Summary
This paper is about Book publishing industry in the USA. Main analysis are done using Porter’s five forces analysis. First analysis is on industry before e-books while indentifying main levels of threats for industry from existing rivalry, new entrants, bargaining power of buyers, bargaining power of suppliers and substitutions. Also, same research is being conducted for industry after ebooks emerged. Next part is looking to the future of industry and identifying main opportunities and threats looking forward. Finally paper is concluded with suggestions for suppliers how to sustain their business.
Introduction
Book publishing business recently has been going through lots of changes. New technologies opened doors for new
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Bargaining power of suppliers – High for Manuscripts of popular authors/ Low for material
Production: Two of major costs for publishers ware paper and printing. Both paper and printing services were easily accessible and publisher could easily switch from one supplier to another.
As a result, bargaining power of suppliers was low. In addition, in terms of printing, publishers could choose either to outsource printing or to build their own printing facilities, which put even more pressure on suppliers.
Manuscripts: Bestselling authors had a strong bargaining power; publishing houses even went to auctions to buy new manuscripts. Meanwhile, new and unknown authors had low bargaining power. For them it was important to get on the book store shelves.
Industry after advent of e-books
Threat of new entrants - Increased.
Internet and e-books lowered barrier to enter. There are more and easier ways how publishers can reach consumers. People have electronic devices everywhere (phones, tablets and etc.) and small companies can reach bigger audience much easier.
Rivalry Among Existing Competitors - Decreased
E-books and online publishing had a significant impact on industry. Some companies failed to keep up with technological advancement and had to run out of business. Industry became less concentrated with fewer but stronger publishers.
Threat of substitute products or services – Increased
In terms of books itself, to
Bargaining Power of Suppliers: The bargaining power of suppliers in the industry is low. There are numerous suppliers in this industry, and the large department stores have the ability to negotiate for the lowest prices. In addition, the switching costs are low, as the products are not highly differentiated. There are a large volume of purchases in the industry, allowing the department stores to exert even more power over the suppliers.
From 1870 to 1899 the indexed value for the cost of living index steadily decreased due to industrialization (Doc A). During this time period, factories utilized techniques such as mass production and interchangeable parts which reduced the necessity of skilled workers. These techniques helped lower the cost of labor which in turn reduced the cost of most products for Americans and the cost of living. Also during this time period, various monopolies began to emerge and with these new monopolies the cost for goods such as food, fuel, and lighting began to go down. Although these monopolies were beneficial to the average consumer, many businesses closed down because they could not compete with the lower prices.
Before Waverlys were published in the United States, publishing in America was mainly just newspapers, almanacs, and pamphlets and relied on Britain to send them anything fiction. However, as tariffs rose publishers decided that they would make more money by importing one copy of a British book and then reprinting in the United States. This shift in publishing changed the game of the publishing world. Publishers didn’t have one job anymore; they were now wholesalers and distributors for the books they published by themselves. Now they didn’t just have a local market, they had a national market.
As demand for technology increases, many companies have begun to transfer every day items and tasks to an electronic version of the same program. A specific type of product that has been altered to be more compatible with growing technological demand is books. Before technology was popular, books were available as paperback and hardback copies only. However, as consumer demand for technology increases, tablets are becoming an asset to a person’s work materials. To accommodate for this shift in consumer wants, eBooks are created; these make up for the technological improvement and produce a cheaper alternative to actual books. The possibility of an eBook monopoly is steadily increasing and is already high
Three key challenges facing the Canadian book publishing industry are the concentration in retail market, the competition for multinationals, and the cost of adapting to new technologies and entering the export market. Policy source 14, Summative Evaluation of the Book Publishing Industry Development Industry Program discusses these challenges.
In this case, the traditional bookseller’s niche is overlapped the Big box retailers’. Because of the limited resources: only certain amount of people demand for popular books, they have to compete for the market of popular books. However, scale difference generates selection pressures. Obviously traditional booksellers have smaller scale and less purchasing power to compete with “Big box” retailers. When the electronic books came out, traditional booksellers struggle more. Although all booksellers were affected, “Big box”
The book market is in fact growing with the exception of weak fortnights in both March and April, sales figures for the overall book market have shown sustained growth in 2005. ...
The bookstore chain has been decreasing in profit in the US over the past 20 years. Most of the books retailers are shutting down their operations and only a few are still operating in the country. Barnes and Noble has become the largest bookseller in the book retailers industry. The firm has integrated its business philosophy into web presence though eBook marketplace. This business strategy assisted the firm to be able to reach a large scale customers and remain as a strongest competitor in the book retailing market.
In order to determine whether the Five Forces are still applicable, this part will analyse Industry in general concerning structural changes due to Digitalization. Because of Digitalization, another two forces significantly affect the competition which are Globalization and Deregulation. The impact of Globalization on the Industry structure is the customers gain benefit as comparing global prices become much easier and faster in from the Globalization process (Dalken, 2014).
Porters five forces will help us in analyse the industry amazon.com is in. Five Forces which will be analysed will be
Furthermore, Barnes & Noble had the power to position their own books in areas of the store with the highest traffic. Electronic publishing was also one of the most salient threats to Random House’s business. Several authors started to self-publish their own manuscripts online avoiding the whole process of bypassing the publishers, distributors and retailers. The emergence of ebooks benefitted both the author and the final consumer. Self-publishing implied a more rapid process for publications and allowed customers to pay lower prices.
The second option involves entering the book production business. But, its potential is unlimited. Here we are dealing with huge market consisting significant figures of 50,000 new titles and 1,500,000 repeat titles a year. Moreover, the market for on demand and short run books is extended beyond the life cycle of normal book. This makes market interesting in terms of extent it can expand to.
Government has introduced some policies to protect the publishing industry. According to National Book Policy which adopted in 1985, it proposed that the book industry should be recognized as an essential industry and, therefore, support must be given for its development. Moreover, the Government policy towards local printing and publishing industry was meant to give ‘protection’ to the industry.
The seller of digital textbooks will also be saving money over producing hard copies. 32% of the cost allocated to paper, printing and editorial can be completely eliminated along with 22.4% of costs related to bookstore operations and personnel. Bookstores as we know them could become obsolete or transformed into stores that sell tablets, e-readers and software packages on campus. Publishers or sellers will now be able to tap into a more global market with electronic textbooks as the information can be translated into many languages quickly.
2-B&N and the book publishers are changing their business models to deal with the Internet and e-book technology by B&N developing its own e-readable devised called Nook. In order to meet demand and supply, they started to be actively in control of its supply chain by developing,