Founded in 1971, by brothers Tom and Louis Borders of Ann Arbor, Michigan, Borders Bookstore was originally a small used book store that’s rapid growth had it move into its 10,000-square foot flagship store in 1974, unheard of at the time (CNN.com). Part of their rapid success was the in home developed Book Inventory System which became a separate company selling the computer software to other independent booksellers (CNN.com). Eleven years later, the bookstore opened the second superstore in Birmingham, Michigan. These stores served as the first of five nationwide superstores. In 1992, Borders was valued at approximately $190 million and was a mainstay in early 1990’s bookstore chains (Borders Group Inc.).
The expansion was spearheaded by …show more content…
The Borders brothers sold to Kmart corporation for $125 million in 1992 (Crainsdetroit.com). While the brothers did not stay on after the sale, the company saw a 15.8% increase in sales in the first year as a wholly owned Kmart subsidiary (Borders Group Inc.). As a wholly owned subsidiary owned by Kmart Corporation, all common stock owned by Borders comes under ownership of the new parent company and the parent company directs how all assets are invested. Other examples of wholly owned subsidiaries include Disney owning ABC and Motown Records selling to MCA Incorporated in 1988. This arrangement is different from a merger in which a corporation acquires a company and dissolves their organizational structure and identity (Legaldictionary.com). Diversification is a way in which a company can manage risk by developing a variety of businesses and is an advantage to the parent company, in this case Kmart Corporation. The corporation had acquired Walden Books prior to their purchase of Borders and later combined the two to form Borders-Walden Group (Borders Group Inc.). In 1994, overall sales for Borders-Walden …show more content…
The Walden stores were not profitable for the company, which Borders Group blamed on “sluggish” mall-traffic. By January of 1997, it had closed a total of 223 Walden stores (Form 10-K). Despite these closures, Borders Group continued to expand. From January 1998 to January 1999, Borders expanded its store footprint by 25.5%, adding 52 superstores. By January 1999, the company has 256 superstores (Ann Abor News). In the mid-nineties, while all competitors were focusing on offering digital options, Borders Group turned to selling more pre-recorded music and DVDs (NPR.org). In fact, Borders Group acquired several CD Superstores, including Planet Music, Inc., to solidify its presence in this market (Borders Group Inc. Form 10-Q, 1997). It also significantly remodeled its bookstores to feature prerecorded music and DVDs. Borders Group believed that offering a wide variety of entertainment options would create “unique opportunities to cross-sell merchandise to both its book and music customers” (Borders Group Inc.). While Borders Group was focusing on offering a variety of entertainment options, its competitors were focusing on expanding to the then new world wide web. In May 1998, through its subsidiary, Borders Online, Inc., Borders Group launched its ecommerce site Borders.com to “enhance the shopping experience by offering products to customers in a variety of channels,” as explained in
The expansion was spearheaded by …show more content…
The Borders brothers sold to Kmart corporation for $125 million in 1992 (Crainsdetroit.com). While the brothers did not stay on after the sale, the company saw a 15.8% increase in sales in the first year as a wholly owned Kmart subsidiary (Borders Group Inc.). As a wholly owned subsidiary owned by Kmart Corporation, all common stock owned by Borders comes under ownership of the new parent company and the parent company directs how all assets are invested. Other examples of wholly owned subsidiaries include Disney owning ABC and Motown Records selling to MCA Incorporated in 1988. This arrangement is different from a merger in which a corporation acquires a company and dissolves their organizational structure and identity (Legaldictionary.com). Diversification is a way in which a company can manage risk by developing a variety of businesses and is an advantage to the parent company, in this case Kmart Corporation. The corporation had acquired Walden Books prior to their purchase of Borders and later combined the two to form Borders-Walden Group (Borders Group Inc.). In 1994, overall sales for Borders-Walden …show more content…
The Walden stores were not profitable for the company, which Borders Group blamed on “sluggish” mall-traffic. By January of 1997, it had closed a total of 223 Walden stores (Form 10-K). Despite these closures, Borders Group continued to expand. From January 1998 to January 1999, Borders expanded its store footprint by 25.5%, adding 52 superstores. By January 1999, the company has 256 superstores (Ann Abor News). In the mid-nineties, while all competitors were focusing on offering digital options, Borders Group turned to selling more pre-recorded music and DVDs (NPR.org). In fact, Borders Group acquired several CD Superstores, including Planet Music, Inc., to solidify its presence in this market (Borders Group Inc. Form 10-Q, 1997). It also significantly remodeled its bookstores to feature prerecorded music and DVDs. Borders Group believed that offering a wide variety of entertainment options would create “unique opportunities to cross-sell merchandise to both its book and music customers” (Borders Group Inc.). While Borders Group was focusing on offering a variety of entertainment options, its competitors were focusing on expanding to the then new world wide web. In May 1998, through its subsidiary, Borders Online, Inc., Borders Group launched its ecommerce site Borders.com to “enhance the shopping experience by offering products to customers in a variety of channels,” as explained in