Comparing Two Similar Businesses

Amazon and Borders book history and the core business of each company will be discussed with a look at the comparison of the companies view point on management approach to Internet marketing and sales. You will read reasons for Amazon's success and Borders demise. The emphasis will be on each company's adaptability to the markets changing conditions and recommendations a company should build in flexibility to back decisions to adapt to these market changes.

Let us start with a timeline of Borders Books which was founded in 1971 by Tom and Louis Borders. Two brothers opened an 800-square-foot used bookstore and called it Borders Book Shop located at 211 S. South State St. in Ann Arbor Michigan. Borders had eight CEO's over its 40 years. Starting in 1988 when Borders recruits Robert DiRomualdo to lead the company's expansion. DiRomualdo is later credited with leading the company's rise to national prominence in the 1990s. The highest point of Borders was in the 1990's under DiRomualdo's leadership as CEO, the company started integrating music and movies into some of its stores. In 1992 Borders chooses not to go public but rather to allow Kmart Corporation acquire them and in 1995 the book store chain, renamed Borders Group Inc., spins off from Kmart and goes public on the New York Stock Exchange. At the time, Borders' innovative inventory management system was considered "the envy of the industry". The 1990's Borders adds 52 superstores in the biggest one-year expansion in its history. In May 1998, Borders launches an online retail presence for the first time at Borders.com. In November 1998 Borders had its first CEO turnover with bringing on Philip Pfeffer and the last CEO turnover in June 2010 with Bennett LeBow. In 2005 Borders reaches an annual profit of $101.0 million. In August 2001 Borders Books makes a decision that later will be seen as one of the blames for the failure of the company. This would be the contracts with online retailer Amazon to sell products online - this relationship is blamed for making Borders late to the emerging web retail segment. The year of 2007 started the downhill spiral of Borders Books when their stock hit a low of $ 12.28 a share and the selling of its U.K. and Ireland subsidiaries. 2008 and brought stock closing at $5.07 after Borders says it lost $157.4 million in 2007. 2008 was also the year that Borders puts itself up for sale and accepts $42.5 million loan from New York hedge fund Pershing Square Capital Management to boost financial position and severing ties with Amazon, the company launches a new Borders.com. In effort to keep the company it June 10, 2008 Borders sells off its business based in Australia, New Zealand and Singapore. In 2008 the layoffs were inevitable and affected 10 percent of the Ann Arbor corporate staff. Borders cuts costs in 2009 and conserves cash in effort to avoid bankruptcy in the aftermath of the financial crisis. Borders continued the struggle and the perseverance to try and save the company throughout the next several years. More layoffs for Ann Arbor in 2010 but Borders does pays off $42.5 million loan to Ackman, renegotiates credit agreement with lenders. But by February 2011, the number of small-format stores is about 170, down from more than 1,100. Tobacco executive and activist investor Bennett LeBow invests $25 million and is names CEO. Borders launches e-book store, starts selling e-readers, sets strategy to get 17 percent market share in e-books within a year. In 2010 Borders launches redesigned website, posts $74.4 million loss for third quarter, and acknowledges possible cash crunch in early 2011. Stock plunges in December 2010 to 0.90 a share. Early January 2011publishers weigh whether to agree to short-term debt in exchange for giving up immediate cash payments for book shipments. More cuts for Borders in the Tennessee distribution center and in the corporate headquarters. Reports dated February 1, 2011 indicate bankruptcy filing may come with weeks. A few days later the New York Stock Exchange warns Borders that its stock could face delisting if it doesn't rise above an average monthly price of $1 within six months. Ackman publically acknowledges a loss of Ackman acknowledges $125 million loss on Borders investment on February 11, 2011 and files Chapter 11 on February 16, 2011. The core business of Borders Books started with a simple bookstore in 1971 to the 2nd largest bookstore in the nation and closing the same first doors four decades later in September 2011.

The timeline for Amazon is a much different one. Amazons path was more aggressive. In 1994 Amazon.com was started by Jeff Bezos. At the time, his company was run completely from his garage in Bellevue, Washington. He was able to secure funding from Nick Hanauer. This first investment of $40,000 was joined by a larger, $100,000 investment from Tom Alburg that helped make the new website. Amazon's first book was sold in 1995. And in 1996 amazon.com Associates Program is launched. 1998 and they opened its first international sites in the United Kingdom and Germany, where it quickly gained success. The Advantaged Program was also launched. In 1999 Amazon.com Auctions is launched, Amazon acquires Alexa Intenet, Amazon is granted 1-Click patent. Time Magazine featured Jeffrey Preston Bezos as Person of the Year in 1999, calling him "king of cybercommerce." In January 2009, Amazon reported $6.7 billion in fourth quarter 2008 sales. The company now has fulfillment centers in 12 U.S. states and eight countries. Its headquarters are in Seattle, Washington, and the company employs more than 21,000 people worldwide.

When it comes to comparing the management approach for Borders Books verses Amazon.com, the difference is day and night. Amazon's management was proactive in staying ahead of the competitor. Amazon has a group called the S Team--S meaning "senior"--that stays on top of what the company is working on and explores strategic issues. They meet weekly as well as once or twice a year. The key is to ensure that this happens throughout the company, not just at the top. At different scale levels it's happening everywhere in the company. And the most important thing is that all of it is informed by a cultural point of view. Not only did Amazon make products, merchandise, and services to meet customer demands; they made their website user friendly by creating the one-click shopping. Borders management approach to internet and marketing were not equivalent to Amazon's approach. Borders did not embrace the internet but seemed either intimidated by it or Borders did not do its research on the trend, it did not envision an internet future. All in all it does not look as if Borders initiated a competitive analysis on the internet and therefor losing their once 2nd largest bookstore lead to Amazon based on internet