Professional Documents
Culture Documents
Case Study:
Better World Books - HBS
Question
1:
As
a
for-pro*it
social
enterprise,
Better
World
books
(BWB)
follow
a
triple
bottom
line
philosophy,
basing
their
economic
activities
on
the
elements
of
people,
planet
and
pro*its.
They
aim
to
create
and
deliver
value
for
customers,
employees,
shareholders
and
most
importantly,
the
illiterate
population
by
selling,
receiving
and
donating
used
books.
With
social
responsibility
and
community
involvement
at
the
core
of
their
value
proposition,
the
world
can
become
a
more
literate
and
better
place.
Although
a
rosy
but
attainable
ideal,
such
proposition
can
have
its
weaknesses
including
the
volatility
of
inventory,
the
distribution
of
pro*it
and
the
ignorance
of
minority
towards
social
issues.
A
weakness
arising
from
the
planet
element
of
BWBs
value
proposition
is
the
reliance
of
donations
to
supply
majority
of
the
total
inventory.
Since
donation
levels
are
not
always
consistent,
inventory
levels
*luctuate
creating
a
degree
of
constant
uncertainty.
In
addition,
35.1%
of
consumers
interviewed
in
a
study
by
BWB
do
not
or
somewhat
care
about
social
responsible
behaviour
(Norton,
M.,
Wilson,
F.,
Avery,
J.
&
Steenburgh,
T.
2012,
p.17).
Also
if
they
wanted
to,
they
can
donate
straight
to
the
non-pro*it
organisation
instead.
BWB
must
thus
emphasize
how
their
brand
ful*ils
their
needs
to
read
and
save
money,
builds
on
their
values
why
illiteracy
is
an
issue
and
imply
urgency
so
that
action
can
be
taken
today.
(Austin,J.,
Stevenson,
H.
&
Wei-Skillern,
J.
2006,
p.7).
As
part
of
the
people
and
pro*its
element,
BWB
returns
a
percentage
of
their
pro*its
to
its
investors,
partners
and
shareholders.
The
dif*iculty
with
this
is
how
it
is
distributed.
BWB
management
needs
to
frequently
be
aware
of
issues
relating
to
customer
perception
and
reassess
the
percentage
they
give
to
stakeholders.
Since
customers
only
see
the
exterior,
they
may
perceive
5-10%
as
a
small
amount
when
actually
it
is
more
than
what
the
two
BWB
co-founders
have
ever
earned.
In
addition,
how
much
they
set
aside
towards
literacy
initiatives
need
to
be
in
line
with
investment
returns
because
low
returns
means
lower
attractiveness
for
further
investment
in
BWB.
This
could
have
detrimental
affects
for
future
expansion.
Lastly,
when
balancing
the
pro*its
and
people
elements
of
their
value
proposition,
*inancial
incentives
need
to
be
taken
into
consideration
to
attract
talented
labour
to
further
develop
the
company.
BWB
can
turn
to
the
equity
method
of
funding
whereby
they
allow
the
purchase
of
larger
shares
in
the
company
however
this
can
make
large
investors
turn
on
them
and
demand
more
pro*it.
Question
2
In
Better
World
Books
(BWB)
case,
their
core
competencies
lie
within
the
values
that
the
co-founders
shared
since
the
inception
of
this
company
in
2002
aiding
others
through
their
business
practices.
With
a
business
model
that
incorporates
a
for-pro*it
approach
with
built-in
social
and
environmental
bene*its
it
continued
to
delivered
on
its
unique
promise
of
being
a
triple-bottom
line
of
pro*it,
people
and
planet
enterprise
(Norton
et
al.,
2012).
As
Helgesen
explained,
Were
not
a
traditional
company
with
an
add-on
cause
component.
Social
and
environmental
responsibility
is
at
the
core
of
our
business
in
our
DNA.
(Norton
et
al.,
2012)
The
uniqueness
of
BWBs
approach
to
business
was
unprecedented
in
the
used
books
industry
which
led
to
interest
in
their
risky
venture
of
Creating
a
Better
World,
One
Book
at
a
Time.
(Norton
et
al.,
2012)
Being
one
of
the
88
founding
Bene*it
Corporations
in
2007,
they
have
displayed
ongoing
sustainability
in
these
values
that
they
hold
through
major
improvements
in
their
B
Impact
Reports
as
seen
by
comparing
the
2008
and
2011
B
Impact
Report
scores.
