Strategic Management and Corporate Social Responsibility
Introduction
The book retailing industry is suffering from fierce competition due to globalization and unpredictable trends (Yang, 2009; Scupola, 2003). It has been realized that the purchasing trend of printed books is declining, and the utilization of e-books is increasing. The numbers of independent stores of books declined lower than 1000 in 2014. Even, the industry faced the shutdown of more than 500 independent shops since the year of 2005. In 2013, the book retail industry in the United Kingdom faced the shutdown of 67 local bookshops. However, 26 shops were opened, and 987 were trading already. The immense decline in physical sales of books has been observed due the switch of people from traditional book buying to the digital book buying. In 2012, 134 percent increase was seen in the sale of the e-book (Butler, 2014).
Before starting any business, it is essential to analyze the macro environment of the industry as these factors are not in the control of the organizations, but they can formulate strategies to deal with them. Macro analysis helps the organizations in reducing the effects of possible threats to the business. It encourages and aids the growth of strategic thinking; provide a framework that enables the companies to realize and exploit the existing or new opportunities. Even, it allows the organization to analyze the implications of entering in the particular industry. However, each technique has some drawbacks associated with itself so as the macro analysis. Users of the data can generalize the information, and the process can be costly and time consuming (Gupta, 2013).
Secondary data of the UK book retail industry
The growth of e-tail and e-readers is badly hitting the bricks and mortars retailing in the book market. Therefore, it has become essential for book retailers that they perform more than as a bookseller. Thomson (2012) in his article defined that the retailers need to redefine themselves. It is crucial for grapping the marketing share back from e-stores. In 2012, the online sale of books was making approximately half of the market. It was expected that the sale of e-stores would continue to grow. Even it is expected that until the last month of this year the online sale of the books will be 978.1 percent. The online growth of book selling does not means that the physical books will disappear as many people still like the feel and look of the books. The major thing that is driving the online sale is the convenience and the lower price than physical stores. It is evident from the researches that the e-reader market has exploded as compared to the retail stores. Therefore, for competing with e-stores, physical stores just need to come up with new ideas that can make the stores attractive for customers (Thomson, 2012).
Microenvironment analysis and evaluation
The overall microenvironment is positive for the industry as the tax rates on the income are decreasing. Academic schools are no longer liable to follow the national curriculum, which will enable the physical book retailers to set the book prices, labor wages, and printing rates at a competitive level (Gov. UK, 2016b). People still love to feel and touch the books; the trend of physical books will not disappear. The improved economic situation indicates the enhanced purchasing power, therefore; it is expected that improved economic situation, as any other business will drive the customer interest towards the physical book buying as well. It has been observed that physical book buying declined in the UK, but the online reading trend or buying trend is increasing. The fact indicates that with some improvements, the interest of customers can be enhanced towards physical book buying. Technological environment is also positive for the UK book retailers as their digital knowledge is improving.
Business opportunities
Taxation is an important factor that contributes to the cost of every business and book retailers has no exception, decrease in taxation produces the opportunity for retail business to reduce the cost and gain the advantage of being competitive. Increased VAT on an e-book that physical book customer does not need to pay will also pose the opportunity for book retailers to be competitive in term of price (Grasset, 2015).
Retailers have an opportunity to take the full advantage of digital media and use it as a distribution medium as the major reason for the online book buying for customers in reduced cost and ease of buying. In general, the reading trend is improving in the United Kingdom (Mintel, 2011). They have an opportunity to reinvent the ideas of setting the store that differentiate them from competitors. For example, retailers and physical stores can facilitate the customers in discovering new authors and titles through the utilization of proper techniques. For being price competitive, book retailers can offer discounts or can encourage customers by giving the books on rent.
