Risk

Risks

The biggest risk that this new initiative will have to overcome is that the transactions may have a potential impact on Barnes & Noble's retail business of the separation. The partnership with Microsoft will help Barnes & Noble's with e-book strategy to go forward and create a new movement for e-book and reader business into a new subsidiary. Of course in any partnership and business there is a certain catch and risk involved. According to (InformationWeek, 2012),with this partnership, the both organizations are gaining in which Microsoft gets a 17.6% stake, in exchange Barnes and Noble's is receiving $300 million. (Releasing Newco, a new subsidiary and transitioning to e-reading will bring a significant rapid growth and lead to expend the business. The partnership and transition could create recovery from previous losses and assist to gain the reputation by attracting more customers. This new strategic planning will help with the increase of sales because it’s going to give students what they need at the tip of their fingertips. In addition to the risk of separation and a new product (Newco), Barnes & Noble's also poses a risk of not achieving the expected benefits, including the risk that new applications are not foreseen as successful or expected distribution is not achieved as the company strategically planned. Barnes and Noble could increase its eBook sales order for this plan to pay off. The Barnes and Noble's going forward depends upon consumer spending. Today due to the economic downturn it may create another significant risk of declines in customer traffic and spending patterns. The company must also know that these costs will be recurring costs, so the sales must stay high for a long period of time. The Newco must be well developed with newest enhanced applications, staff, computers, and any other hardware required to make it run smoothly. These costs may become other risks in addition to the ones that we have already stated.

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