Case Analysis Questions on Leadership Online (a): Barnes & Noble vs. Amazon.Com

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Q1: Summarize Barnes & Noble’s business strategy and business model based in the case descriptions. How have these strategy and business model been evolved since the case was written?

Barnes & Noble’s business model simply put was lower cost, and SCM. They sold merchandise at lower cost and they also decreased cost associated with procurement by obtaining better discounts from publishers than other book retailers and by publishing certain titles themselves. Since Barnes & Noble’s held a huge portion of the market share they were able to leverage scales of economies when it came to reducing costs. Lastly, they were able to achieve reduced inventory cost through the business perks provided to them such as longer payment terms and access to books in short supply. Barnes & Noble’s business strategy was to use economies of scale and economies of scope. They used economies of scale through procurement and logistics. Since they were able to get bigger discounts from publishers they were able to produce more revenue when selling merchandise. As far as economies of scope is concerned one can clearly see that Barnes & Noble’s implemented this because they offered other services and they acquired other companies as well as certain percentage stakes in them. They acquired a mail-order book business, a membership club, and a 20% stake in Canada’s largest book retailer to try and broaden their scope.

I think one can argue that Barnes & Noble’s business strategy and business model in theory hasn’t changed (I.e. that they use economies of scale still) that they just added new products or services; however, I‘ll make the argument that both has changed. Barnes & Noble realized how big the virtual storefront became so not only did they try to create an on-line presence they also created the nook an e-reader device. They self-manufacture this product along with a couple other devices and currently sell them in their stores. They are...
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