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Case Study 3

1. Use the value chain and competitive forces models to evaluate the impact of the
Internet on book publishers and book retail stores such as B&N.

According to Michael Porter’s five competitive forces models, there are 5 factors
that affect the competitiveness and status of the company. These are Competition in
the industry, Potential of new entrants in the industry, Power of suppliers, Power of
buyers and Threat of substitute products.

The impact of the Internet on book publishers and book retail stores such as
B&N using the above cited five forces model are as follows:

Competition in the industry – the book retail stores are very much threatened by the
introduction of the internet. The customers are now ‘techy’ as they want the books to
be less hassle and that they can use it anytime, anywhere.

Potential of new entrants in the industry – since we are now in the modern area where
almost all things are done digitally, there is a constant appeal to have our new
competitor by way of taking the internet.

Power of suppliers – The suppliers of books is also threatened by the impact of internet
since there would be now a decrease of customers who want to buy books from the
bookstore since they are now into technology.

Power of buyers – The buyers will patronize the new e-book because it is handy and less
hassle as compared to the traditional bookstore. They can also escape the crowd and
hassle of falling in line to the bookstore just to buy books.

Threat of substitute product – The introduction of internet in the market is a perfect


example of a substitute product. The bookstore is selling a book to the market a
traditional way. Here comes the internet which is a substitute good by means of e-book
or electronic books where customers just can browse books with the use of internet or
technology.

2. How are B&N and the book publishers changing their business models to deal with the
Internet and e-book technology?

The B&N and book publisher was considered as a big bully in the field of bookstore and
publishing books since they are unbeatable and aggressive as to price tactics back in the
days. But when the introduction of internet comes into play, that role was said to be
reversed since the demand for the bookstore and books has changed drastically due to
change in customers’ perspective.

B&N are now adapting to the trend of the environment and of the competitors. They
practically adhere to what the demand of the customer is. Before they were just a
simple bookstore with a traditional way of selling and publishing books and is a doing
business with physical books, today they styles itself as a seller of e-books, devices to
read them on, and apps that enhance the reading experience of its customers. As what
can we see, B&N is changing its course towards modernization and globalization which
is a practical way to survive. The only way to survive with this ever-changing world is to
adapt to its trend and to have an edge on our competitors.

3. Will B&N new strategy be successful? Explain your answer.

The new strategy of B&N to adhere to the current trend and demand of the customers
has been a positive one since they grabbed a significant market share from Amazon and
Apple in the e-book marketplace. Actually analyst has estimated in 2011 that B&N
controlled approximately 27 percent of the digital book market (Amazon held 60
percent). This shows that B&N has a voice on the market and not to be underestimated.

4. Is there anything else B&N and the book publishers should be doing to stimulate more
business?

The B&N and the book publishers can always use Michael Porter’s competitive forces
model to identify risks and threats on their products. They were once a leader on their
industry, then they experienced a fall when the internet was introduced and now they
are bouncing back and working hard to claimed that status again. With the use of
competitive forces, they can update, upgrade and address any risks and threats on their
business. They can also study their competitors’ strengths and weaknesses and also its
own. Knowing their competitors’ strengths and weaknesses will put B&N and its
publishers in a better position to assess any opportunities that may come across and
capitalizing it and use it in its full advantage.