Introduction
Borders Group was started in 1971 by Louis and Tom Borders. The company began as an independent used bookstore in Michigan together with a book wholesaling business named Book Inventory Systems. The company’s first book superstore was opened in 1985 following several years of ongoing regional expansion. Over the last two decades, Borders Group has faced several challenges including stiff competition from other players in the industry, forcing it to adopt different strategies to remain in the market. Borders Group has an internet business model which is mainly characterized by implementation, connected activities, and capabilities components (Roush 4).
Connected activities
Prior to the boom of the internet beginning in early 1990s, Borders Group mode of operation was chiefly traditional retailing through which it had set up hundreds of stores not only in the United States but also in the United Kingdom, Australia, Singapore, New Zealand, and Puerto Rico. The main disadvantages of traditional retailing were space and physical location constraints. Thus, the growth of the internet changed the face of the bookstore industry.
Through the internet, retailers could be larger and could provide an extensive selection of products to online shoppers. The internet also eliminated the difficulties inherent in traditional retailing such as tedious book searches, waiting for assistance from an employee, and high costs resulting from physical and personnel infrastructures (Gataric, Gilbert, Green, Kennedy, Lewallen and Sumita 390).
Competition in the industry became rife with the growth of the internet and rivals such as Amazon, Bertelsmann, and Barnes & Noble rushed to adopt the new technology. As a result, these competitors’ revenues through sales, increased significantly. These changes forced the Borders Group to follow suit and adopt the new technology as well. The company launched its ecommerce website, Borders.com, in 1998. The online system proved to enhance the company’s efficiency. In addition, customers were enabled to order out-of-stock titles from other stores of the company located in different regions (Gataric, Gilbert, Green et al. 391).
Implementation
Between the late 1990s and early 2000s, the Borders Group faced several challenges including falling stock prices, distribution and marketing problems as well as a legal suit which forced the company to incur heavy losses. It was therefore imperative for the company to adopt strategies which would enable it to pick up. One of these strategies involved the company’s partnerships with other players in the industry.
Borders Group entered into partnership with: SALON, a new online magazine that focused mainly on books, the arts and modern issues; Open Sesame, a website that offered custom-made information about books, music and videos; CNET; Infoseek; Harvest; and IBM. Nevertheless, the most significant partnership Borders Group entered into was the one with Amazon.com. The alliance with Amazon.com helped the Borders Group to enhance its performance which had been dwindling in the past years particularly given that Amazon.com was the leading player in the industry (Gataric, Gilbert, Green et al. Sumita 393).
Capabilities
The Borders Group capabilities have been strengthened through its entrance into the online market but more so through its extended partnership with Amazon.com. Indeed, the company’s directors, shareholders and analysts view the Borders-Amazon alliance as the best possible long-term solution for the firm. Since the formation of the alliance, Borders.com has been able to increase its share of the domestic as well as international markets. The firm has been able to increase its book and music superstores in different locations and consequently its market value (Gataric, Gilbert, Green et al. 395).
Works Cited
Gataric, Ivan, Jon Gilbert, James Green, Lain Kennedy, William Lewallen, and Yosuke Sumita. Borders: Responding to Change. Massachusetts: Massachusetts Institute of Technology, n.d.
Roush, Matt. “Borders Buys Rest of Its Stock: Move Aids Kmart Too.” Crains’ Detroit Business 1995: 4.