Milestone 2 on Business-Level Strategy Borders Group Inc.: Lessons from a Failed Strategy Borders Group Inc. that used t

Milestone 2 on Business-Level Strategy

Borders Group Inc.: Lessons from a Failed Strategy

Borders Group Inc. that used to be the second-largest chain of bookstores in the United States is a good illustration of a company that ended up being stuck in the middle and eventually declared bankruptcy in 2011. Stuck in the middle is the failure of a firm to devote itself to either a cost-leadership strategy or a differentiation strategy, and leaves the business at the mercy of rival firms who have mastered either one of the two strategies. The collapse of Borders shows that misalignment to the industry trends and consumer choices may result into placing a company in a position of death.

How and Why Borders Was Stuck in the Middle.

Borders tried to compete as a bricks and mortar store with large size book sorts as well as in differentiated supplier of a unique customer safford. But it did not establish its leadership in terms of costs as Amazon controlled the sales of online books with lower prices and more efficient system of delivery. Meanwhile, Borders was unable to maintain differentiation as the Barnes and Noble stores had an equivalent in-store experience and invested in digital platforms, such as the Nook e-reader. This left Borders in a place of not having a unique position, between cost and differentiation and has neither.

Industry Environment and Strategy Advice.

During the 2000s, the book retailing business was experiencing a massive transformation because of the development of e-commerce, digitalization and shifts in consumer purchasing behavior. The online format, effective logistics and developing e-books product placed Amazon in a new competitive position. In the case of a company such as Borders, it had to be flexible enough to adjust to technological innovation and concentrate resources strategically in order to survive.

Borders ought to have invested in establishing its own online sales early by contracting its online sales to Amazon in 2001. By following a specific differentiation strategy, Borders would have focused on specific verticalization (niche markets), including rare books, in-store events, and will online first in order to establish a physical-digital experience. This would have enabled the company to compete differently with the low-cost model of Amazon in capitalising on customer loyalty.

Strategy Recommendation

The executives of Borders ought to have embarked on clear focused differentiation strategy. This would involve:

Developing of own digital channels, such as an e-reader and strong online marketplace, which would be competing Amazon.

Increasing store value using author events, community programming, and special product assortments.

Increasing optimization of the operations by cutting down on over-sized store sizes and saving the gains back into the technology and digital innovation.

Provided such measures, Borders could have avoided being caught in between and instead have placed itself as a unique retailer as straddling between community involvement and innovation in the digital world.

References

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition (9th ed.). John Wiley & Sons.

Stone, B. (2013). The everything store: Jeff Bezos and the age of Amazon. Little, Brown and Company.

Trachtenberg, J. A. (2011, February 16). Borders files for bankruptcy. The Wall Street Journal. https://www.wsj.com