Bookmaster Case Study

$"$I$\text{'}$m going to Bookmaster to buy a book," Drew yelled as he walked out of his apartment. "I'll be back in about an hour," he continued, as his roommate lay on the sofa after a hard night of partying. As he drove to the bookstore, he caught a red stoplight at the first highway intersection. He always hated this intersection because the light took four minutes to complete a cycle. After seven traffic lights he arrived at the store parking lot only to find a city bus blocking the driveway entrance, so he parked on the street and walked about $1,000$ feet to the store entrance. There he encountered a lady in a wheelchair exiting the store, so he patiently held the doors open for her and her friend. After his $25-$minute ordeal to get to the store, he went

up to the information booth, waited until the current customer completed her query, and then asked the customer relations associate $($CRA$),$ if they had the book. After a quick search on the store's computer, Millie said, "Yes, we have copies. The book is $$39\mathrm{.}95."$

"I'll take you to the book," Millie said with a smile. Upon wandering the aisles of books, she came to the shelf where the book should have been residing. But after a careful search, the book was missing. The store computer said they had two copies, but they were not on the shelf as expected. After an extended search only one Bookmaster store across town had this book.

$"$Do you want to drive over there and get it$,"$ she asked again with a smile, $"$or would you like me to order it for you? It only takes a

CHATER $2$: Value Chains

$45$

couple of days to get the book over to this store." $"$No$,$ I don't want to drive over to that store$-$it's $15$ miles away," Drew said with a sigh. $($Pause$)$ As he began to walk out of the store Millie asked, "Why don't I check to see if an e$-$book exists?" After examining the computer, Millie said, "Yes, this book is in digital form. It costs $$19\mathrm{.}95$ as an e$-$book." "Thanks, Millie, I'll go back home and see if I can download it to my computer. I don't have an iPad or Kindle reader yet$-$they're too expensive," Drew said as he began the difficult journey back to his apartment.

Kindle and iPad designs impose various restrictions on their use. For example, Apple's hardware and software locks purchased media to Apple's platform; Apple's development model requires a nondisclosure agreement and the centralized approval process for apps. Of particular concern is the ability for Apple to remotely disable or delete apps, media, or data on the iPad at will. Another tough issue is who owns and controls the digital rights to digital content such as e$-$books, music, apps, movies, and games. The creators of digital content are concerned about diminished or no royalties due to piracy of their work.

CASE QUESTIONS FOR DISCUSSION

Draw the "bricks$-$and$-$mortar" process stages of the value chain by which hard$-$copy books are created, produced, distributed, and sold in retail stores. How does each player in the value chain make money? $($You can use the exhibits in this chapter to help you identify major stages in the value chain.$)$

Draw the process stages for creating and downloading an e$-$book today. How does each player in this new electronic$/$digital value chain make money?

Compare and contrast value chain design and structure in the previous two questions from customer and management viewpoints. What are the advantages and disadvantages to each value chain design?

What is the role of operations in each of these value chain designs and structures?

What other criteria and issues are important in critiquing these two different value chain designs?