[Workers:
24
(2008)
to
31
(2011)]
[Community:
32
(2008)
to
51
(2011)]
[Environment:
6
(2008)
to
23
(2011)]
[Governance:
9
(2008)
to
17
(2011)].
Core
competencies
result
when
*irms
learn
to
harmonise
multiple
practices
intertwined
with
technologies.
(Prahalad,
1993)
Essentially,
these
harmonising
practices
lay
the
foundations
for
their
competitive
advantages
and
provide
for
the
added
value
in
the
company.
Kevin
Jones,
a
board
member
believed
the
development
of
a
proprietary
inventory
management
system
to
be
an
increasing
competitive
advantage
over
other
companies.
(Norton
et
al.,
2012)
This
system
was
unique
to
the
bookselling
industry
at
this
time
and
drastically
improved
transparency
and
ef*iciency
in
the
companys
operations.
However,
costing
over
$2
million
the
technology
was
expensive
and
time
consuming
for
a
company
at
such
a
small
scale.
In
addition
to
this
technology,
a
competitive
advantage
lies
in
the
social
aspect
of
BWBs
operations
whereby
it
embodies
Helgesens
rallying
cry
to
consumers,
BWB
rely
on
consumers
voting
with
their
dollars
for
a
world
in
which
every
child
has
access
to
books
and
education.
(Root,
2009)
However,
the
*inancial
perspective
of
BWB
requires
a
pro*itable
return
in
order
to
continue
in
their
quest
for
their
social
mission
of
giving
a
certain
percentage
of
their
pro*its
to
the
non-pro*it
organisations
that
they
are
partnered
with.
However,
this
percentage
number
has
decreased
from
15%
originally
to
5-10%
of
revenue.
This
embodies
the
paradox
in
such
a
business
model
where
social
responsibility
is
given
importance
at
the
same
level
as
*inancial
growth.
Whereby,
the
decision
to
donate
to
their
non-pro*it
partners
is
two-fold,
where
BWB
stunts
its
own
growth
if
they
donate
too
much
of
their
revenue
and
this
in
turn
creates
a
lower
valuation
for
the
company
which
would
hurt
future
growth
and
investment
which
would
eventually
lead
to
decreased
future
donations.
Thereby
the
cycle
occurs
where
*inding
the
right
balance
between
donations
and
future
investments
has
to
be
determined
in
order
to
remain
true
to
their
social
cause
of
assisting
children
around
the
world
in
educating
and
providing
them
with
books.
Therefore,
in
order
for
BWBs
core
competencies
and
competitive
advantages
to
remain
sustainable
in
the
future
they
need
to
remain
true
to
this
motto
otherwise
they
risk
both
their
partners
and
the
credibility
they
hold
in
the
industry
as
a
social
for-pro*it
B
Corporation.
Question
3:
Amazons
logistical
pro*iciency
has
allowed
the
company
to
excel
in
the
bookselling
business.
In
an
industry
that
generates
a
high-volume
inventory
with
low-margins,
size
is
what
has
seen
this
company
achieve
a
greater
competitive
advantage.
In
2010,
the
company
occupied
11.8
million
square
feet
of
warehouse
operations
in
North
America,
and
5.7
million
internationally
(Norton
et
al.
2012).
These
*igures
illustrate
the
magnitude
of
the
companys
warehouse
facilities,
which
at
the
time
were
almost
six
times
greater
than
some
of
its
competitors,
namely,
Boarders,
Barnes
&
Noble.
Access
to
large
inventory
enabled
Amazon
to
overshadow
smaller
companies
such
as
Better
World
Books
(BWB)
and
dominate
the
online
market
for
the
sale
of
new
and
used
books.
As
such,
BWB
was
subjected
to
a
pricing
structure
that
ultimately
undermined
the
brand
and
the
companys
social
reputation.
In
order
to
combat
BWBs
social
image,
the
company
aimed
to
carve
out
a
new
identity
(Norton
et
al.
2012)
with
the
launch
of
their
new
website
BetterWorldBooks.com
in
December
2006.
As
a
result,
BWB
were
able
to
sell
directly
to
its
consumers,
eliminating
the
*ifteen
percent
commission
it
paid
on
average
to
Amazon.
The
launch
of
the
new
website
implemented
a
pricing
strategy
that
saw
less
*inancing
on
marketing
overheads
and
more
money
spent
on
paid
search
advertising.
Consumers
who
typed
used
books
on
search
engine
sites
such
as
Google
would
now
have
the
BWB
advertisement
appear
at
the
top
of
their
search
results,
ultimately
heightening
brand
awareness.
