Abstract
Barnes and Noble has maintained its performance through effective strategies and policies that have sustained its revenue yield and profitability. However, recent prevailing economic turmoil has led to significant challenges in their performance mandate. As such, the organization has been facing three main problems: increased costs of publishing books, stagnation in profitability and reduced customer awareness. The various challenges facing the organization have posed a daunting avenue for successful operations and sustenance of viability or survivability within the organization. Thus, with an aim of handling the challenges evident, it is significant that the organization incorporates three main solutions. The three solutions include: outsourcing, internationalization and above the line promotion. Thus, this paper will evaluate the three solutions to the diverse hurdles facing Barnes and Noble Company.
Problem 1: Increased costs of publishing books
The recent economic recession led to the rise of increased costs of operation at Barnes and Noble. Accordingly, the increased inflation within the market led to an increase in costs of purchasing the various raw materials. Furthermore, the extensive human resource within the organization further led to an increase in costs of operation. As per now, the costs of operation have been on extreme levels calling for proper strategies towards sustaining profitability and increasing performance. Thus, as a solution to the increased costs of publishing books, the organization should invest into outsourcing.
Solution: outsourcing production of books
Outsourcing has become a fast phenomenon within the organizational performance. Through outsourcing, organizations have managed to eliminate the prospect of being confined to the nonstrategic business activities such as production, legal services and so forth. However, through outsourcing, which denotes relinquishing the non-core business activities to third party organizations, has become a plausible tool of inculcation. From the evaluation of Barnes and Noble, the notion of publishing goods is a non-core operational facet within the organization. Throughout its growth, the organization has ensures performance through its numerous retail stores across US. However, the inculcation of publishing despite its first year profitability has become a challenge for the organization towards sustaining profitability. As the organization became more integrated to the fabric of core operations in ensuring sales of books, the publishing facet of operations became a daunting task to manage and ensure profitability. However, the inculcation of outsourcing poses strategic coupled with economic benefits that the organization cannot ignore. Through outsourcing (Spalton, 2010) affirms that the organization can accrue reduced costs, increase in flexibility, enhanced expertise in its publishing facet of operation and freedom for the organization to focus on the fundamental or core organizational capabilities. Hence, the main question for the organization to ponder is how they will manage to ensure viability of outsourcing. Thus, in outsourcing its publishing of goods, it should undertake extensive research into the regions that are evidenced by reduced costs of operation. China, India and Brazil are developing economies that the cost of operation is plausible for organizations to outsource production. Through outsourcing its publishing facet of operation at Barnes and Noble, the organization should critically assess six main issues:
- Strategies priority coupled with risk
As the pioneer step in embarking on an outsourcing initiative, it is imperative for Barnes and Noble to evaluate where in the prevailing value chain the company prefers to compete. The decision pertaining to where the organization wants to play within the value chain is imperative for the decision on the facet of partnership with the outsourcing company. The specialists within the organization should undertake the outsourcing mandate with the prospects of carving out niches coupled with dominance through extensive economies of scale. The company should undertake outsourcing with a mandate of enhancing opportunities to grow or enhance its margins. The rivals within Barnes and Noble’s retail sector have been seeking to differentiate their product offerings through extensive development of novel solutions for its customer needs. The traditional reading of books is being replaced by technologies such as Kindle in which a customer can access numerous books within a Tablet. As such, the extensive competition needs formidable solutions such as outsourcing publishing for the organization to sustain its price points at lower levels and compete effectively. Without the inculcation of plausible approaches towards maintaining profound and competitive prices, the organization is bound to incur increased costs of operations and reduced profitability. The emergent need for an organization to succeed is imperative for the organization within their decision making facet. As such, the organization should look beyond the assessment of the value chain and embark on the evaluation of all the business processes to embark on the plausible outsourcing platform.
- Market considerations
Within the market consideration mandate, the organization should consider the prevailing external options in the provision of the publishing activity. Accordingly, the organization should evaluation the rate of available organizations within US that can offer publishing at a lower price point. Additionally, the organization should evaluate the contractual obligations emanating from the various outsourcing companies available both within US and in other emergent economies. Furthermore, extensive evaluation of the stability of the perspective options for outsourcing should be significant (Spalton, 2010). Evaluation of the prospective options in regards to financial strength is significant to ensure a plausible and successful undertaking of the operations by the third party organization. Moreover, the evaluation of the prospective outsourced company is significant for the organization to determine the cost of quality advantage in regards to the organization. An increased and intensive evaluation of the organization is imperative since the company can accrue the best deal from the organization. As such, an intensive research into the plausible outsourced organization is imperative towards obtaining a mutually beneficial partnership.
- Internal versus external capabilities
It is highly advisable for the organization to evaluate the capabilities emanating from the suitable outsourcing partners as compared to in-house publishing of its books. Through an extensive evaluation of the capabilities within the eternal environment is imperative for the organization to determine the quality coupled with reliability that may emanate from undertaking the outsourcing approach. As such, through the evaluation of the outsourced organization, Barnes and Noble and determine the most plausible and cost effective option in their operational mandate (Spalton, 2010).
