Misaligned Seven S's at Winder Farms

Everything about a milk delivery company portrays an aura of service. They come to your house, when you want, with what you want. Also, to justify their premium prices they offer premium products. After my mission, I worked for Winder Farms and was consistently impressed with how their alignment allowed them to offer superior service.


Their internet system allowed customers to change their order anytime before 8pm the night before a delivery. Shared values were instilled in every company meeting and at the corporate headquarters that still looks like an old barn. Their strategy was to become a farmer's market on wheels and they successfully increased their product offering to over 300. Their skills were to find local inexpensive organic/natural food. Structure allowed for a great delivery system. The style was impressive, tracing their roots back to John Winder who would deliver milk directly to local hotels.

Unfortunately, they had a misalignment with their staff. The customer service department was horrible and their incentive structure was not aligned with providing great service. The department was supposed to give out as few credits as possible thus leading to very stingy customer service representatives. I did not work in this department, but I heard of a rep denying a credit as small as 20 cents because, "if the customer can't afford 20 cents, they shouldn't be getting Winder Farms." I do not know if their have been any changes in the last few years, but at the time the churn rate for Winder Farms was a major impediment to their growth.

Five Forces For Barnes and Noble

Barnes and Noble recently declared that they will stop paying a dividend to focus on building their e-book presence. Their main competitor for many years, Borders, has entered bankruptcy protection, and may not last the summer. Below I detail my analysis of the Five Forces Model for the book industry, particularly for Barnes and Noble.

Bargaining Power of Suppliers
Positive. As there are not that many national retail chains for books, and their are many publishers and writers, the retail outlets have a better bargaining position. There is evidence of this in the recent bankruptcy of Borders. Months before Borders entered bankruptcy, they changed the payment terms on their accounts payable to be very unfavorable to the publishers, and there was nothing the publishers could really do about it.

Threat of New Entrants
Mixed. This used to be very high, but the advent of the internet changed everything for this industry. Brick and mortar stores required a lot of capital, but Amazon has become successful without being so encumbered. However, now that Amazon has such brand recognition on the internet, it is difficult to see another internet rival appearing.

Rivalry
Negative. Amazon continue to amass profits and sells. Online power gives resellers access to new markets. Even Apple has entered the E-book market.

Substitutes
Negative. Throughout history we have read books for information and entertainment. Never before have we had so many options to provide for these needs.

Bargaining Power of Buyers
Negative. With the ability to buy from other readers, I can't remember the last time I bought a book new.

Overall, this is a poor industry. It will be interesting to see if Barnes and Noble can turn it around, I doubt that they can.