References
BBC News. (2015, November 17). UK inflation rate remains negative in October. Retrieved February 16, 2016, from < http://www.bbc.com/news/business-34841952>
BBC News. (2016, January 20). UK jobless rate at 10-year low but wage growth slows. Retrieved February 16, 2016, from http://www.bbc.com/news/business-35359689
Butler, S. (2014). Independent bookshops in decline as buying habits change. The Guardian. Retrieved February 16, 2016, from http://www.theguardian.com/books/2014/feb/21/independent-bookshops-campaign
Dakers, M. (2015). Controversial VAT change means e-books are about to get more expensive. The Telegraph. Retrieved February 16, 2016, from http://www.telegraph.co.uk/finance/businessclub/11320318/Controversial-VAT-change-means-e-books-are-about-to-get-more-expensive.html
Gov. UK. (2016b).Types of school. Retrieved February 16, 2016, from https://www.gov.uk/types-of-school/free-schools
Gov.UK. (2016a). Corporation Tax rates and reliefs. Retrieved February 16, 2016, from https://www.gov.uk/corporation-tax-rates/rates
Grasset, G. (2015). Competitive Pricing. Lokad. Retrieved February 16, 2016, from https://www.lokad.com/competitive-pricing-definition
Gupta, A. (2013). Environment & PEST Analysis: An Approach to External Business Environment. International Journal of Modern Social Sciences. 2(1), 34-43. Retrieved February 16, 2016, from http://modernscientificpress.com/Journals/ViewArticle.aspx?YTDXIp8pwb35qABc+2BV/1WJUQnMuLGNSj0NcUX/H4nrYH2pOUyBFV904kXBzuJV
IBIS World. (2015). Book Retailers in the UK: Market Research Report. Retrieved February 16, 2016, from http://www.ibisworld.co.uk/market-research/book-retailers.html
Mintel. (2011). Books and e-books - UK - February 2011. Retrieved February 16, 2016, from http://store.mintel.com/books-and-e-books-uk-february-2011?cookie_test=true
Nwagbara, U. (2011). Waterstone’s and the Changing Bookselling Environment in the UK: the Journey so far and Prospects. Economic Sciences Series. LXIII (3). 14-26. Retrieved February 16, 2016, from https://www.google.com.pk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjojbLnp_rKAhVEEpoKHfBQD-kQFggZMAA&url=http%3A%2F%2Fwww.upg-bulletin-se.ro%2Farchive%2F2011-3%2F2.%2520Nwagbara.pdf&usg=AFQjCNEuw9TmPFVrfTXK2-ntlO1qUkBBiA&bvm=bv.114195076,d.bGs
Scupola, A. (2003). E-commerce and the publishing industry. The Electronic Journal of Information Systems in Developing Countries, 11.
The Book Seller Association. (2013). BA Market Intelligence. Retrieved February 16, 2016, from http://www.booksellers.org.uk/MI-Reports/Category-List?tagid=70
Thomson, R. (2012). Analysis: Where next for the books market? Retail Week. Retrieved February 16, 2016, from http://www.retail-week.com/analysis-where-next-for-the-books-market/5043009.fullarticle
Yang, L. (2009). The Effect of the Internet in the Book Retail Market. Asian Social Science. 5(2). 90-92.
Appendix
PESTLE Analysis
Political/ Legal: The corporate tax rate on small businesses is stable with 20 percent rate; however, on large profits above £ 300, 000 is declining year on year such as in 2012 it was 24% and by 2014 declined to 21% (Gov.UK, 2016a). Academic schools are not liable to follow the national curriculum and controlled by local authorities (Gov. UK, 2016b). The consumers will have to pay 20% tax on e-books. It is not applicable to retailers (Dakers, 2015).
Economic: Unemployment rate is low and inflation rate is declining in the country as well (BBC News, 2016; BBC News, 2015). The annual revenue of the industry is £ 1 billion with 1071 businesses; however, the annual growth rate is -2.3 percent (IBIS World, 2015). The book market fell in the UK in 2015. However, in 2012, when other book retailers in countries were struggling the UK book market for all books was rising up to 27.6% (The Book Seller Association, 2013).
Social: The physical book buyers dropped from 2014 to 2015 by 74% to 70%. In 2013, consumers spent on e-books £300 million. However, the printed books retained £2.2 billions, which were 4 percent lower in volume and value compared to prior year (The Book Seller Association, 2013).
Technological: Due to technological advancement, it is expected that the e-book segment will secure up to 35% of the UK book industry in this year. It is expected that the retailers will overcome the lack of technological knowledge and the sale will increase (The Book Seller Association, 2013).
Environmental: Due to environmental concerns, people prefer to buy environmental friendly products. In 2003, the government of the country launched the strategy for reducing environmental damages, minimize resource consumption, and cut waste (Nwagbara, 2011).
