IntroductionTMP (The Management Press) is a specialist business publisher; commissioning, printing and distributing books on fi nancial and business management. It is based in a small town in Arcadia, a high-cost economy, where their printing works were established fi fty years ago. 60% of the company’s sales are made through bookshops in Arcadia. In these bookshops TMP’s books are displayed in a custom-built display case specifi cally designed for TMP. 30% of TMP’s sales are through mail order generated by full-page display advertisements in magazines and journals. Most of these sales are to customers based outside Arcadia. The fi nal 10% of sales are made through a newly established website which offers a restricted range of books. These books are typically very specialised and are rarely featured in display advertising or stocked by general bookshops. The books available on the website are selected to avoid confl ict with established supply channels. Most of the online sales are to customers based in Arcadia. High selling prices and high distribution costs makes TMP’s books expensive to buy outside Arcadia.Business changesIn the last decade costs have increased as the raw materials (particularly timber) used in book production have become dearer. Paper is extremely expensive in Arcadia and the trees used to produce it are becoming scarcer. Online book sellers have also emerged who are able to discount prices by exploiting economies of scale and eliminating bookshop costs. In Arcadia, it is estimated that three bookshops go out of business every week. Furthermore, the infl uential journal ‘Management Focus’, one of the journals where TMP advertised their books, also recently ceased production. TMP itself has suffered three years of declining sales and profi ts. Expenditure on marketing has been reduced signifi cantly in this period and further reductions in the marketing budget are likely because of the weak fi nancial position of the company. Overall, there is increasing pressure on the company to increase profi t margins and sales.Despite the poor fi nancial results, the directors of TMP are keen to maintain the established supply channels. One of them, the son of the founder of the company, has stated that ‘bookshops need all the help they can get and management journals are the heart of our industry’.However, the marketing director is keen for the company to re-visit its business model. He increasingly believes that TMP’s conventional approach to book production, distribution and marketing is not sustainable. He wishes to re-examine certain elements of the marketing mix in the context of the opportunities offered by e-business.A young marketing graduate has been appointed by the marketing director to develop and maintain the website. However, further development of the website has not been sanctioned by the Board. Other directors have given two main reasons for blocking further development of this site. Firstly, they believe that the company does not have suffi cient expertise to continue developing and maintaining its own website. It is solely dependent on the marketing graduate. Secondly, they feel that the website will compete with the established supply channels which they are keen to preserve.However, the marketing director is convinced that investing in e-business is essential for the survival of TMP. ‘We need to consider what unique opportunities it offers for pricing the product, promoting the product, placing the product and providing physical evidence of the quality of the product. Finally, we might even re-defi ne the product itself’. He feels if the company fails to grasp these opportunities, then one of its competitors will, and ‘that will be the end of us’.Required:
(a) Determine the main drivers for the adoption of e-business at TMP and identify potential barriers to its adoption. (5 marks)