Barnes And Noble Internal Environment

Barnes and Noble Analysis

Introduction

Barnes and Noble opened its first retail store in New York City in 1917. Over the years it expanded and gained market share and has become the world's largest book seller and a component of the Fortune 500 list of the largest corporations in America.(2) While Barnes and Noble has had a history of immense success over the last 100 years it is now facing increased competition, dwindling sales, and profits. For Barnes and Noble to remain in business it must develop and implement new business strategies to survive the changing business environment. Today, the company has over 500 brick and mortar book stores location spread over all 50 states of the union which serves as a publisher for some books they

sell, and also conduct online sales through their website bn.com.
Prevailing state
Barnes and Noble is best known for its bookstores found in shopping centers across the country. These locations attract customers utilizing a variety of different means including their cafés which serve Starbucks Coffee, having competitive pricing on bestselling books, and their wide selection of media which include magazines, newspapers, DVDs, graphic novels, gifts, games, and music. In Barnes and Noble store there are also displays of Barnes and Nobles e-reader which is named NOOK and is pitted against offerings from Samsung, Apple, and Amazon.
Barnes and Noble has also developed and spun off a couple of successful businesses in their own right. GameStop and Barnes and Noble Education were both once part of the Barnes and Noble corporation but were both taken public, GameStop in 2004 and Barnes and Noble Education in 2015, becoming independent of Barnes and Noble.(6)(7)
Over the last 20 years the development of internet based booksellers namely Amazon.com have taken a significant amount of market share away from Barnes and Noble. The convenience, wide selection, and low-prices offered by Amazon have made it hard for Barnes and Noble to compete in the marketplace. Amazon not needing expensive storefronts minimizes its expenses enabling it to offer prices lower than Barnes and Noble. Amazon also offers an extremely wide selection of products far beyond the books and media that Barnes and Noble offering one stop shopping for its customers where they are not only able to purchase books but also other goods ranging from car tires to potato chips. Amazon enables customers to purchase a significant portion of the goods they need on a daily basis from the comfort and convenience of their phone or computer.
Increased competition from amazon and others have eroded Barnes and Nobles sales. The decrease in sales have forced Barnes and Noble to close retail locations to eliminate underperforming stores to reduce expenses. By 2016 Barnes and Noble has closed over 150 of their retail locations accounting for an elimination of just under 20% of their retail locations they had in 2007.(3)
NOOK is one of the distinct categories of Barnes and Noble sales has been facing increasing losses. Initially brought to market in 2009 to directly compete with the Amazon Kindle and other e-readers it has not been able to become profitable. NOOK accounted for losses that will approach $100 million dollars this last fiscal year.(3) Even with the losses NOOK accounts for Barnes and Noble is unwilling to eliminate it from its product line due to the belief that e-books are the future and a book seller such as Barnes and Noble cannot ignore the book market is headed in. (3)
In addition to Brick and Mortar locations and NOOK Barnes and Noble also has an Online presence at BN.com. Due to their focus on retail sales the company largely ignored their website and did not invest in it due to this it has never been competitive with Amazon.com. BN.com is an a direct extension of the retail stores of the company whose variety of products directly mirrors their retail locations. It does not have the variety of products nor the features that Amazon.com has.

Organizational structure
The company’s organizational structure comprises of the Executive Chairman at the top of the company’s management. All information is disseminated from the executive management down to the junior management.

External environment and the industry
Barnes and Noble operates within an environment where a small amount of external elements change swiftly.(ppg.

150-151) For instance, due to technological advances within the realm of online sales, companies are constantly finding new ways to deliver an increasing variety of products to consumers. This has decreased the number of sales that come directly from brick and mortar businesses. Barnes and Noble is currently one of the only book retailers that continues to focus on and maintain physical locations.

