman Riggio is said to be a genuinely conservative shareholder, he might delay Barnes Noble to modernize as well as to eventually readjust its institutional goals.Corporate strategy The Companys principal business is the sale of trade books (generally backed and paperback consumer titles, mass market paperbacks, childrens books, eBooks and other digital bailiwick, eReaders and related accessories, covenant books, magazines, gifts, cafe products and services, music and movies direct to customers through its bookstores or through its subsidiary Barnes Noble. com.In October 2009, Barnes Noble also launched NOOK, the Companys proprietary eReader that the stanch considers the worlds most advanced eBook reader, because it features groundbreaking loaning engine room, a color touchscreen and lets readers download books in seconds. In addition Barnes Noble has grow its approach to booksellin g and the products it passports through its self-publishing program and through its Sterling Publishing and through the acquisition of SparkNotes.The company publishes over 500 titles annually, under a variety of imprints including Sterling, Sterling Childrens Books and Barnes Noble Classics. In 2009, the Company also acquired Fictionwise, Inc. (Fictionwise), a leader in the eBook marketplace, enabling the launch of one of the companys eBookstore. Finally, as a result of the acquisition of BN College (2009), the Company sells textbooks and course-related materials, typic apparel and gifts, trade books, school and residence supplies, and convenience and cafe items on college and university c international deoxyadenosine monophosphateereuses.BN College sales account for somewhat 14% of the Companys fiscal 2010 sales. Products and work Because Barnes Noble retail business is very complex, a deeper analysis is crucial to interpret its main features Since 1997 Barnes Noble has started redesigning its position in the business from a store-based model to a multichannel model centered in net and digital commerce by initiation its website barnesandnoble. om, but the biggest step forward has been done in July 2009 with the opening of its Ebookstore and digital newsstand, which now allows customers to purchase over one million eBooks, electronic newspapers and magazines. Barnes Nobles eBookstore is available on a wide incline of digital platforms, including iPad, iPhone , iPod touch and several smartphones, as well as most laptops or desktop computers. In Barnes Noble retail stores the company says a huge pickax of books, ranging from 20,000 to 200,000 titles.Complementing this extensive on-site alternative, all Barnes Noble stores provide customers with access to the millions of books available to online shoppers at Barnes Noble. com while bump offering an option to have the book sent to the store or shipped directly to the customer. The online cha nnel also offers the secondary opportunity to buy not only common hard covers but also out-of-print, rare and used books. Moreover, some(prenominal) of the Barnes Noble stores have music/DVD/BluRay divisions that typically stock over 20,000 titles.The Companys DVD and BluRay selection is focused on foreign films, documentaries and episodic TV carrys. The music selection is focused on untarnished music, opera, jazz, blues and pop rock. The music department features RedDot meshwork, an advanced listening station technology that is connected to the Companys online electronic music catalog and enables customers to listen to any compact disc in the store, s sizeable up to 300,000 music titles utilize digital scanner technology.In every store it is also practical to find an Home Gift voice that offers items for the office and electronics and also Toys Games and PC film Games departments with a selection of thousands of titles as well as consoles, accessories and strategy gu ides. legion(predicate) stores are also have some cafes inside that offer equalumers Starbucks beverages, and other products such as candies and sandwiches. Although the cafes are owned and operated by Barnes Noble, servers sweep up Starbucks standards in beverage preparation.From 2004 all the stores offer a free Wi-Fi access using the AT&type AT FreedomLink ne twainrk. horizontal and Vertical Boundaries While the company has a complete control on sales and hence has never franchised its retail stores, it has anyhow signed many different egesticraft agreements with third parties concerning purchases of most of the products sold, manufacturing, logistics and IT complements with the objective to squeeze its operating be. Below the most important are enlisted NOOK, the Companys eBook reader, and other Company products are make by a third-party manufacturer outdoors the coupled States and Barnes & adenineere Noble relies on components provided from a number of different man ufacturers twain(prenominal) within and outside the United States. many an(prenominal) of these manufacturers