Compare Borders and Amazon

Compare Borders and Amazon

Borders history

The company was established in 1972 by two brothers, Tom and Louis, while still doing their undergraduate in the University of Michigan. The first store was called Border Book Shop located at Ann Arbor Michigan in the State Street. They started by selling used books. The two brothers built a book community. The company also developed quality inventory system and excellent customer service. They expanded their business through acquisition of aging bookstores and hiring staffs to manage them (Raff, 2000). In 1992 the brothers sold the business to Kmart that had just acquired Waldenbooks a few years ago. Waldenbooks had been performing poorly in the books business and management hoped with that acquisition experienced borders management would help to turn thing for the best. However, various executives who were involved with Borders management left soon as the transaction was completed. This resulted in a major disorganization. Their core businesses are sales of books, DVDs, Movie, Music and Toys. They operate chain of retail stores estimated to be over 350.

Amazon history

Company was established in 1994 by Jeffrey Bezos. Bezos who was moved by the rate at which the internet was spreading decided to look for a product that can better be sold with the internet. He thought that books would be the best product because they existed in a large number. He also thought of music and video. Its headquarters are at Seattle in Washington. Its owner envisioned a big business like Amazon River. The company core business at inception was online sale of books. With time CDs, DVDs and Mp3s have also become part of the company core businesses (Web hosting report.com, 2010). After successes in the online business the company has developed strategic intents of partnering with business dealing with retail stores of these core businesses, in order to retain customer who are in a hurry to get the books and cannot wait for deliveries.

Compare and contrast the management approach each took to Internet marketing and sales

The first contrast between the two in terms of internet marketing is the decision to use it. Amazon founder Bezos went into the internet with a very clear vision and knowledge of its capability. He had skills about computers. His entry to the online business was innovative. It was compelled by statistics that people connectivity to the internet was increasing rapidly. He saw an opportunity with internet connectivity being everywhere soon. Therefore he researched to find a product that can match this growth. Research reveled that there were so many books in the world that it would be difficult to store them in one store (Amazon.Com, 1998). This means Amazon made sale of online books a core business. On the other hand borders core business is sale of books by operating multiple stores. In the technology there are late bloomers.

Borders entered into online marketing very late when Amazon had already started to operate in the domain. Their entry into e-commerce was delayed twice, with final decision being made to go online in 1998. This delay by management to enter the domain made them lose the opportunity of first entrants. Their decision to give Amazon control of their online book sale is also seen as a flaw (Bomey, 2011).

Analyze 3 reasons for Amazon’s success despite not turning a profit for the first five to six (5-6)

First the internet was just starting to pick up and its growth rates then projected at 2300% per year. This means the company already had a ready market to tap to. Second the company was able to attract customers through its website features. These are first its large catalogue of more than 1.1 million books titles for the customer to choose from.

Second it solved inconveniences experienced with retail business. It offered customer time flexibility as well as location in purchasing books. Another feature is its service, email follow up on customer and automated order verification to name a few. Third factor that made the company successful is their chief executive. For instance his persuasion to investors arguing that the company differed from traditional book retailers by things like few employees no need to purchase real estates and reduced inventory (Laudon & Traver, 2006).

Discuss 3 reasons Borders, although initially successful and profitable, ended up in Chapter 11.

One factor is rapid change in the industry. Changes in the marketing of books took place and its management was unable to respond effectively to them.

The company also had unquenchable desire for organic growth. Uncoordinated growth only contributed to increased company debts and increased cost of production.

Third reason is the late entry into online books sale that could have saved the company from ineffective choice of a large retail chain. Management did not take advantage of the entry of the internet and instead chose to develop multiple stores that failed to give it competitive advantage (Bomey, 2011).

Adapting to changing market conditions

Amazon under the stewardship of their C.E.O has established control of changing market from the time of the company inception. First the C.E.O saw the internet as revolutionizing the way market operates and decided that to benefit from the trend he would start an online bookstore. In 1998 with previous years registering loss the company increased its products by adding music CDs and later on videos and DVDs. The company also went global around this year opening websites in other countries. In the preceding year its product line extended to toys, video games and software. Customer oriented sales strategies were also adapted by the management to improve profitability when competition became stiff. In 2001 some strategies included lower prices and free shipping. Both were meant to increase the company revenue. The company also introduced kindle, technology to deal with completion in online book sale. Finally, another way management dealt with change is through partnerships with willing companies dealing with retail book stores. Still it was a customer oriented strategy to ensure convenience for those who do not want to wait.

Borders on the other hand did not respond so timely to disruptions in the market. When technology swept the world in the nineties the company was in a better position to respond to these changes than its competitors. However, its decision to hold back its entry into online books market, denied the company advantages of being the first entrant in the market. Further its registration of losses in online sales is an indication that the management failed to make the right strategies. For instance they rolled out their electronic reader and bookstore, three years behind Amazon kindle and one year after Barnes and Noble Nook.

Recommend 3 ways a company should build in flexibility to back up its decision-making process

In making decisions that have less uncertainty, net present value model can be used. The strategy that has highest value is taken.

Where the risks due to uncertainty are high, Monte Carlo Simulation application software provides multiple possibilities scenarios.

Finally decisions will also be made in matters that consider both risks and opportunities. Real options analysis approach provides the best flexibility in decisions of this matter (Pfefer & Kusiatin, nd, 6).

References

Amazon.com. (1998). Expanding Beyond Books. Retrieved from http://faculty.bschool.washington.edu/skotha/website/cases/Amazon_98.pdf

Boomey N. (2011). Borders Plans to Liquidate,Eending 40-year-old Bookstore Chain. Retrieved from http://www.annarbor.com/business-review/borders-liquidation-chapter-11-ann-arbor-bookstore-chain-borders-group-e-books/

Laudon, K. C., & Traver, C. G. (2006). The Revolution Is Just Beginning. In C. G. Traver (Ed.3), E-commerce: business, technology, society (1-53). New Jersy, NJ: Pearson/Prentice Hall.

Pfefer, G. & Kusiatin, U. (nd).The path to Strategic Manufacturing Flexibility (PDF file). Retrieved from http://www.twovalue.com/pme072805_pfefer-kusiatin_realoptions.pdf

Raff, D. M. G. (2000). Capabilities in America Bookselling, Strategic Management Journal, 21: 1043-1059.

Web Hosting Report.Com. (2010). The History of Amazon. Retrieved from: http://www.webhostingreport.com/learn/amazon.html