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Informatiox H Hamdan eBook Store + Management Information Systems, Global Edition 148 Part One Organizations Management, and the Networked Enterprise Can This Bookstore Be Saved? CASE STUDY B orders Grup (including many former Waldenbooks rebranded as Border Ixpress) liquidated its ants and closed all of its locations in the second half of 2011. The previous year had already seen the demise of Dalton, a Barnes & Noble subsidiary since 1987 Since 1991, leven major US, bookstore chains have been whittled down to six, and nearly 3,300 stores to just over 2,200 in 2011. still in the lead after over 20 years of domina tion, Names & Noble was often painted as the bully, driving both regional chains and small indepen dent bookstores out of business with its agressive pricing tactics and unbeatable inventory. Before e-commerce shaped the landscape, its superstores forced smaller rivals into most titles offered" war. Asmaller chains struggled to keep pace, support from publishers was not forthcoming. This short term, bottom-line strategy would come back to haunt publishers INN kicked around the idea of selling books online, experimenting with intex, a 1980s Web retail prototype, welling hooks on Computery in the mid-1990s, and opening an online shop on ADL However, it was not until 1997, fully two years after the arrival of Amazon, that it launched its first weh site. Data from numerous emerting e-commerce markets now werifies that books are an ideal initial product to draw first time buy WWN was already behind the curve Amazon, launched initially as an online bookstore, upended the title war. While I might be able to offer over 200.000 sites in its bricks and mortar , Amazon offered an inventory limited only by publisher availability, Shrewd financial move, including willing 50% of its internet operation to German giant Bertelsmann in 1998, kept in the game. It established a new industry standard of 70,000 ides on land and bagged that it could pro- runs over il million new, out of print, and rare books for customers from suppliers. However, Amam continued to trump on innovation. When launched online music stone in 1999, several months after taking barnandnoble.com public and fishing in cather was in playing catch up with Amazon, which had pioneered the con tayari In early 2009, when be purchased Fictionwise, one of the biggest electronic book proprietor in North America, it was again behind the technol ogy curve. Amazon had already unveiled its Kindle e-reader sixteen months earlier. What's more, Amazon would offer New York Times bestsellers and other popular e-books for less than $10. While publishers fretted that maden would be reconditioned to devalue the worth of the printed word and that online stoms would be trained to their limits discounting print books to compete BN scrambled it took until July 2009 (two months after the Fictionwise purchase) to finally unveil BN's e-bookstore. It Nook e-mader was released in October, again more than two years behind Amazon Ironically, as early as 19, N had partnered with software companies such as Nuvo-Media to develop a prototype e-mader called the Rocket, but it had nixed the project in 2003 because there didn't appear to be any money in it. Now it had to hustle to reashion welf as a seller of e-books, e-reader, and apps to enhance the reading experience Critically well received, the Nook began scrape market share from the Kindle when it sparked a price war a year later. Dropping the price from $250 to $199 and releasing a wir only model for $119, IN took aim at the giant. Amazon quickly coun tered by slashing the Kindle to $189 eight hours later and releasing the Wir enabled Kindles within a month, again at $10 below the Nook with titans such as Apple (itad) and Google originally with the liver Story and in 2012 with the Nexus 7 providing additional competition, the tables had been turned on the former hookstone huron. Will IWN be able to survive against the tech giant The answer remains to be seen BN was the only hookuller with the more to complete the consid erable task of developing an e-made marketing, and setting up manufacturing and retail operation for the device, tus closest competitors were already succumbing in the contraction of the chain bookstore market, victims or both and the e-commerce revolution, Hooks A Million, with approximately 250 to compard to 3636 til andet college for is its containing competito While still depend on its physical brick and masters in driwis busine, the book man ketika bone of a different color the economico 1481 524 pages remaining > Hamdan eBook Store ormaticx + Management Information Systems, Global Edition Chapter 3 Information Systems, Organizations, and Strategy 149 e-book sales are very different from traditional book sales, Customers who visit BN's Web site buy three digital books for every one physical book, but book- sellers still make more money on print books than e-books. And while having a competitive e-reader seemed essential to successfully vying for market shame, it came at a steep cost. Moreover, it is not the pivotal factor in controlling the book market. Content is Since the price war, the reality is that in order to compete with Amazon, e-reader hardware most well at or near cost, with profits derived from the sale of digital content, including e-books, music, vid- cor, apps, and games. Once Amazon had wrung all the prodit it could from Kindle hardware, it quickly maneuvered into adding apps and app features and aggressively pursuing a cross-platform strategy. It began marketing its e-books for tablet, smartphones, and Cousing Android, Windows, and OS X operat- ing systems. Moreover, Amazon, along with Apple, and another competitor, Kobo, are global competi- tors: BN is not Despite spending hundreds of millions of dollars to compete with Amazon.com Inc. and Apple Inc. in the market for tablets and e-reader, N contin wed to lose money on the Nook, as well as e-book market share. Analysis estimated in 2011 that controlled approximately 27% of the U.S. digital book market while Amazon led with 50%. Since then, Amazon has held steady, and has steadily ceded ground to Apple N's digital book market sharela dropped to 25%, and is still falling On June 25, 2013 IN announced that losses at its Nook digital business more than doubled in the quarter ending April 27, 2013, wiping out profits enerated art bookstore, Ana mult, the com pany