AMAZON

EMBA270: Strategy Formulation and Implementation ROBERT PAUL ELLENTUCK

Mission
Earths most customer-centric company, where customers can find and discover virtually anything they might want to buy online. First and foremost a technology company.

Background
Jeff Bezos 1994 Idea! 1995 Online bookseller begins 6 months: Garage -> 2,000 ft2 -> 17,000 ft2 1997 IPO

Core Competency
Technology Compelling online experience Innovation
Pizza Teams Wish List, One-Click, Bottom of the Page Deals

Efficient
Distribution system for goods

Proving the Business Model

Operating costs the Brick & Mortar challenge for

inventory and distribution Competing Online Booksellers (Borders, Barnes & Noble) Continuing price war with Barnes & Noble Partnership with Borders Online retailer: Toys R US, Office Depot, Target

Industry Map

Mom & Pop Price

Large

Amazon Selection

Growth
Single (bookstore)

Dominant Constrained (expanding products)

Related Constrained (branching out to services)

Growth
Concentric diversification Hesitant to move until move until model proven First, music CDs; complemented books

Growth
Concentric Diversification Products DVDs Books Electronics Software Line of Business Amazon Grocery Amazon Unbox Amazon Business Solutions WebStore Amazon S3 International Expansion Retail Website Canada Germany China Japan Product Development Centers England Scotland India Germany France

Amazon Today
Today, Amazon is the leading Internet retailer! - Over 12,000 employers - $700 million profit - $10.7 billion in revenue

Five Forces
Suppliers: Many suppliers, large buyer with great influence over purchasing of media New Entrants: First mover advantage; 500-lb gorilla; Leverage services to other stores Substitutes: Other online retailers; brick & mortar

Strategy Evaluation & Control

Strategic Fit
Portfolio of Projects are aligned

Organizational Peformance
Economies of Scale Innovation costs

Sustainable competitive advantage

Turnkey, Online Storefront

Possible Strategies
Backward Vertical Integration: NO
Already strongly positioned as large buyer among many vendors

Forward Vertical Integration: NO

Already well established, efficient carriers

Acquisitions:YES
Buy new technology, expertise

Competitive Sustainable Advantage

Cost management Innovation
Better recommendation engine, tools, user experience

New, expanded markets

Broadening global reach

Recommendations
Acquisition
Hardware: Innovative consumer electronics Online application designers, programmers

Services: Marketing, advertising, product development Global: Non-English Divest Partners: cable providers

Present Day
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