Forecasting and prediction

Boarders group closed its doors in September 2011. Borders was founded in 1971 by Tom and Louis Borders in Ann Arbor, Michigan. At the time Borders had twenty one stores and then it was purchased by K-mart in 1992. By 1997 they were more than 200 stores. By 2008 mounting competition forced Borders to try unsuccessfully to try and sell itself (n.d). Where did Borders go wrong? BusinessInsurance.org (n.d) identified eight reasons that might have led to the demise of borders.

• Loses: According to the website. The last time Borders made a profit was in 2006 and experienced its peak sales in 2003 when it operated more than 1,200 borders’ and Waldenbooks stores. Shortly after that the company ended its operations in the UK and scaled down operations of Waldenbooks. The company was then hit hard during the financial crisis.
• Management missteps: During the companies’ weaker years, the management made some risky decisions when they changed the rewards program and closed the music and video departments in the stores. The company also continued to hire people with who had little or no interest and knowledge of books and authors. Including four CEOs who lacked book selling experience.
• Debt: After Borders announced that it would be selling the chain in 2008 due to financial issues, it increased its debt by borrowing $42.5 million which it used to remodel its stores and upgrade technology. The company then paid back the debt but did not see an increase in book sales.
• Amazon: In 2001 Borders made a damaging business move when it partnered with its competitor Amazon.com and allowed the competitor to run its online sales business, thus keeping Borders from truly competing in the electronic book market, this also hurt borders online presence causing the bookstore too fall behind its competitors.
• Behind in technology: Borders failed to get involved in electronic books and ecommerce. By 2008 when it launched its own website and e-readers it was too late and it had failed to catch on to the importance of electronic books.
• Invested in too many stores: Instead of developing online presence and e-readers, Borders concentrated on building superstores and focusing on international business.
• Ignored declining music and DVD sales: Borders did not see the decline of music and DVD sales. While these sales were down, e-books were gaining popularity, but borders failed to emphasize the importance of this new technology.
• Category management initiative: When the company implemented the retailing concept of category management. The program controlled the number of titles that were sold for each genre. Borders created specialized categories and assigned their own sales, marketing and merchandising team. However this was largely criticized since it put large publishers’ before small presses therefore giving customers fewer options when it came to choosing a market

From a sociotechnical perspective, the company failed to see the change of paradigm in the society, preferring the use of e-commerce to order books and using e-readers, instead of going to the store to buy physical books. Failing to recognize the interaction between people and technology.
References
Business Insurance. (n.d.). The 8 reasons borders Went Bye-Bye. Retrieved from http://www.businessinsurance.org/the-8-reasons-borders-went-bye-bye/

Daily Mail Online. (n.d.). Borders goes out of business after 40 years, leaving 11,000 without jobs. Retrieved from http://www.dailymail.co.uk/news/article-2016289/Borders-goes-business-40-years-leaving-11-000-jobs.html