Assignment 1: Comparing Two Similar Businesses
Bus302: Management Concepts

Border Books and Amazon.com both started out selling books. So, why is Amazon.com one of the largest retailers in the world and Borders Books is out of business? There are many things that go into making a business a success. It is not enough to have a product to sell and a location to sell that product. In order to understand the difference between Amazon.com and Borders Books, it is important to look at the history and core business of each company, the management approach each company took to Internet marketing and sales, the reasons for Amazon’s success despite not turning a profit for the first five to six years, the reasons Borders Books, although they were initially successful ended up in bankruptcy, the extent to which the management of each company adapted to changing market conditions, and ways a company should build flexibility to back up its decision making process so to adapt to changing market conditions. In order to understand the difference between Amazon.com and Border Books, it is important to understand the history and core business of each company. Looking at Amazon.com first, Amazon.com opened for business on July, 16 1995. “The company was nothing more than a few people packing and shipping boxes of books from a two-car garage” (Webley, 2010). The company was using a desk made out of an old door to pack the books. When Amazon.com first started selling books, people wondered why anyone would purchase books off-line when they could go to a bookstore to purchase the books. “But eventually, a revolutionary change in culture and groupthink took place” (Webley, 2010). The text book, Management says that Groupthink “occurs in highly cohesive groups when group members feel intense pressure to agree with each other so that the group can approve a proposed solution” (Williams, 2010). Amazon.com eventually moved into selling just about anything on-line. They have come to be known for having an extensive selection and great prices. Amazon.com has come a long way since its humble beginnings in a two-car garage. It is now one of the largest on-line retailers in the world. In contrast with Amazon.com, Borders Books history tells another story. Tom and Louis Borders opened their first bookstore in 1971 while they were still students at the University of Michigan. The brothers then opened other stores in Michigan, Atlanta, and Indianapolis. They “developed an inventory tracking system that by the standards of the time, was as sophisticated as computers allowed” (Osnos, 2011). They had their bookstores and sold their inventory system to track book sales and inventory. They opened their first super store in 1985. It was an upscale bookstore with a coffee bar. In 1988, the company employed Robert DiRomualds who had retail experience to expand the business. The bookstore chain grew rapidly over the next four years. Borders Books business was booming in 1992. Kmart purchased the chain in 1992 and created the Borders and Walden Group; however, they did not have the profits that they had hoped for. Also, the company’s problems were intensified because Kmart was having retail troubles of their own. The company had an initial public offering of stock in 1995. The Borders and Walden Group expanded to the international market in 1997 opening their first store in Singapore. The bookstore chain seemed to have a promising future. In order to understand why Amazon.com is a thriving Internet based business, and why Borders Books went out of business, it is important to look at the management approach each company took to Internet Marketing and Sales. First, consider Amazon.com’s Internet Marketing and Sales strategy. The company is an Internet based company who started selling only books on-line. The company now sells almost anything a customer could want on-line. They were also quick to sell E-Books on-line. The company does not stop there. A new customer to the site finds a lot of helpful information on the site; however, the Amazon experience is built around the repeat customer. Amazon personalizes the shopping experience for their repeat customers. “The embedded marketing techniques that Amazon employs to personalize your experience are probably the best example of the company’s overall approach to sales: Know your customer very, very well” (Layton). Tracking customers’ information is one of Amazon’s strong suits. The experience is all about customizing a customer’s experience. Another strategy Amazon uses is a multi-leveled e-commerce strategy. This means that Amazon let’s just about anyone sell just about anything on its platform. A customer can find things sold straight by Amazon on the site, or they can find things sold by a third party on their site. Another neat strategy of Amazon.com is to allow anybody to post Amazon links and earn a commission on things sold through that link. Also, people can build their own Amazon site built around Amazon links and as long as sales go through the Amazon site, the people who have the site get commission off the sales. In contrast with Amazon’s extensive Internet Marketing Strategy, Borders Books did not have much of a strategy. In the beginning, Borders Books was primarily a brick & mortar business. They were happy with following what other bookstores were doing. They even got Amazon to handle their Internet Sales. They did not have an Internet sales strategy except to use Amazon.com as its main e-commerce channel. It is also important to understand the reasons for Amazon’s success despite not turning profit in the beginning. The first reason for Amazon’s success is the company changed faster than the competition. “Often the difference between business success and failure comes down to whether your company is doing a better job of satisfying customer wants and needs than the competition” (Williams, 2010). The company did not settle for selling only books on its web-site. It wanted to be one step ahead of the competition. It started selling other company’s books on its