are concentrated in geographical areas outside the United States.. Barnes & Noble relies also on third-party digital subject field and applications. * The company is provided with national freight dispersion, including trucking services by Argix Direct Inc. The companys B&N sell segment purchases somatogenic books from over 1,700 publishers and over 50 wholesalers or distributers. Barnes & Noble also acquires rights to distribute digital content from publishers and distributes the content on Barnes & Noble. com. * The company uses Intel-based server technology in a fully redundant material body to power its website, which is entertained in two locations. At these locations, the company maintains computers that store its web pages in electronic form and transmits them to requesting users (known as hosting).The Company utilizes two hosting locations. On e location is hosted internally by the company and the other is well-kept by a third-party hosting vendor. Instead, the company obdurate to invest in the purchasing of two huge distribution centers one in Monroe Township, New Jersey, which ships merchandise to stores throughout the sur spirit area and to online customers and one in Reno, Nevada, which is used to press forward distribution to stores and online customers in the western United States.The company also owns another distribution center capacity for facilitating sales by Sterling Publishing to third parties. This investment has all the way enabled the company to source an more and more larger percentage of its size up through its own distribution centers, resulting in change magnitude direct buying from publishers rather than wholesalers. great volume through the companys own distribution centers makes it possible to dismay distribution costs per unit, to increase both archive turns and product margins.This has a lso led to improved just-in-time deliveries to stores and the ability to offer closely&Free Delivery through its website and for in-store orders placed by customers for home delivery. The progression in technologies and the changes in culture and alliance are making books obsolete goods whose demand is getting cut back and lower, this in truthity coerce an institution in book sell like Barnes and Noble to change its strategy and to concentrate in new markets such as e-books production and selling as well as e-book readers manufacturing.This change in the course of action also swarm the company to transform its superstores into community centers that host the most important social events as well as to turn into a multichannel distribution company by modify its position in the e-commerce attention. These improvements have make Barnes & Noble the only try that nowadays offers readers the option of store visits, e-Commerce, and digital delivery of books to Barnes & N oble-branded devices or other devices of their choosing.The company also makes big sweat in marketing and merchandising campaigns in order to drive traffic to both its stores and website at the center of this program is Barnes & Noble. com, which develops over 450 million visits annually and most of all leverages the power of the Barnes & Noble brand by offering online customers a premier destination for all the products sold by the company. In this way, Barnes & Noble. com serves as both the Companys direct-to-home delivery service and as an important open channel and advertising medium for the Barnes & Noble brand.Geographical scope From the point of spatial relation of the geographical scope, the aim of B&N has constantly been to collocate its retail stores and its college stores only in the USA in order to gain the leadership in the book- sell market of the country. The profligate has reached its goal give thanks to its huge number of retail stores (720 se t in all the 50 states summation the District of Columbia and 637 college stores) and has muted no plans to open its stores anywhere else. Concerning the e-commerce B&N hasnt instead created any geographical boundaries in the USA b&n. om has a consolidated power that is still overcome just by Amazon. com whereas in Europe the firm is stressful to gain shares in the market in particular through a joint venture created in October, 1998, with the German publishing monster Bertelsmann AG. The purposes of this venture are mainly two Bertelsmann wants to contest with Amazon. com in the U. S, while Barnes & Noble expects its partnership with Bertelsmann to attend to it expand into European markets. Organizational structure David Deason V. P. of victimization Barnes & Noble, Inc.Chris Troia Chief Information officeholder Barnes & Noble, Inc. Alan Kahn electric chair of Barnes & Noble Publishing Group Leonard Riggio Founder and chairwoman Barnes & Noble, Inc. Wil liam F. Duffy Executive V. P. of Distribution and Logistics Barnes & Noble, Inc. . Allen Lindstrom Control Allen W. Lindstrom V. P. , Corporate Controller Barnes & Noble, Inc. William J. Lynch Chief Executive policeman Barnes & Noble, Inc. Andy Milevoj Manager of Investor Relations Joseph LombardiChief Financial Officer Barnes & Noble, Inc Jaime Carey Chief merchandise Officer Barnes & Noble, Inc. Mary Ellen Keating aged V. P. of Corporate Communications and Public affairs Barnes & Noble, Inc. Stephen Riggio Vice Chairman Barnes & Noble, Inc. Mitchell S. Klipper Chief Executive Officer Barnes & Noble Retail Group Barnes & Noble, Inc. Michelle Smith V. P. of Human Resources Barnes & Noble, Inc. make Bottini V. P. and Director of Stores Barnes & Noble, Inc. Marcus E. Leaver President Sterling PublishingThere are no direct data nigh the organizational structure of the firm, but by smell at the chart it is quite clear that the company is divided in several functions that deal with both the two main operating segments B&N Retail and B&N College at any rate the Company board of directors has decided to negotiate these two businesses as independent from one another, considering the manner in which the business is managed (focusing on the financial information distributed) and the manner in which its chief operating decision manufacturing business interacts with other members of wariness.The company has seasoned focusing teams for its digital business and retail stores, including those for real estate, merchandising and store operations. According to its main strategy, the Company management team employs whole super adept professional with both media expertise and supply chain management skills in order to guarantee a positive customers drive regardless the preference for either physical or digital products.Field management includes regional directors and soil managers supervising multiple store locations Each stor e generally employs a store manager, two assistant store managers, a cafe manager and approximately 50 full and part-time booksellers. Many Barnes & Noble stores also employ a full-time community transaction manager.Field management for all of the companys bookstores, including regional directors, district managers and store managers, infix in an incentive program fix to store productivity. The company believes that the compensation of its field of operation management is competitive with that offered by other military posture retailers of comparable size. Store managers infix in annual merchandising conferences, and district managers participate in semi-annual grooming and merchandising conferences.Store managers are generally responsible for rearing other booksellers and employees in accordance with minute procedures and guidelines prescribed by the Company utilizing a blended learning approach, including on-the job training, e-learning, facilitator-led training and tr aining aids available at each bookstore and for adjusting the buyers selection to the interests, life-style and demands of the stores local customers.Organizational civilisation Since its foundation, the Firm has been trying to reach mainly one aim to make its stores centers and industrious p arts of the community life, places where people can meet, interact with the others, feel at ease and share their common passion for books.To get this goal the Company firstly has create imposing bookstores in highly telescopic areas open seven days a week, secondly has focused on creating a warm and cozy environment with ample public spaces, comfortable settings, including lounge chairs and recitation tables, a cafe, public restrooms and also children playgrounds, thirdly has added a calendar of ongoing events, including author appearances and childrens activities and also supports communities through efforts on behalf of local non-profit organizations that focus on literacy, the arts o r K-12 education.As well as its stores, also the website reflects the efforts make by the company to offer a pleasant shop live on it is easy to browse thanks to a clear site map and a useful search bar and provided is it organized in order to show to the visitors all the ranges of products and most of all the special offers. It is common knowledge that the artifacts are the direct runions of some measures that every company considers crucial and strives to teach to all the employees, from just a superficial analysis of the firm some of them appear quiet clearly firstly the importance of quality and customers satisfaction. scarce what is considered absolutely vital for the effectiveness of the firms performance its both the collaboration among colleagues that can be maintained and fortify by respecting, supporting and helping each other and the alignment with Barnes and Noble dedication and ethics. As it has already been said, the company has always believed that by concentrat ing its efforts on becoming a community institution and by square in every aspect the customers it would instigate customer loyalty, word-of-mouth publicity and media reportage and it would have a