A Case Analysis of Barnes & Noble MGMT 4842 – Strategic Management A Case Analysis of Barnes & Noble Robert Daigle - Sidney Best - Jack Zeigler - Charlie Smith Jessica Whitley - Josh Cornwell

Company Background The Barnes family's history in the book business started in 1873 The company revolutionized bookselling by introducing giant, supermarket-style stores with deeply discounted books in the 1970s As of July 2010 B&N operates 717 retail bookstore locations in all 50 states and 633 college bookstores These stores stock between 60,000-200,000 book titles

Issue 1 Barnes & Noble needs to address the company’s lack of effective leadership in its effort to sell the company Alternative 1: The first alternative is for the company to attempt to handle the sale of the company in-house. Alternative 2: Another option to resolve this dissonance in the boardroom is hire a third party consultant to handle the sale of this company.

S.W.O.T Analysis Strengths Weaknesses Opportunities Threats Barnes & Noble is an established brand with a solid market presence which correlates into a strong competitive advantage. Barnes & Noble enters into the digital market and shows a strong presence with its multi-channel strategy. Price conscious customers are attracted to Barnes & Noble’s discount pricing. Barnes & Noble offers benefits to their customers. Barnes & Noble’s acquisition of Barnes &Noble College has propelled the company into the college bookstore market. Weaknesses Barnes & Noble’s profitability has been harshly impacted by legal proceedings. Competitors are causing weak margins. Reliance on a small number of suppliers. 4. College textbooks sales shifting to renting textbooks or digital textbooks. 5. Falling profit margins cause less investment opportunities. Opportunities Considerable growth expected from the eReader and eBook areas . With the acquisition of B&N College, Barnes & Noble has forayed into the college textbook market . Barnes & Noble launches a “go-green” line of products . Barnes & Noble will become the leading and largest retailer of magazines and newspapers in America. Threats Barnes & Noble’s growth opportunities are negatively affected by competition and price wars. Decreasing physical book sales are reported even though digital product sales increase . College enrollment is declining due to a decrease in state funding . Barnes & Noble embroiled in boardroom issues. Barnes & Noble sees decline in holiday sales.

Issue 1 Alternatives Alternative 1 Alternative 2 Pros Less expensive than hiring a consulting firm Would eliminate the 2 controversial parties having direct contact Cons Slower results Consumes company time and resources Bias can still be prominent Pros Non-Bias interpretation Shareholders interests in mind Results produced in a timely manor Cons High costs Vulnerable to consultants having access to information Difficulty in agreement on consultant

Issue 1 Recommendation Recommendation: Alternative 2- hire a third party consultant to handle the sale of this company. Addresses the companies need for decisions to be made in a timely manner. Important the decisions be made quickly before the situation becomes worse than it is. This alternative will also provide stability for the company.

Issue 2 Barnes & Noble faces a reduction in its profit margins. This is caused by increases in competition, government regulation, and online sales. Alternative 2: The second alternative is for Barnes and Noble to market eBooks and eReaders inside its bookstores. Alternative 1: The first alternative is to increase product differentiation.

Issue 2 Alternatives Alternative 1 Alternative 2 Pros Product differentiation can lead to increased profit margins Utilizing physical stores Cons Hard to establish a truly “unique” product Pros Using stores to promote new eReader technology Provides a one-on-one experience Cons Can lose traditional book readers to the eReader Can potential make physical stores obsolete

Recommendation: Alternative 1- Increase product differentiation Issue 2 Recommendation Recommendation: Alternative 1- Increase product differentiation Makes B&N more appealing in the marketplace B&N have started this process by introducing its NOOK in a color version

Issue 3 Barnes & Noble faces is its decline of physical book sales . This is due to a changing consumer trends towards digital technology. Alternative 2: The second alternative is to create special offers for college students. Alternative 1: The first alternative is to expand the company’s eBook sales with select and exclusive products.

Issue 3 Alternatives Alternative 1 Alternative 2 Pros Offering exclusive products can build a loyal customer base Cons Issues with obtaining licenses or rights Shifting to digital media can be costly Can make physical stores obsolete Pros Dramatic increase in repeat purchases Can be marketed to any level of education Possibility of renting eReaders Cons Decrease in printed textbook sales

Issue 3 Recommendation Recommendation: Alternative 1- Expand the company’s eBook sales with select and exclusive products. Increases customer loyalty and increase brand recognition for the Nook. By increasing brand recognition and consumer loyalty B&N may be able to beat Amazon for dominance over the industry market share.

11/29/10 Questions and Answers