Principles of Business – Assignment

The underlying problem for Fender’s CEO is a three pronged problem; they are still operating under an old business model, they are not developing a plan to combat the ever growing online shopping market, and the younger generation are more tech savvy then hands on like generations before them.

Fender is still operating under the thought process that customers want and “need to touch, see and fill a guitar before they buy one (Kinicki & Williams, 2020)” concept. In today’s market that is not necessarily true. Companies, like Amazon, have grasped the ecommerce market and now offer no hassle returns on most to all products sold on their website. This allowed Amazon to become the giant online seller that they are. With the younger generation being more tech savvy, it will be hard for Fender to keep with their current way of sales. According to the article, less than 2% of total North American sales are done online (Kinicki & Williams, 2020), this is a big problem. Fender will need to develop a short-term goal in developing their online market to be successful in their long-term goal of being more financially stable.

Fender’s current strategy and plan will only be successful in the short-term. The development on applications to help beginners learn guitar, is making them a leader in the education factor, but they are falling way behind in the sales aspect and that is where they make the most revenue and profit. If a guitar company is not selling guitars, then they outlook for the company will be grim. Fender needs to develop a strategy and new business model. If they could come up with a way to sale and have guitars returned, if not liked, back with minimal hassle, like Amazon, then this will stabilize, increase ecommerce and benefit the company in the long run. This may be the only option Fender has going forward, since music and instrumental physical stores are becoming hard to find. For example, here in Terre Haute, IN there is only one place you can buy instruments from and the selection is not very good. Guitar Center use to have a store in Terre Haute, but due to increased shopping online and low sales from physical stores, the Guitar Center closed the Terre Haute branch and many others around the country, limiting the hands-on experience on the Fender business model.

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The planning/control cycle developed by the new Fender CEO is working, but it is not necessarily increasing guitar sales for the company and that is what they ultimately need and want. If they can continue to be the leader in online education and learning for guitar beginners, plus develop and online sales market for their guitars, then they will be very successful going into the future. If they could combine a free year of online education with a purchase on a beginner’s level guitar from their newly developed online retail store, nothing with stop their growth moving forward.

Works Cited

1. Kinicki, A., & Williams, B. K. (2020). Management: A Practical Introduction 9th Edition. New York: McGraw-Hill.

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