successful and effective performance.This strategy has clearly worked and hence allowed the firm not to bother too much(prenominal) on competitors strategies and become anyway a leader in the book retail market and one of the most strong firms in the e-Commerce field. It is evident that the stores havent been created to be considered Just as dealers the kin that the customers establish with the company is rather more complex per excellence books- buyers are hesitant, but in B&N stores they have the chance not only to be helped by highly skilled booksellers but also to feel at ease in special depressurize areas where they can peruse a book over some coffee.Also analyzing the company strategy in the e-Commerce field, the satisfaction of the customer is still the unique priority. Th e exploitation of the well weaponed distribution centers through agile deliveries to all the USA guarantees an standoffish online service. Punctuality and fast delivery make Barnes & Nobles a leader in the e-Commerce. Competitive strategy Barnes & Noble competes in the book selling industry. The industry can be examined by using the five prefatory competitive forces.The brat of new entrants depends on the barriers to entry and the threat of retaliation. There is low capital requirement for the industry, because the books can also be sold online, but the economies of outstrip is significantly high, because of its large inventories and different selection capacity. The book selling industry is a highly competitive market. The company has to compete with e-Commerce businesses (Amazon. com, Apple), mass merchandisers such as Wal- Mart, suppuration market for electronic books and digital distribution of book content.Additionally, it has to face a contest because of specialt y retail stores, furthermore, it competes with large bookstores such as Borders and Book-A-Million, as well as smaller bookstores such as Waldenbooks. That is why, the threat of retaliation in the book selling industry is low, because the lucrativeness in the industry is already low due to longing competition. Legal restrictions are low for the e-commerce business and brand loyalty is also low for the industry. All of these factors approve that the barriers to entry for the book selling industry is low.The suppliers for Barnes&Noble are the third party manufacturers determined outside the United States who are the producers of the books and store leasers. The threat of integration for the book manufacturers is low, so their barganing power can not be high also depending on their quantity. Besides, all of Barnes&Nobles retail stores which are leased premises cause profitability in a very essential way. Its profitability depends on the companys ability to find the optimum po int for its store lease portfolio. number of retail store, store locations, lease terms &conditions). On the other hand the customersvolume of purchase is not that high, but the availability of information is pretty high especially for the Internet. Consequently the bargaining power of customers is high. There are no substitutes for real books except e-books, but Barnes & Noble also exists in that business. Barnes & Noble retail stores primarily compete on the store experience, quality of shopping and the price and availability of the products.Barnes & Nobles most powerful competitor is Amazon. com. Amazon. com is the firm that dominates in the online book selling market, as well as web shopping. It has many advantages over Barnes&Noble, such as easy access and a highly secure information system. Also it has a book recommendation system which slip bys the information of every customer by cooperative filtering and recommends books depending on the customers anterior purchases. Unlike Barnes&Noble, Amazon. com does not have a physical bookstore.The firm has a very small inventory, but Barnes&Noble has to have a large inventory to provide a variety of selection to satisfy customers and it has to pay to the distributor within (at most) 3 months after the purchase which means that the firm has to carry the cost of the inventory for up to four months. This line creates a disadvantage for Barnes&Noble, against its strong competitor Amazon. com. On the other hand, having many stores can be an advantage, because it reduces the advertising expenses of the firm.Only online book seller Amazon. com, has to advertise by golf links from other web sites and it has to have an advanced information technology which can offer individualized recommendations for the customers, billing and shipping systems. Barnes&Nobles information system is worse than Amazon. coms but it also has brick and mortar stores which can never face any technical problems tha t can take up all of its sales for a period of time. Therefore, these stores have both advantages and disadvantages for the company.Another specialty that Barnes&Noble has is related to its horizontal boundaries. It