- Economic evaluation
It is imperative that Barnes and Noble conducts a complete evaluation of the long-term cost of their publishing activities within the internal environment as opposed to outsource. The organization should undertake a holistic analysis of the impact of the variable coupled with fixed costs. As well, it is noteworthy that the organization evaluates the costs of transition and managing the external supplier of its published books. Accordingly, it is imperative for the organization to take into extensive consideration the effect of the outsourcing platform on the production levels. As such, Barnes and Noble should undertake a proper estimation of the 5 to 10 year evaluation of the net present value.
- Ability to manage novel outsourcing process
Barnes and Noble should embark on a plausible approach towards evaluating its capability to evaluation and manage the new outsourcing mandate. As such, the business should conduct an in-depth evaluation of the new outsourcing process within a mandate that cuts across the operational boundaries. Undertaking a profound evaluation of the outsourcing process is significant towards successful outsourcing platform.
Thus, all in all, the outsourcing platform at Barnes and Noble should be based on the following process:
Problem 2: Stagnation in profitability
Barnes and Noble has been grappling with the prospects of reducing profitability. As a large organization, it has sustained performance through numerous retail stores across US. Its mercurial growth has however been facing significant challenges since the organization is at its peak in performance and revenue yield. Its prevailing profitability has been within a minimal mandate. Accordingly, the profits yielded have stagnated with a yearly rise being pegged at less than 10%. The prevailing stagnation in profitability has called for novel approaches within the organization construed towards enhancing profitability. As such, the inculcation of internationalization has become a worthy approach among various large organizations across US.
Solution: Internationalization
Internationalization as per Sparrow (2013) denotes the prospect of an organization undertaking international ventures into new markets. Globalization has become a driving force within the internationalization prospect among organizations. Globalization, which entails the rapid growth in markets through infrastructural growth, has led to a plausible environment for operations among organizations. As such, organizations can invest highly into internationalization since the telecommunication and transport sector has developed significantly across the world. Additionally, the changes in the economic approach among the various countries such as china and Russia have become a profound and incentive facet. Accordingly, Sparrow (2013) asserts that china, Russia and other countries have incorporated a mixed economy characterized by both free and planned economic aspects that pose a proper incentive for companies such as Barnes and Noble. New markets will pose an avenue for the organization to obtain more revenue and increase its profitability. Most fundamentally, the new market will ensure that Barnes and Noble can add its revenue streams which are imperative for sustaining its growth and performance mandate. The international market, which exudes various incentives for new businesses, should be a proper strategy for the organization to undertake. Thus, the internationalization approach by Barnes and Noble should be based on two main undertakings by the organization:
- Extensive data mining
Data mining is high imperative for the organization in their international venture. Data mining entails researching within an in-depth mandate the prevailing external environment. Through data mining, the organization will comprehend the political, social, economic and technological environment. An in-depth evaluation of the prospective markets is imperative for the organization. Through proper comprehension of the market, the organization can venture plausibly into the market. Data mining poses a plausible tool for the organization in their market venture initiatives. Possession of plausible information ensures that Barnes and Noble can set up successful stores within the new market regions of entry.
- Investment into cross cultural competency
Cross cultural competency is a basic aspect in the market ventures of an organization into a foreign market. As such, cross cultural competency denotes comprehending the prevailing values, tastes, preferences and various aspects. As such, the extensive investment into cross cultural competency denotes that the organization can relay goods and services that are aligned to the consumer characteristics within the new market (Nigel 2012). Without extensive investment into cross cultural competency may render the internationalization prospects of Barnes and Noble unsuccessful. Many organizations fail in their internationalization ventures due to improper comprehension of the cultural facets of the consumer. The assumption that the local market is similar to the international scene is uncalled for and may lead to losses for the organization.
Problem 3: Reduction in customer awareness
Barnes and Noble has been ranking behind in regards to customer awareness of their goods and services. Accordingly, the organization has been grappling with a slump in sales. The trend in reduction in sales has emanated from improper approaches towards enhancing customer awareness of the organization coupled with its products. Thus, for the organization to ensure increased customer awareness across US, it is advisable that it undertakes an intensive above the line promotion approach.
Solution: Above the line promotion
The above the line approach is based on enhancing awareness through the inculcation of mass market based tactics. The mass marketing approaches that the organization can inculcate include:
- Online marketing
The online marketing approach should be focused on the use on the internet to enhance awareness. As such, the company should set up a formidable website. Through its website, the company will relay information on the prevailing books available within the organization. Within a current mandate, the business will relay real time information on the books, their details and so forth (Nigel 2012). Additionally, the organization should embark on online business. The online business approach should be construed towards ensuring that customers can make purchases through the online store. As such meeting the customer needs through the online platform will lead to the emergence of convenience buying coupled with serving as a marketing tool
- Television and radio advertising
Television and radio media forms as plausible tools towards generating mass awareness of the goods and services available within the organization. Through marketing in prime time, Barnes and Noble can enhance its awareness of the various goods and services availed within the organization. An extensive investment into the two approaches will necessitate increased awareness by the various customers (Nigel 2012).
Conclusion
Business operations are based on incorporating the right approaches towards ensuring the going concern of the organization is sustainable. Thus, from the evaluation of Barnes and Noble, the inculcation of above the line promotion, internationalization and outsourcing is imperative towards mitigating the challenges posed within the organization. The inculcation of the evaluated solutions is bound to sustain profitability, reduce costs of operation and ensure enhanced customer awareness.
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