Report on Waterstone's Strategic Issues

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Report on Waterstone's Strategic Issues

Introduction

The performance of a business organization is influenced by so many factors from within and without its environment. Changing the business environment is one of the most challenging aspects facing many companies today across the world. It has become clear the strategies applied recently cannot be applied in today’s context as well as in the future. It calls for modification of approaches used in the past to survive today while preparing to face the future from another perspective. Many companies have been closed due to the failure of the management team and other stakeholders to address issues from a strategic point of view. There are numerous studies carried down to assist organizations to develop strategic approaches to solve issues faced by their organization and strengthen for the future.  Strategic management is a significant approach through which various challenges facing an organization are resolved (Witcher & Chau 2010).  The approach starts with the identification of a current issue or what is expected in the future and developing strategies to resolve them. Waterstone’s Company will be in focus in this report concerning its strategic issues and options that are there to address such issues.

Reasons Why the Company Was Chosen

Researching strategic issues requires the identification of a company with clear issues to be addressed. Such companies can be identified through newspapers, television news, social network, and business dailies among other sources. It has become to the public that Waterstone has been facing internal and external challenges. This has been particularly exposed through prominent news stations such as BBC News. The company has the potential to expand its market while strengthening its already dominated market. However, the company is losing its market while its expansion rate is relatively slow than its potential (The Telegram 2013).

Identification Of Issues

Waterstone has been in operation since 1982 with its key market in the United Kingdom. The company is prominently known for its book stores and currently for online services in book preview, online purchasing of books, and book rating. The online business is a strategy to expand its market and improve customer services. Recently, the company has partnered with Amazon to assist in resolving challenges faced, during the world economic recession. The company has faced critical challenges as several stores have been closed down. Some of its debtors close down their businesses after which Waterstone suffered a huge amount of loss. In addition, competition in the industry is mounting such that some customers who used to be loyal had shifted to competitors (Witcher & Chau 2010).

Suggested Solution To Address Issue Identified

Waterstone has realized that there are critical issues, which require strategic approaches to reduce or solve them for all. This is a positive move as the company has come up with four key strategies to address underlying issues. The following are the strategies identified by the company

• Opening cafes, stocked with books; to attract a customer who visits these cafes to have a look at various products from the company and possibly purchase them.
• Customers are allowed to read reviews of books online before purchasing them.  This allows customers to select the best copy to purchase which is vital for their satisfaction.
• Loyalty cards have been introduced to facilitate the engagement of readers which is important to let them feel important to the company.
• Waterstone has introduced mechanisms to allow customers to offer their feedback.  

Specific Issues Faced by Waterstone’s

The main issue facing the company is that there has been a digital- migration in the bookselling industry, but Waterstone’s has not yet adopted the concept. To move forward, there are both internal and external issues, which are essential to the achievement of Waterstone’s strategies. Internally the company has resolved strategies such as joining Amazon, introducing new product lines, establishing methods to increase sales, and rebranding the company and its products. Externally it is clear that shops are closing down while the company embarks on selling books in outlets such as cafes and introducing discounts.

From specific issues identified, we came up with two options to assist the company to be strategically positioned.

• The company should rethink its corporate strategy and embark on diversification. This will strengthen the company's performance in the industry and reduce the risk of negative trends in the industry.
• The company should uphold business strategies, which are likely to enhance differentiation and improve scales of operation. Acquisition and alliances will assist in the realization of these objectives.

Strategic Position

Identification of issues and options to resolve them provides a green light on the establishment of strategic positioning. Strategic positioning requires the application of various tools. We decided to apply PEST analysis in the establishing strategic positioning of Waterstone. The use of PEST analysis was highly supported by group members as it offered an insight into the external environment facing the company (Sadler & Craig 2003).

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PEST analysis for Waterstone’s

• Political

Regulations in copyright, piracy, and sharing in the publishing business keep on changing from time to time in various countries. This hurts Waterstone as the company operates in different countries, which affects its income and results in high costs of adjustment to changes. This aspect is out of the control of the company.

• Economic

The increased use of technology and online-based books in various economies is a real issue for Waterstone. The company has moved forward to introduce online services, as well as, maintain its physical books supply, to capture the interest of internet users, as well as, physical book- lovers. Another economic aspect that is likely to affect the company is trends in economic performance, particularly in the company’s key markets such as the United Kingdom. During positive economic growth, Waterstone is likely to experience positive growth in its revenue and profit levels and vice versa.

• Sociological

The shift in the application of technology has attracted many young and middle-aged people who form a key segment in the industry. The use of iPhones and e-books among other digital applications calls for a faster service provision through on-time online service provision. Waterstone has the opportunity to uphold technology to reduce its costs and errors, as well as, capturing to a large market in young and adult groups (Sadler & Craig 2003).

• Technological

With the ever-changing technology, Waterstone should ensure that its systems and those of its partners are working effectively and efficiently.

Market Segmentation

Market segmentation is an essential aspect of marketing; it assists an organization in divining its market based on the needs of customers and establishing a marketing mix that suits their needs (Witcher & Chau 2010). The following are possible segments for Waterstone to focus on.

• Families include friends or nuclear relatives who may find it useful to read certain books to strengthen their relationship.
• Students and academicians require favorite books in their areas of study.
• Business organizations and individuals require knowledge and information to assist in improving their performance.
• Competitors

Some of the key competitors of the company are Amazon, WHSmith, Barnes, and Noble. These competitors are times when it comes to the adoption of technology as opposed to Waterstone’s.

• Value Proposition

There are five prepositions to the company including customers, price, customer needs, value chain, location choice, and marketing. Customers of the company may include, students, teachers, cooks, and children among others; they need quality, variety, and flexibility. Price to the company can e positioned through discounts, loyalty cards, and stationery goods cards (Witcher & Chau 2010).

Porters Forces

 The porters five analyses of Waterstone’s shows several important aspects including

• New entrants can easily join the industry as there are no restrictions.
• Buyers have weak bargaining power and hence cannot influence the prices of books.
• The sales of books online will affect negatively the performance of the company’s book stores.
• Competition is stiff within the industry and hence market share will keep on reducing.