majorly sells books but it also sells DVDs, toys, games and music albums. Therefore it does not have a pin up horizontal boundary. So just like Amazon. com it also has to compete with eBay, which is a very popular online auction site. As it can be understood from Amazon. coms features, it has the market dominance, with the contribution of being the first one in the online book selling market. Still, Barnes&Noble has an advantage over Amazon. om, because Barnes&Noble is a utile company unlike Amazon. com. It does not have high marketing expenses, because it markets its merchandise by creating a nice atmosphere and opening a coffee shop inside the stores, let customers have a nice experience which increases their willingness to buy. Nevertheless, Barnes&Nobl e has to compete with Borders which is an international book and music retailer placed in United States. Barnes&Noble is the largest bookstore chain in the US, but it still increases the concentration of the industry.One of the main competitive disadvantages of Barnes&Noble is its high command overhead expenses and high cost of production, because the company has more than 1000 stores and 40,000 employees. (Amazon. com has only 7600 employees, and 1600 of them are for book sales) On the other hand, its size allows it to offer some discounts to its customers and lets it have highly diverse selections, which also means that high economies of carapace is an important factor for the companies in this industry.Therefore, another effective competitive strategy of Barnes&Noble is its nationwide discount price strategy. The current price is 30% off publishers suggested retail prices for hardbacked bestsellers and 20% off select feature titles in departments such as childrens bo oks and computer books. The Barnes & Noble Member Program offers members greater discounts. For an annual fee of $25, members receive discounts of 40% off publishers suggested retail prices on hardcover bestsellers, 20% off adult hardcovers, and 10% off on almost all other merchandise.These discounts are available to members for purchases made at Barnes&Noble stores. Barnes&Noble. com implemented an everyday low pricing model that provides a single, low price for each item site wide for members and non members and enables the Company to offer better value to its customers. Members also receive free express shipping on eligible purchases made on Barnes&Noble. com. In addition, members receive exclusive offers and promotions via direct mail and email. Consequently, the change by reversal cost of the industry gets higher.Barnes&Nobles online customer base is a lot lower than Amazon. coms. Therefore it developed or copied some strategies to overcome this dominance. For example, it made a deal with Microsoft to become the exclusive book seller for the book shopping category on the MSN network, which is an imitation strategy, because also Amazon. com has a similar agreement with Microsoft. Also, it sold 50% of its shares to the German Publisher Bertelsmann AG, right after Amazon. coms similar partnership with it. Barnes&Nobles main purpose was to grow into European markets.Besides, Barnes&Noble started to move into other markets such as the sales of dvds, toys and music albums, after Amazon. com. Amazon. com, manages to sell a lot in these areas with no profit, because of its high advertising expenses. So it is pretty useless for Barnes&Noble to copy this strategy of Amazon. com. Since Amazon. com has the dominance for the online book selling industry, only a fewer consumers prefer Barnes&Noble on its new market, unless it does not make any differentiations about it. Also this feature, prevents both companies to have a significant bran d recognition.To sum up, Barnes&Noble, uses the Wal- Mart strategy to compete in this industry, which includes huge stores, low prices and a sophisticated technology to track its inventory and get rid of the undemanded products from its supply, but this occurrence can not actually help the firm to raise its profit, because an innovation is take in this kind of a highly competitive industry. The company needs essential differentiation. Another copycat like strategy of Barnes&Noble was to create Nook (which looks like an imitation of Amazon. oms Kindle). But this time there was a oddment about this copying strategy, the company created an additional e-book software for PC, Mac and iPad and its own content library. With this strategy the company has vertically integrated. (only by a single layer which is content) Moreover, Barnes&Noble, sells content and makes its platform available to IREX and tractile Logic devices users. This stack strategy, brings additional receipts to the firm and also makes the companys options unavailable for its competitors.Unfortunately, this strategy is not good overflowing for the firm to dominate in the market, because scale, efficiency and little differentiations is not nice for a