Critical Analysis of Controllable and Uncontrollable Business Environments
Organizations operate in an environment characterized by both controllable and uncontrollable factors which influence their performance. These aspects include legal, political, technological, and sociocultural changes. The most significant challenges that affect contemporary companies are competition and changes in consumer preference. In highly competitive industries, numerous businesses offer similar products at different prices. Barnes & Noble is an example of a retail company that has been adversely affected by growing competition in the retail and bookstore industry.
Barnes & Noble faces stiff competition from fast-growing online retailers. One of the leading competitors in the industry is Amazon, a company that has both an online and physical presence in the sector (Levine-Weinberg, 2019). Since Amazon’s entry into the business, Barnes & Noble has continuously reported lower sales. For instance, the organization experienced a 6.1% sales drop in the first quarter of the fiscal year 2018 (Tyler, 2018). Considering the forecasted trends by the industry analysts, Barnes & Noble may eventually terminate its operations.
Apart from industrial threats, the company is also affected by consumer tastes and preferences changes. The aspect may explain the decline in adjusted EBITDA from $139.5 million to $133 million in 2018 and 2019, respectively when the bookstore industry had a “strong lineup for new titles” (Levine-Weinberg, 2019). Customers’ shopping behavior has significantly changed over the years. Tyler (2018) argues that people are no longer interested in purchasing books from bookstores. In my view, Barnes & Noble’s strategy of creating a unique in-store experience is ideal in the industry. Despite spending heavily on enhancing customers’ experiences, the firm may not generate enough revenue from its sales.
Although the company appears to be on the verge of failing, few solutions that could save its operations in the industry exist. First, the organization should invest in an omnichannel shopping experience. Barnes & Noble may need to reduce its inventory capacity but respond to customers’ demands on time (“Can Barnes & Noble Survive,” 2018). The company capitalizes heavily on books and store space records, which does not equally translate to increased revenues. For instance, Tyler (2018) noted that a lot of space in one of the stores was used for bookshelves as a reading area. The firm should reduce the resources spent on physical space and redirect them to creating a seamless experience that would ensure books and other products are delivered promptly. The strategy may reduce operational costs and boost the firm’s revenue.
Barnes & Noble should also restructure its store chains to foster a purchasing habit. One of the company’s shortcomings is its retail layout, which encourages in-store reading rather than buying (“Can Barnes & Noble Survive,” 2018). Instead of investing in the in-store customer experience, the firm should revamp its online presence to facilitate out-of-store sales. The company should also review its assortment of books. Barnes & Noble appears to satisfy the needs of millennial consumers (“Can Barnes & Noble Survive,” 2018). Therefore, the organization should stock books devoted to older people to balance its products and sales in all market segments.
Overall, Barnes & Noble operates in a highly competitive retail landscape. The company faces industrial threats from e-commerce giants, such as Amazon. The presence of online retailers adversely affects the organization’s sales and revenue. The firm can thrive in the business by investing in omnichannel experience and restructuring its chain stores. If the corporation fails to act in time, it may accumulate more debts and eventually risk liquidation.
Can Barnes & Noble survive? (2018). Wharton University of Pennsylvania. Retrieved from https://knowledge.wharton.upenn.edu/article/can-barnes-noble-survive/
Levine-Weinberg, A. (2019). Barnes & Noble could succumb to the retail apocalypse. The Motley Fool. Retrieved from https://www.fool.com/investing/2019/03/11/barnes-noble-could-succumb-to-retail-apocalypse.aspx
Tyler, J. (2018). We shopped at Barnes & Noble and saw a key shortcoming that’s hurting the chain in its battle against Amazon. Business Insider. Retrieved from https://www.businessinsider.com/barnes-and-noble-store-struggles-against-amazon-2018-5?IR=T