web-site. Amazon even sold Border Books merchandise on its site. It did not stop there. It started selling other types of merchandise on its site. Today a customer can find almost anything they could ever want on the Amazon site. Secondly, Amazon seeks to offer the most products at the lowest prices. It is not good enough in the company’s eyes just to offer the most products; they also have to offer them at the best prices. Lastly, Amazon seeks to cater the experience to the individual customer. The company does this by putting tracking cookies on the repeat customers’ computers. They then customize the options based on the customer. All of these things make Amazon a customer’s favorite. Another important thing to understand is why Borders Books was initially successful; however, they ended up in bankruptcy. Borders Books started out a successful business with a promising future, but in the end they were forced to closed their doors and lay off 10,000 employees. Three factors that affected Borders Books was the failure of the company to address the rapidly changing book industry, e-reader revolution and a turbulent economy. The perfect storm so to speak was brewing. At the same time as the country was having economic problems, the book industry was changing. People now wanted to read books on their cellphones and nooks causing the e-book to become popular. While these factors did have an effect on the company, other companies managed to weather the market shifts. The real factor to why Borders Books went out of business is mismanagement. The job of management is to stay on top of what the market is doing. There were significant changes being made in the book market which included: e-readers, e-books and the economy. Borders Books did not address the issues the way that they should have. They were content in staying the way that they were. They were pretty much a brick and mortar business and had Amazon to sell their books on-line. The complacency of the company’s managers is what destroyed the company. If they would have moved on with market shifts, they may still be in business today. It is also important to look at how each company adapted to changing market conditions. The extent to which the management of each company adapted to the changing market conditions is evident in that Amazon.com is still a strong company and Borders Books is no longer in business. As discussed in the previous paragraph, the market conditions were changing. Things like a rapidly changing book industry, e-reader revolution and a turbulent economy affected both Amazon.com and Borders Books. Borders Books did not do a good job in changing with the environment. They did not make the necessary changes to keep the business strong. The company stayed the way that they were. Amazon.com on the other hand stayed one step ahead of the changing environment. They were one of the first on-line bookstores that began selling e-books on-line. They began selling other products on their Internet site, and they let other companies sell their products on Amazon.com. Also, the company sought to make their prices the lowest in the industry. Amazon did many things to stay ahead of the industry while Borders Books did not change. There are several things that companies can do to build in flexibility to back up its decision-making process in order to adapt to changing market conditions. The first thing companies can do in order to build flexibility to back up its decision-making process is to not be afraid of change. “Their survival in the job, not to mention a company’s success, will depend on their ability or willingness to do something adults hate to do…change” (Kriegel & Patler, 1991). It is important for companies to at least keep up with the changing environment if they wish to stay a success. The second thing companies can do to build flexibility to back up its decision-making process is to have a team of managers making the decisions for the companies. As the text book states, “companies are making greater use of teams because they have been shown to improve customer satisfaction, product and service quality, employee job satisfaction and decision making” (Williams, 2010). A team of managers would have more opinions and ideas to offer than just one or two managers. A result of the more opinions and ideas would be a less likely chance the company would have of failing to change with the environment. The third thing companies could do to build flexibility to back up its decision-making process is to do a SWOT analysis. A SWOT analysis analyzes the companies’ strengths, weaknesses, opportunities, and threats. A SWOT analysis not only looks at what the company is doing right or wrong, but it also looks at what the environment is doing and what its competitors are doing. If Borders Books would have followed these suggestions the outcome of the company may have been different. After looking at the different management approaches of each business and the extent to which each company keeps up with the changing market, some conclusions can be drawn to answer the question, why is Amazon.com one of the leading E-businesses and Border Books is out of business? Borders Books was not only a victim of the changing market, but they were also a victim of the company managers’ unwillingness to change to keep up with the market. On the other hand, Amazon.com not only kept up with the market, but in most cases, they were one step ahead of the market paving the way for the others.

References Kriegel, R., & Patler, L. (1991). If it ain't broke..Break It! Warner Books, Inc. Layton, J. (n.d.). How Amazon Works. Retrieved 2012, from How Stuff Works: http://money.howstuffworks.com/amazon.htm Osnos, P. (2011, 01 11). What Went Wrong at Borders. Retrieved 2012, from The Atlantic: http://www.theatlantic.com/business/archive/2011/01/what-went-wrong-at-borders/69310 Webley, K. (2010, July 16). Online Shopping. Retrieved 2012, from Time Business: http://www.time.com/time/business/article/0,8599,2004089,00.html Williams, C. (2010). Management. Cengage Learning.