decided to stop producing to own color tablets in favor co-branded devices made by third party manufacturin Marea Noble will continue design and make its own black-and-white Nook -readers, which account for the majority of its - book ale ut with e-maderul declining.it unclear how competitive Harnes Noble can be does term without its own pace in the cable market, which becante loep growing IN retail store closing continued to cutan new stor openings as had been the cane sine CEO Michal Klipper pmjeseda net reduction of one-third or store over the next dead, meducing the total by about 20 ton per year until between 0 and remain while has it back against the wall, it does have a multiprognd strategy for survival a principal opponent with an estimated value 121 times higher than its own (BN has a market capital- ization of $1.062 billion; Amazon's is $121.5 billion) But it also has allies. Publishing companies have a vested interest in N's survival, l'hysical book retailers are indispensable for effectively marketing and selling books. Bookstores spur publisher sales with the Throwsing effect. Surveys show that just one third of bookstore visitors who make a purchase walked in with a specific book in mind. According to Madeline Mcintosh, Random House president of sales, operations, and digital, a bookstore's display space is one of the most valuable places that exista for communicating to the consumer that a book is a big deal. Brick-and-mortar retail stores are not only essential for selling physical books, but also stimu- late sales of books and audio books, bring traffic inte malls, and serve as social gathering places. The more visibility a book has, the more likely read- ces will want to purchase it with the demise of B. Dalton, Crown Books, and Borders, BSN is the only retailer offering an extensive inventory of physical books. Iook publishers need a physical presence Without BN, the likely candidate to fill the void i Amazon, and publishers are not eager for that to happen. Amazon's goal for e-books in to cut out the publishers and publish books directly, selling books at an extremely steep discount to drive sales of its Kindle devices. Editors, publicists, and other entities within the publishing business View Amazon as an enemy selling books at Amazon's discounted prices is not a tenable business model for publishers in the long-term IBNI to survive must capitalin on its proti able retail stores, develop small, local community band shops, expand digital content, lead the digital education market and develop marketing techniques to drive e-book maders to purchase print hook, has been experimenting with ways to drive traffic to its physical stones. For example, if you connect a network in a HN sore with your Nook you can get free extras in many apps and games like Angry Birds, where you can unlock a bonus character that normally conta a dollar N has also expanded its stone space for toys and yame, which have higher profit marginn, while doing the range of book titekt stocks, there are also plans to experk ment with slightly smaller stores in malls. Although that straty boting the company's bottom line, publishers worry it may also drive book lown to Amazon.com Inc., which ways its physical book sale are still growing 149 523 pages remaining ormaticx Hamdan eBook Store + Management Information Systems, Global Edition 150 Part One Organisations Management, and the Networked Enterprise What will the future hold? Will be able to succeed as a digital company and is there a future for its brick-and-mortar stores is there a way for e-books to help sell print books, just as print books have stimulated demand for their digital versions Although BN has made a spirited effort to revamp its business and go toe-to-toe with several tech titans, it's possible that it might be too tall an order for the storied bookseller the App to Laure Comes into a January 27, 2012; Alexandra Aerowing up the wall strualnuary 20, 2012, Miracking 20 ans of Hookstore Chain, huhes August 25, 20, and my A. Trachtenberg and Martin Hanna and Noble. The Next Chaplint Wall Streal January Source Jeffrey A. Thachtenberg. "How to Resume Nobletterer den mm hexperts, Wall Strul July 1,2013 i Kalmar, arnes Noble miks ma strangy for the Nokkruary 2018 Cara me Noble No Am Ited, but o Am Won Willem Jurnatay Arach w Amst Whistles and Wall Mirror anuary 2013 Hot Apple is a worldwide Who Market Share Analyst Think Wall Monary Michal Merend an eman, Microsoft Deal Adits to over New York, May 1, 2013 Olvin and they thin, Microsoft Hook Will May 1, infatti West Last and work on January 2012 Apple, Aman The Deadly Hallows for Publisher Nok April 11, nan x. Chen, um Noble CASE STUDY QUESTIONS 3-13 Use the value chain and competitive forces models to evaluate the impact of the Internet on hook publishers and hook retail stores such as Barnes & Noble 3-14 How did iarnen and Noble change its business model to deal with the Internet and hook technology? 3-15 will arnes & Noble's new strategy be u fulf Explain your answer. 3-16 Is there anything else Barnes & Noble and the book publishers should be doing to stimulate more business? MyMISLab Go to mymistab.com for the following Assisted graded writing questions, 3-17 Describe the impact of the Internet on each of the five competitive forces 3-18 What are the main factors that mediate the relationship between information technology and organizations and that managers need to take into account when developing new information systems Give a business example of how each factor would influence the development of new information systems 150 522 pages remaining > REE Harvard Refer... The Purpose of the... 20161UAE_SDGs_R... nation Systems, Global Edition I Bookstore Chains," Publisher's Weekly, August 26, 2011; and Jcitrey A. Trachtenberg and Martin Peers, "Barnes and Noble: The Next Chapter" Wall Street Journal, January 6, 2011. mp ans, he July ay for Ernes CASE STUDY QUESTIONS 3-13 Use the value chain and competitive forces models to evaluate the impact of the Internet on book publishers and book retail stores such as Barnes & Noble. 3-14 How did Barnes and Noble change its business model to deal with the Internet and e-book technology? 3-15 Will Barnes & Noble's new strategy be success- ful? Explain your answer. 3-16 Is there anything else Barnes & Noble and the book publiskiers should be doing to stimulate more busind ms to 013; 28 Dcal hira ook, c's able 150 | 522 pages remaining > pawi