Barnes And Noble Case Essay

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Intro Barnes and Noble (BN) compete in a $24 billion retail bookselling industry that in 2010 was considered a mature industry. The spike in technological advances has pushed the bookselling industry into new territory that many companies are rushing to enter. The biggest competitor in the newly created e-reader industry was Amazon’s Kindle who in 2010 had approximately 70-80% of the market share. Barnes and Noble acted rapidly to the change in industry trends and released the Nook, BN’s e-reader. The issues that BN is faced with in 2010 are of varying importance. The primary issues are how to create long-term success with the Nook e-reader, how to handle Yucaipa’s increasing control through stock accumulation, and how to reduce the $5.7 billion in operating costs. The secondary issues that BN faces are how to handle the lawsuit and the legality of the poison pill, in addition to whether BN should stay public or go private. Recommendation It is our recommendation that Barnes and Noble activate the poison pill in order to dilute Burkle’s share in the company, and to further invest into transitioning the company into the online arena. The initial focus will be on the basic Nook and in order to generate quick growth through online sales. The long-term focus will be on expanding the product line of the Nook to capture a wider audience. Another aspect of the recommendation is for BN to continue operating their various retail outlets but create an exit strategy to reduce floor space over the next 8-10 years. Alternatives 1) Accept Burkle`s request to partner with Microsoft and HP and reduce focus on the Nook. Pros: Create potential long-term relations with corporate giants who have access to vast resources and exit the e-reader business before more costs are sunk into the development. Cons: Missed opportunities in the e-reader industry, remain solely in a

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