Barnes and Noble Going to Australia

Due to the numerous changes brought about by the twentieth century, organizations are now able to expand their businesses overseas more easily. And they try in this sense to seize any opportunity that would lead to increased organizational profits. The American corporations are the ultimate epitome of international success and to prove this, just take a glimpse at Nike, Microsoft or McDonald’s. Barnes and Noble is also an organization that has been considering the penetration of foreign markets in the attempt to gain more customers, and consequently increase their profits.

The venture cannot however commence without the elaboration of a clear business plan. This would begin by presenting the global environment in terms of opportunities that can be seized. It would then follow with an analysis of Barnes and Nobles’ competition within the selected market. An analysis of the environment is also crucial and this should be done from several standpoints, such as geographical, economic, social, cultural or political. Then, the company should have a developed financial plan, presenting the sources of financing the venture and also information on the return on investment. They should also consider the risks and implications of conducting international business. Once the environment and the financial aspects of the business are analyzed, Barnes and Noble should focus on the administrative nature of their internal affairs and this would generically materialize in the creation of a Management Information System. For the business to be successful, it must employ highly skilled and committed personnel; therefore, the American organization will develop and implement a wide variety of human resource strategies, encompassing all moments from personnel recruitment to the termination of their employment contract. Then, they should decide on several marketing features, such as international distribution, pricing, product and target market features. Finally, they should estimate the financial outcome of their operations.

2. Global Business Opportunities

Barnes and Noble is the largest book store in the United States, with 798 book stores opened in all 50 states and the District of Columbia. They are still intending to open other stores (Barnes and Noble 2007 Annual Report). A new business opportunity could materialize in the opening of a venture in Australia. This initiative could prove successful due to the variety of advantages that Australia presents. First of all, they have a literacy rate of 99% (Central Intelligence Agency, 2008). Then, the Australians are educated people who enjoy reading, and therefore would become loyal customers of Barnes and Noble’s. Then, the state government has also implemented various programs that promote reading activities for both children and adults. The children’s programs are focused on introducing the youth to the pleasures of lecture and they intend to stimulate children to read throughout their summer vacations (Australian Library and Information Association, 2004). Finally, the general price of the Australia published books is higher than that of the books published in the United States. Barnes and Nobles would as such be able to offer a cheaper alternative; but currently unfortunately, there are regulations which limit the import of cheaper books.

SWOT analysis of the company and the environment is a useful means to clearly identifying the features that could influence Barnes and Noble’s ultimate outcome in Australia:

Internal Strengths extremely favourable reputation vast expertise in the field of book publishing and retail the ability to offer cheaper items

Internal Weaknesses lack of previous experience in conducting international operations

External Opportunities wide palette of potential customers reading is a preferred activity in Australia discussions are currently taking place to eliminate the restrictions on importing cheaper books (Chettle, 2008)

External Threats intense competition the restrictions on importing cheaper books

3. International Competitors

Since the reader is quite common in Australia, it is only natural that the offering is vast, leading to the conclusion that Barnes and Noble would encounter serious competition. The general perception over the American companies varies, and a generalization is not possible to achieve. However, most readers would agree to the elimination of the bans, whilst those directly involved with the industry would not. The Australian book industry is in many ways similar to the American one, in the meaning that they suffer the consequences of the same global mutations. “The Australian Book industry is like many industries currently faced with huge challenges. The effect of discounting on growth, the impact of GST on imports as well as the impact of digital media all have a profound effect on what is a very large, and predominantly Australian-based content, industry” (GS1 Australia, 2008). A study conducted by the Printing Industries Association of Australia and the Australian Publishers revealed several characteristics of the most successful book publishers and stores across Australia. These are their competitive advantages, and the characteristics Barnes and Noble would have to meet in order to succeed. They refer to: clearly defined goals, understood and sustained by employees; inspiring and enthusiastic leadership; proficient and competent teams; close relationship with customers; a niche market that attracts hard-core profitable business; high technologies and easy access to resources; strategic partnerships; implementation of quality management and the principles of the learning organization (Printing Industries Association of Australia).

4. The Economic/Geographic Environment

Australia has a total surface of 7,686,850 square kilometres, coast line of 25,760 kilometres and no land boundaries. This then means that transportation of products would only be possible by ships and airplanes. The country has limited forests, most of its natural resources being metals. This means that the raw materials for the books would not come from Australia.

Australia is the seventeenth largest economy of the globe in terms of measures gross domestic product, with an estimated GDP for 2007 of $760.8 billion and a GDP per capita of $36,300. “Australia has an enviable, strong economy with a per capita GDP on par with the four dominant West European economies. Robust business and consumer confidence and high export prices for raw materials and agricultural products are fuelling the economy, particularly in mining states. Australia’s emphasis on reforms, low inflation, a housing market boom, and growing ties with China have been key factors behind the economy’s 16 solid years of expansion. […]Australia’s budget has been in surplus since 2002 due to strong revenue growth” (Central Intelligence Agency, 2008). Most Australians work in services (75.2%), followed by industry (21.2%) and agriculture (3.6%). The unemployment rate is of 4.4%.

Australia has a highly developed telecommunications system, with 9.94 main telephones lines in use and 19.76 million mobile telephones. It has 9.458 million internet hosts and 15.3 million internet users, revealing as such the possibility of conducting business online. They possess 461 airports, 2,000 kilometres of waterways and 12 primary ports and terminals (Central Intelligence Agency, 2008).

References

Chettle, N., 2008, Book Industry Debates Cheap Imports, ABC News, http://www.abc.net.au/news/stories/2008/07/17/2306228.html. Ast accessed on September 25, 2008

2004, State Premiers Promote Reading Around Australia, Australian Library and Information Association, http://www.alia.org.au/publishing/incite/2004/12/state.premiers.htmllast accessed on September 25, 2008

2008, the World Factbook – Australia, Central Intelligence Agency, https://www.cia.gov/library/publications/the-world-factbook/geos/as.htmllast accessed on September 25, 2008

2008, Book Industry, GS1 Australia, http://www.gs1au.org/industry/book.asplast accessed on September 25, 2008

Barnes and Noble 2007 Annual Report, Retrieved at http://www.barnesandnobleinc.com/for_investors/annual_reports/Barnes_%26_Noble_2007_Annual_Report.pdfon September 25, 2008

Book Production in Australia, Joint Industry Study, http://www.printnet.com.au/pages/our_industry/industry_reports_sub_pages/book_production__jis.htmllast accessed on September 25, 2008