When faced with new challenges in a highly competitive market, it often requires bold and innovative strategies to increase profitability.
As evidence, Barnes and Noble Inc. has decided to split its operations in two, separating its digital Nook business from its brick-and-mortar stores. Microsoft Corp and Pearson PLC will be the preeminent shareholders of the Nook Media offshoot, having heavily invested in the digital readers, but not in the broader company,
This reflects a growing popularity in the decision for restructuring large organizations to spin off divisions with a significantly different outlook than the rest of the business. This blog has recently reported the decision of Time Inc., the long-standing magazine publisher, to spin off from Time Warner, a move that has many parallels to Barnes and Noble's current strategy.
But as the Wall Street Journal indicates, in this most recent case, both operations are still solidly profitable. However, as the print industry experiences decline and the digital reader market is growing consistently more competitive, the decision could provide more flexibility for both operations to react to changes in market demands independently.
According to the source, investors applauded the decision, as Barnes and Noble's stock rose 5 percent.
"It will simplify what has been a very complicated situation," Maxim Group analyst John Tinker told the Wall Street Journal. "Valuing a business that is a physical retailer, a college book retailer, a hardware vendor and a digital content seller is very difficult."
Often, it requires insight from an organization change management consultant in order to provide above-the-fray insight into the challenges being faced by the organization. These professionals bring extensive industry insight and experience which allows them to identify solutions that may have been overlooked by entrenched leadership.