Bookselling is an industry where product differentiation matters. Since books themselves are identical, retailers must concentrate on other things to attract and retain customers. In You’ve Got Mail differentiation factors include location, selection, service, and price, among others. In theory there should be room both for small and large book stores, but Fox Books wants to drive the smaller rival out of business.

Write an essay titled “Competition Strategies in the Bookselling Industry.” Using your textbook and the movie excerpt, address the following questions in the essay:

a. Explain what type of market structure is presented in the movie. Explain the types of strategies Joe Fox and Kathleen Kelly use to compete and maintain market power. Differentiate between pricing and non-pricing strategies (use Chapter 7 in Stengel’s textbook). You can expand and talk about potential strategies in the bookselling business even if they were not explicitly addressed in the movie.

b. Explain the difference between the Industry (external) view and the Resource (internal) view of sustainable competitive advantage (use Chapter 10 in Froeb/McCann). Make sure you explain Porter’s Five Forces model and the resources and capabilities emphasized by the Resource Based View. Which of the two approaches in your view is more suitable for the analysis of the bookselling industry presented in the movie?

c. List the three basic strategies to generate superior market performance (use Chapter 10 in Froeb/McCann). Which of the three strategies would you recommend to Joe Fox and Kathleen Kelly?