In
addition,
a
key
point
of
difference
to
its
competitors
was
the
companys
commitment
to
free,
reliable
shipping
(Norton
et
al.
2012);
a
strategy
that
was
fundamental
to
its
growth.
Also,
the
company
encouraged
its
customers
to
use
eco-shipping.
This
sustainable
approach
produced
a
lower
energy
expended
per
package
in
comparison
to
other
shipping
companies
and
harnessed
BWBs
socially
sustainable
image.
With
the
growth
of
the
new
website,
BWB
now
faces
challenges
pertaining
to
its
pricing
structure.
In
order
to
sustain
its
competitive
edge
within
the
marketplace,
it
should
adopt
a
dynamic
pricing
strategy
that
adjusts
prices
continually
to
meet
the
characteristics
and
needs
for
individual
customers
and
situations.
A
study
conducted
by
Xiong
et
al.
(2013)
found
that
dynamic
pricing
strategies
effectively
balance
supply
and
demand
over
time
in
a
rapid
changing
online
environment.
The
advent
of
the
Internet
has
affected
pricing
to
a
great
extent.
The
*lexibility
of
the
Internet
allows
online
consumers
to
instantly
and
constantly
adjusts
prices
on
a
wide
range
of
goods
based
on
demand
dynamics.
Dynamic
pricing
could
offer
many
great
advantages
for
BWB,
both
from
a
marketing
point
of
view
and
as
a
means
of
monitoring
and
controlling
inventories.
A
case
in
point
is
exempli*ied
with
catalogue
retailers
such
as
CableChick.com.au,
who
can
change
prices
instantly
according
to
changes
in
demand
or
costs,
changing
the
prices
for
speci*ic
items
on
a
daily
basis.
Furthermore,
Dell
Computer
uses
dynamic
pricing
to
achieve
real-time
balancing
of
supply
and
demand
for
computer
components.
These
strategies
can
be
further
applied
to
BWB
by
raising
prices
on
components
in
short
supply
and
dropping
prices
for
oversupplied
items.
Question
4:
Before
exploring
the
strategies
Better
World
Books
(BWB)
can
implement
to
complete
the
full
circle
(Norton
et
al.,
2012),
it
is
imperative
to
understand
exactly
what
completing
the
full
circle
actually
means.
This
term
is
used
by
the
BWB
VP
of
Marketing,
John
Ujda,
to
describe
strategies
that
the
company
employs
to
further
engage
and
link
the
book
donors
and
the
book
buyers
together.
Duo
strategies,
physical
evidence
and
people
are
proposed
in
order
to
answer
the
fundamental
question
of
how
to
increase
engagement
within
the
network
of
book
donors,
BWB,
and
buyers.
Physical
retail
stores
was
a
consideration
BWB
had
kept
in
their
minds,
but
prevented
from
being
actionable
because
of
the
*inancial
sacri*ice
that
entailed.
However
the
potential
for
BWB
is
that
such
a
strategy
will
generate
a
greater
*low
of
customers,
reiterated
by
research
conducted
by
(Kau,
et
all
2003
pg
141),
showing
that
47%
of
consumers
aged
16-35
utilise
the
internet
to
purchase
goods,
whilst
only
25%
of
consumers
aged
35+
do
so.
The
second
issue
is
that
insuf*icient
people
know
about
BWB.
Thirdly,
even
if
they
do
know
BWB
exists,
they
do
not
tend
to
donate
books.
Hence,
a
physical
store
is
more
than
another
channel,
it
can
represent
and
symbolise
what
a
company
stands
for.
(A.E
Kirby,
A.M
Kent
2010
pg
433).
By
having
a
store,
there
will
be
higher
in*lux
of
customers
that
will
buy
books
there,
awareness
of
BWB
will
increase,
create
positive
publicity,
and
*inally,
because
of
the
added
convenience,
people
will
donate
more
books
as
well.
People
is
another
core
strategy
BWB
can
used
to
further
the
relationship
with
both
the
donors
and
buyers.
First
of
all
,
(J.Barney,
P.
Wright,
Pg
3)
argues
that
people
are
the
faces
of
the
*irm,
again
representing
the
eco-green
*irm
BWB
represents
and
communicating
that
to
their
target
market.
By
training/employing
staff
so
they
remain
goal
driven,
passionate,
and
have
the
correct
competencies,
it
will
help
excel
the
*irm
in
terms
of
one,
maintaining
relationships
with
current
partner
and
negotiating
with
new
ones,
and
two,
to
act
as
ambassadors
to
the
cause
and
spread
word
of
mouth
and
be
a
catalyst
to
awareness.
