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Barnes and Noble Inc. is one of the most successful bookstores in the world. The company operates throughout the United States and boasts roomy inviting stores. In addition to books, the company also sells DVDs and music. The company operates both brick and mortar stores and it is also the largest internet bookstore. Furthermore, Barnes & Noble, Inc. is a Fortune 500 company and the largest bookseller in the world. In addition, "The company is a leading content, commerce and technology company that provides customers easy and convenient access to books, magazines, newspapers and other content across its multi-channel distribution platform. As of January 29, 2011, the company operates 705 retail bookstores in regional shopping malls, major strip centers and freestanding locations in 50 states, and 636 college bookstores serving nearly 4 million students and faculty members at colleges and universities across the United States (For Investors)." The purpose of this discussion is to examine the manner in which the company makes decisions based on three different scenarios including new store location, introducing new products and new business acquisitions. The research will focus on the manner in which decisions are made at different levels of the organization. Understanding the decision making process is important because it establishes the standards by which decisions are made by the company. Understanding the process could also be of benefit to other companies in the future.
Decision Making at Different Levels of the Organization
Locating New Stores
Barnes & Noble has a visible presence in locales across the United States and it also has an internet presence. Decisions as to where to locate new stores is made at the highest levels of the organization and people in various departments at Barnes and Noble play key roles in the decision making process. There are several factors that the company examines prior to deciding whether or not to open a store in a new location. These factors include demographics, the presence of competitors, and the likelihood that the location will be profitable. As it pertains to demographics factors such as population levels/foot traffic, education levels, marital status and income levels are taken into consideration.
Population levels and by extension foot traffic, is some of the most important factors that the company considers when choosing a new location. Most Barnes and noble stores are located in malls and shopping centers. The company wants to guarantee that the population level in any given area is conducive to carrying the store. That is places that have lower populations are likely to have lower foot traffic. The presence of low foot traffic means that fewer people will come into the store resulting in low sales.
Education levels are important because they determine whether or not a family or individual will want to purchase the product sold at Barnes and Noble. In addition education levels assist the company in understanding whether or not the population in the location under consideration is likely to be avid book readers.
Marital status can also have an impact on whether or not people purchase reading materials and the type of materials that they purchase. For instance a married couple with children may purchase material for their children and items such as parenting books. Whereas a single person may be more apt to purchase magazines or other things that are pertinent to their lifestyle. As such understanding the marital status in the process of making location decisions is vitally important. This information not only reveals the extent to which the bookstore will be successful but it also assist in determining the types of products that will be offered at that particular location.
Income levels in a location are also important because they assist in determining whether or not the market can absorb the store. In other words, income levels can determine whether or not people in the location have the disposable income needed to make purchases at Barnes and Noble. The company would not open a store in a location that cannot support the business. Income levels are a good indication of whether or not a business can be supported.
The presence of competitors is also an issue that decision makers must take into consideration. Competition can be a good indicator of how well a business will do. If there is another bookstore within close proximity to the location it is likely that Barnes & Noble will also want to have a presence in that location. The presence of competition also lures customers from a bookstore that they may frequent to see what Barnes & Noble may have to offer.
Lastly the company is going to research whether or not the store is likely to be profitable based on all of the aforementioned factors. The bottom line for any business is how profitable that it can be. All of the aforementioned factors are taken into consideration during the decision making process because they are important factors in determining how profitable the business will be a certain location.
Departments such as marketing play the most active role in determining how the various aspects of demographics will impact the new location. The marketing department performs this research and then reports the findings to decision-makers such as regional managers and ultimately executives.
Introducing new products
Like most companies Barnes and Noble has to remain competitive and as such the company has introduced products to the public that assist in making it easier to purchase books and to travel with books. This product is called the Nook and it was created to compete with other similar products on the market, the most popular being the Kindle offered by Amazon. The Nook is an electronic reader that allows customers to download the electronic version of books, periodicals and newspapers and read them via the Nook. The Nook came to market in 2009 after a long process of making decisions concerning the price, size, type of print and graphics and what would be available through the Nook.
At the time that the company decided to offer the Nook the market for this technology was just beginning and the company saw the opportunity to incorporate the technology and offer it the consumers as a product. According to the company's annual report,
"In 2009, Barnes & Noble transformed its business by extending our bookselling leadership through best-in-class technology. It was the year of NOOK™, the most full-featured dedicated eBook Reader on the market, which quickly gained acclaim and awards. We also opened the doors to our virtual BN eBookstore, a vast digital offering of more than one million titles, and we created free, easy to use NOOK eReader software, which enables customers to enjoy their Barnes & Noble eBooks on a variety of the most popular mobile and computing devices. In less than a year, the Company achieved a 20% share of the eBook marketplace, larger even than its current 17% share of the physical book marketplace. This is an amazing accomplishment in such a short period of time, and we believe our share will only increase in the years ahead and provide an income stream far in excess of our traditional bookstore operations (Barnes & Noble Annual Report 2010)."
During the decision making process that involves offering new products Barnes & Noble does a great deal of research as it pertains to what competitors are offering, what customers want and the price that the market can bear. As it pertains to the competition Amazon is the primary competition for Barnes & Noble. As such Barnes & Noble investigates what Amazon is offering whenever there is a possibility that a new product will be created. In the case of the Nook Amazon created the Kindle first which gave Barnes & Noble a bit of an advantage because the company could then offer a similar product but with additional features.
The decision making process also incorporates the wants and the needs of the customers. The company wants to be certain to create a product that has the features that customers want and expect. This type of market research is important because it assist the company in the development of products that will be profitable and serve the needs of customers.
Barnes and Noble also has a responsibility to determine what price the market can bear. That is the company has to determine how much people will pay for a new product. If the price is too high people will not purchase the product and they will likely purchase a similar product from the competition. On the other hand if the price is too low the company will lose a great deal of revenue that could have been realized.
Introducing a new product to the market is an important step that companies take. In the case of Barnes and Noble the company takes a great deal of care in making the decision to introduce a new product. The marketing department plays a substantial role in determining whether or not a product will be placed on…[continue]
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