Barnes & Noble Decision Making at Every Organizational Level

Introduction: Barnes & Noble Overview

Barnes & Noble Inc. is one of the most successful bookstore chains 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. Barnes & Noble operates both brick-and-mortar stores and is also the largest internet bookstore. Furthermore, Barnes & Noble, Inc. is a Fortune 500 company and the largest bookseller in the world. "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: new store location, introducing new products, and new business acquisitions. The research focuses 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 at the company. Understanding the process could also benefit other companies in the future.

Locating New Stores

Barnes & Noble has a visible presence in locales across the United States and also maintains an internet presence. Decisions about where to locate new stores are made at the highest levels of the organization, and people in various departments play key roles in the process. There are several factors the company examines prior to deciding whether 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. Relevant demographic factors include population levels and foot traffic, education levels, marital status, and income levels.

Population levels and, by extension, foot traffic are among the most important factors the company considers when choosing a new location. Most Barnes & Noble stores are located in malls and shopping centers. The company wants to ensure that the population level in any given area is sufficient to support the store. Areas with lower populations are likely to have lower foot traffic, meaning fewer people will visit the store, resulting in lower sales.

Education levels are important because they help determine whether a family or individual is likely to purchase the products sold at Barnes & Noble. Education levels also assist the company in gauging whether the population in the location under consideration is likely to be composed of avid book readers.

Marital status can also influence whether people purchase reading materials and the type of materials they purchase. For instance, a married couple with children may purchase materials for their children as well as items such as parenting books, whereas a single person may be more inclined to purchase magazines or other materials pertinent to their lifestyle. Understanding the marital composition of an area is therefore vitally important, as this information not only suggests the extent to which the bookstore will be successful but also helps determine the types of products that should be offered at that particular location.

Income levels are also important because they help determine whether the market can absorb the store. In other words, income levels indicate whether people in the location have the disposable income needed to make purchases at Barnes & Noble. The company would not open a store in a location that cannot support the business, making income levels a reliable indicator of business viability.

The presence of competitors is another issue that decision makers must consider. Competition can be a useful indicator of how well a business will perform. If another bookstore is within close proximity to the location under consideration, it is likely that Barnes & Noble will also want a presence there. Competition can also attract customers who may be drawn away from a familiar bookstore to see what Barnes & Noble has to offer.

Finally, the company researches whether the store is likely to be profitable based on all of the aforementioned factors. The bottom line for any business is profitability, and all of these factors are taken into consideration during the decision-making process because they are central to determining how profitable the business will be at a given location.

Departments such as marketing play the most active role in analyzing how demographic factors will affect a new location. The marketing department conducts this research and then reports its findings to decision makers such as regional managers and, ultimately, senior executives.

Introducing New Products

Like most companies, Barnes & Noble must remain competitive, and to that end the company has introduced products that make it easier for customers to purchase and travel with books. One such product is the Nook, an electronic reader created to compete with similar products on the market — most notably the Kindle, offered by Amazon. The Nook allows customers to download electronic versions of books, periodicals, and newspapers and read them on the device. It came to market in 2009 following a lengthy decision-making process concerning price, size, display quality, and available content.

At the time the company decided to offer the Nook, the market for this technology was just emerging, and Barnes & Noble saw an opportunity to incorporate it and offer it to consumers. 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 for new products, Barnes & Noble conducts extensive research into what competitors are offering, what customers want, and the price the market can bear. Amazon is the primary competitor, and Barnes & Noble closely monitors what Amazon offers whenever a new product is under consideration. In the case of the Nook, Amazon introduced the Kindle first, which gave Barnes & Noble an advantage: the company was able to offer a similar product but with additional features.

The decision-making process also incorporates customer wants and needs. The company aims to create products with the features that customers want and expect. This type of market research is important because it helps the company develop products that will be profitable and serve customers effectively.

Barnes & Noble also has a responsibility to determine what price the market can bear. If the price is set too high, customers will not purchase the product and may turn to a competitor instead. On the other hand, if the price is set too low, the company will forfeit revenue that could have been realized.

Introducing a new product is an important step for any company. In the case of Barnes & Noble, the marketing department plays a substantial role in determining whether a product should be brought to market. Market research assists executives in deciding whether developing a new product will be most beneficial for all stakeholders — including employees, investors, and consumers.

Conclusion

The purpose of this discussion was to examine the manner in which Barnes & Noble makes decisions across three different scenarios: new store location, introducing new products, and new business acquisitions. The research reveals that Barnes & Noble takes the decision-making process very seriously. The company uses the skill sets of various departments to ensure that decisions are consistent with the company's goals and objectives. The company is also careful to ensure that the decisions made are financially viable in both the long and short term. Proper market research plays an important role in ensuring that both location and product decisions align with what customers need and want, and a great deal of research is dedicated to the financial aspects and consequences of any given decision. Financial evaluations are vitally important because they ensure that the outcome of each decision is financially feasible and responsible.

The company's corporate governance guidelines are also essential to sound decision making. The guidelines provide the company's decision makers with the policies needed to govern the process. These guidelines have allowed Barnes & Noble to make consistently wise decisions that have positioned it as one of the most successful companies in the country, in both brick-and-mortar and internet sales. As a result, Barnes & Noble has maintained its competitiveness and remained relevant at a time when other companies are experiencing considerable difficulty. The investigation underscores the importance of good leadership and the development of a corporate strategy that is conducive to making sound decisions well into the future.

Barnes & Noble Annual Report 2010. Retrieved from

Corporate Governance Guidelines. Retrieved from

For Investors. Retrieved from

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