In addition to looking into the uncertainty of the external environment it is also important to look at the task environment surrounding Barnes and Noble. The book retail industry is becoming increasingly entangled with the general retail industry as companies such as Amazon and Walmart increase their online sales of novels as well as numerous other products. These companies have become fierce competitors of Barnes and Noble especially considering that Barnes and Noble is one of the few companies that focuses mainly on book sales.

Even though online sales and electronic books are becoming increasingly popular, printed books are still the preference of most consumers within the market according to The New York Times.(8) Due to this fact, the raw materials sector is stable and relations with the suppliers and book publishers are

normal.
The prevailing trend within the labor sector is that while larger numbers of students are graduating from college, they are finding it hard to gain employment after graduation. This means that there is a surplus of labor within the market. This is good for a company like Barnes and Noble who for the foreseeable future will continue to have a steady supply of labor that is highly educated in a variety of fields.
Due to recent changes within the government sector that will be discussed later, the financial resources sector is going through a period of volatility. Bank interest rates are expected to increase soon and the daily fluctuations within the stock market seem to be increasing in size and frequency. (9)
The market sector is also changing rapidly. Consumers have become accustomed to instant service. They no longer have to go anywhere to make purchases. They can simply go online and order numerous items ranging from shoelaces to groceries. They can even have them shipped the same day. Consumers have also become more discerning. The internet provides consumers with vast amounts of information that they can look through before making purchasing decisions. This means that firms must now ensure that they products or services that they produce are not only high quality but also that they meet consumer expectations.
As was previously mentioned, technology is advancing at an extremely rapid rate. For example, smart phones have become so advanced that they are essentially small computers. In order for Barnes and Noble to be successful the technological sector is one an area that they should focus most of their attention to.
The economic conditions sector and government sector are rolled into one at this point in time. With the election of Donald Trump as president of the United States, government funds are being allocated in a vastly different manner than they have been in past years. For instance, military spending is set to reach an all time high at the cost of many welfare programs. Many economic experts believe that due to the decisions the government is making now the country is heading for a recession. This could put Barnes and Noble in an even tougher predicament than they are currently in.
Within the natural sector there is still a great amount of importance being placed on sustainability.

Consumers are still conscious of their decisions and how they affect the environment. The biggest change within the natural sector will come soon as the President has begun to get rid of the regulations on emissions. This will be a sector that Barnes and Noble should watch closely as it may affect their suppliers and book publishers.

The sociocultural sector is an area that is also in a period change. Consumers are becoming more and more educated. Because of this fact they are making more conscious purchasing decisions. Younger consumers are also placing more importance on diversity when it comes to values and belief.

Finally, the international sector is one that Barnes and Noble is slowly becoming better acquainted with. They began selling the Nook overseas in attempt to enter into the international market. Currently, there are few major firms entering into the U.S. market that are major competitors of Barnes and Noble. The new White House regime is also bringing some instability into the international sector by trying to get rid of many of the multilateral trade agreements currently in

effect.

Recommendations:
Move headquarters from 122 Fifth Avenue in Manhattan, NY to lower cost office space.
Moving to a city with lower cost office space located in a state with lower corporate taxes (such as Houston, Texas) will result in millions of dollars in savings annually in taxes and rent alone.
Focus on expanding the variety of products that are available on BN.com beyond those found in retail locations.
Allow customers to have the any good that they purchase on the Barnes and Noble website be shipped next day to any of the Barnes and Noble retail locations free of charge for all goods.
Partner with Samsung and sell tablets which are co-branded NOOK and Samsung tablets and stop developing NOOK products in-house.
Trying to develop a table is far beyond the focus of Barnes and Noble. Having an e-reader is important there is no reason why it needs to be done in-house.
Add Barnes and Noble Cafe to all locations.
Partner with Panera Bread to offer food inside of all Barnes and Noble locations.
Barnes and Noble already offers Starbucks beverages in many of its locations. By expanding the menu beyond beverages and simple pasties the amount of foot traffic will be considerably increased.