It
is
important
to
keep
the
*low
of
books
consistent
to
ensure
survival,
a
speci*ic
example
of
this
being
the
fact
that
supplies
from
Universities
is
declining.
At
the
same
time,
by
having
the
right
people,
new
links
can
be
created
,
increasing
suppliers,
and
also
connect
these
procurements
onto
sellers
who
might
not
even
know
of
this
company,
hence
completing
the
full
circle.
By
investing
in
higher
quality
human
resource
and
eventually
encapsulating
that
into
a
physical
retail
store,
an
icon
of
BWB
will
be
conjured,
effectively
connecting
all
parties
involved,
and
completing
the
full
circle
that
John
Udja
*irst
proposed.
Question
5:
In
todays
present
society,
growing
consumer
awareness
and
favorability
of
social
responsibility
has
sparked
a
change
in
the
way
*irms
operate.
With
this
in
consideration,
Better
World
Books
(BWB)
not
just
for
pro*it
mission
and
business
model
enables
and
constrain
its
potential
as
a
business.
BWBs
mission
facilitates
its
potential
by
effectively
capturing,
creating
and
highlighting
the
well
being
of
society
as
it
aims
to
convert
donated
books
into
*inancial
resources
that
could
be
used
to
do
good.
(Norton
et
al.,
2012).
This
evidently
re*lects
Corporate
Social
Responsibility
(CSR),
which
addresses
the
actions
that
go
beyond
the
interests
of
the
*irm,
and
above
the
level
that
is
required
by
law
(McWilliams,
A.,
&
Siegel,
D.
(2001).
BWBs
business
model
operates
under
the
B
Corporation
concept,
also
known
as
a
bene*it
corporation
(Norton
et
al.,
2012).
B
Corps
are
voluntary
aliases
available
to
for-pro*it
companies
to
demonstrate
their
commitment
to
a
dual
mission
of
making
pro*its
and
promoting
social
good
(Reiser,
2011).
Initially,
BWBs
business
model
inhibited
its
potential,
broadly
operating
as
a
backroom
operation,
whereby
BWB
saw
using
other
online
retailers
a
great
advantage
as
they
allowed
these
websites
to
bring
customers
to
them.
Yet,
because
BWB
used
other
online
retailers
to
distribute
and
sell
its
books,
its
social
mission
and
the
brand
in
its
entirety,
became
obscure
to
customers.
However,
the
company
saw
a
potential
in
a
niche
strategy
to
compete
directly
with
Amazon
(Norton
et
al.,
2012),
where
it
launched
its
own
branded
website
BetterWorldBooks.com,
allowing
it
to
eliminate
signi*icant
costs,
for
example,
paying
commission
to
Amazon.com.
Likewise,
launching
its
own
website
also
enabled
BWB
to
differentiate
its
identity
and
establish
a
reputation
as
a
for-pro*it
social
venture,
in
comparison
to
those
of
their
industry
competitiors
In
the
near
future,
BWB
should
retain
its
status
as
a
for-pro*it
social
venture.
With
the
surge
in
social-
mission
branding,
the
dual
mission
of
for-pro*it
and
promoting
social
good
supports
CSR
and
encouraging
socially
responsible
behaviour
(Reiser,
2011).
Both
these
practices
have
become
increasingly
important
in
consumers
minds,
and
will
continue
to
become
an
important
success
factor
for
*irms
(Snider,
Hill
&
Martin,
2003).
Pro*it
maximization,
although
not
a
key
objective
of
BWB,
still
remains
important
as
it
assists
BWB
in
generating
an
adequate
level
of
pro*it
to
fund
for
investments
and
logistics
such
as
the
proprietary
inventory
management,
which
aided
in
building
competitive
advantage.
More
importantly,
the
ability
for
BWB
to
continually
operate
within
the
social
and
environmental
expectations
of
society
allows
it
to
create
customer
satisfaction,
generate
brand
equity,
and
brand
loyalty
(Luo
&
Bhattacharya,
2006).
Reference List:
2013, <http://www.bcorporation.net/
community/better-world-books>
2009).
97-09
2013.
pp.
1-18.
McWilliams,
A.,
&
Siegel,
D.
(2001).
Corporate
Social
Responsibility:
A
theory
of
The
Firm
Perspective.
Academy
of
Management
Review,
Vol.
26,
No.
1,
pp.
117-127.