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Amazon Inc.

Amazon Inc.

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Published by Brittney Malhoit

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Published by: Brittney Malhoit on Dec 10, 2012
Copyright:Attribution Non-commercial


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Malhoit 1
Written By: Brittney MalhoitDecember 2012
Malhoit 2
Overview of Amazon
Amazon is an online retailer and service provider headquartered in the U.S. Thecompany was founded in 1994 as an online bookstore and their original mission was to be the largest e-retailer of books. Today, in 2012, Amazon has demonstrated success intheir industry by overcoming obstacles to competition and used integration strategies toexpand their business globally. The future outlook for Amazon is bright as they holdtheir #1 position in sales and market value and continue to grow and innovate.
Jeff Bezos founded Amazon in 1994 and has been CEO ever since. People, includingstockholders, employees, customers, and suppliers, see Bezos as a visionary—all for different reasons. To stockholders, Jeff Bezos is the CEO who has continually increasedsales and revenue (see Table 1.1 below) and the CEO who has successfully managed totake the company from a garage to #11 on Forbes list of most successful companies inunder two decades (Forbes, 2012). To customers, Jeff Bezos is the CEO who looks for new ways, like Prime membership and same day delivery, to better serve them and meettheir needs (Amazon, 2012). To employees, Jeff Bezos is the CEO who provides them anopportunity to grow and take on responsibility as an owner of Amazon (Forbes, 2012).To suppliers, Jeff Bezos is the CEO who created an outlet for them to sell a vast array of  products reaching more customers than any other e-retailer.In many ways, Jeff Bezos is compared to the genius of Steve Jobs (SOURCE). Bezos isthe man behind Amazon just as jobs was the man behind Apple. From various articles onBezos, it is clear that he is an innovative leader that brings value to each stakeholder.Bezos has led Amazon from the start with the same goal and mission since its’ founding.The fact that so many stakeholders see Bezos as a key part of what/who Amazon is, prove that he is committed to the success of Amazon to the end of making the customer happy and improving the online shopping experience. It is clear that “people” believeBezos embodies the values of Amazon and that, as long as he is CEO, Amazon willcontinue to grow and prosper.
Malhoit 3
 Amazon’s External Environment 
Michael Porter developed a model of five competitive forces
affecting all industries:threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threatof substitutes, and rivalry among existing competitors (Porter, 2008). The degree towhich each of these competitive forces affects an industry is key in determining howcompetitive and profitable an industry is (Porter, 2008).
 Retail (Catalog and Mail Orders) Industry:
Amazon Inc. is based in the Retail industry under Catalog and Mail Orders because theyare primarily an online retailer of general merchandise (OneSource, 2012). 60% of Amazon’s sales come from electronics and general merchandise (S&P, 2012). The IBISWorld Industry Report Database lists Amazon under the E-Commerce and OnlineAuctions Industry, Online Television Sales, and Online Shoe Sales industries as a major  player (IBIS World, 2012). These sub-industries illustrate the wide array of products andservices that Amazon Inc. offers to customers. The overarching Retail (Catalog and MailOrders) industry “comprises establishments primarily engaged in retailing all types of merchandise using non-store means” (OneSource, 2012).
Threat of New Entrants:
The Retail industry, specifically covering non-store sales, is such a saturated industry thatnew entrants will find it difficult to compete with the top players. It is easy, technically,for new online retailers to emerge because of the openness of the Internet; however,competing with global powerhouses, such as Amazon and eBay, may deter new entrants.Reasons that new entrants would be deterred include unequal access to distributionchannels and incumbency advantages (Porter, 2008). Companies like Amazon haveestablished relationships with well-known product manufacturers and have been in theindustry long enough to create a brand image and customer recognition. Theseadvantages are the product of time and acquired resources and the fear of competingagainst them could inhibit new entrants. Overall, while the barriers to entry are low, thefear of competing with top players may still deter new entrants.
See Figure 1 for Porter’s Model Illustrated

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