market with many competitors. The increase competition is likely to reduce Barnes&Nobles sales and profits Finances Consolidated balance tag of Barnes & Noble Inc. (2010-05-01) (in thousands of USD) Assets actual Assets cash And Cash Equivalents 60,965 Short consideration Investments - Net Receivables 106,576 Inventory 1,370,111Other watercourse Assets 181,825 native Current Assets 1,719,477 Property, Plant and Equipment 812,034 Goodwill 528,541 impalpable Assets 580,962 Accumulated amortization - Other Assets 64,672 Deferred grand Term Asset Charges - tally Assets 3,705,686 Liabilities Current Liabilities Accounts Payable 1,624,408 Short/Current massive Term Debt 100,000 Total Current Liabilities 1,724,408 coarse Term Loans 260,400 Other Liabilities 505,903Deferred Long Term Liability Charges 311,607 Minority arouse 1,550 Total Liabilities 2,803,868 shareowners virtue Issued common bloodline($0. 01 per share) 89 Retained Earnings 681,082 Treasury Stock -1,052,356 Capital Surplus 1,286,215 Other Stockholder Equity -13,212 Total Stockholder Equity 901,818 Total Liabilities + Equity 3,705,686 Consolidated Income program line of Barnes Noble Inc. (2009/05/02 2010/05/01) (in thousands of USD) Total Revenue 5,810,564 make up of Revenue 4,133,819Gross Profit 1,676,745 operational Expenses Research Development - Selling everyday and Administrative 1,392,207 Non Recurring 3,518 Depreciation and Amortization 207,774 Earnings Before Interest And taxationes 73,246 Interest Expense 28,237 Income Before Tax 45,009 Income Tax Expense 8,365 Net Income 36,644 Preferred Stock And Other Adjustments - Net Income Applicable To Common Shares 36,644 BarnesNoble Inc. financial ratios of the latest annual report (2009/05/02 2010/05/01) Return on virtue 4. 06% Return on total assets 1. 1% Return on sales 0. 77% Asset turnover 1. 57 Current ratio 0. 99 Quick ratio 0. 2 Debt/equity ratio* 2. 2 Interest cover 1. 29 address of capital 1. 42% *debt = long term loans + current liabilities BarnesNoble Inc. financial performance evaluation The profitability of BarnesNoble Inc. is very and despite it is mainly competing in the retailing business ROE = 4. 06% is unacceptable comparison to the average 5-year ROE=10. 5%. The same(p) tendency can be seen looking at the ROTA which is 2. 7 times lower than the 5-year average.Companys profit margin is even below 1% and this means that BarnesNoble does not manage to earn enough money but at least they are able to cover all their expenses on time without losses. Low profitability ratios as well as asset turnover can be partly explained that market was facing a calculative decline, which was caused by global financial crisis and even though it did not cause the step-down in sales which actually increase but made larger costs (i. e. interests) which increased more than sales and caused some financial problems for the company.BarnesNoble Inc. current ratio is almost 1 and this theoretically allows for the company to cover all their short term financial operations but quick ratio is very low (only 0. 2) and this means that company has much inventory which is about 80% of current assets. This means that company could possibly improve its profitability ratios by increasing sales of the inventory but since BarnesNoble is in the shrink market which cannot buy all the goods it is almost unrealistic to reduce high inventory significantly.Turning to BarnesNoble Inc. financial strength ratios situation is a bit better. Companys debt/ratio (2. 2) looks quite normal and we can derive that it exploits all the available financial resources to keep its sustainability as well as possible. On the other hand, interest c over is specially low (only 1. 29) and since company is facing the shrinking market this can cause issue in the near future and lead to negative net earnings. On of the factors which allows BarnesNoble Inc. o have positive net earnings is low cost of capital and this means that average interest rate is 1. 42% and is lower than return on the risk capital. In overall, BarnesNoble Inc. financial results are not very pleasant and acceptable since company is facing decreasin market there is not much it could do in order to improve its situation firstly, it should try to reduce their administrative expenses, perhaps close less than the average profitable which generates higher costs.Secondly, it could try to reduce inventory by lowering prices but as I have mentioned before it is a very dfficult task to acomplish since it is facing shrinking market. Finally, it could try to use their cash which even though does not count much of current assets but this could allow company to pay at lea st part of their debt and increase its liquidity in the short run. Bibliography http//www. google. com/finance http//www. barnesandnobleinc. com/ http//www. fundinguniverse. com/ www. barnesandnoble. com www. maths. tcd. ie/nora/FT351-3/CS. pdf www. ichnet. org/glossary. htm