Strategic Analysis of Amazon

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STRATEGIC ANALYSIS OF AMAZON.COM

Presented by: Akshat Jain Lakshmi Lohith Malla Bhaskar Paramjeet Das Yatin Parab

Company Overview
Founded in 1994 in Seattle, USA Over 30,000 employees Global Leader in e-commerce

Wide range of products

Worldwide network of fulfilment

Mass Communication

Customer Experience

Affiliations

Stickiness

amazon.com
• VISION
Our vision is to be Earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.

• MISSION
To leverage technology and the expertise of our invaluable employees to provide our customers with the best shopping experience on the Internet.

• Values
• • • • • •

Customer Obsession Innovation Bias for Action Ownership High Hiring Bar Frugality

amazon.com
• Objective
Amazon‟s objective is not to discount a small number of products for a limited period of time, but to offer low prices everyday and apply them broadly across our entire product range.”

• Core Value Proposition
• • •

Price Convenience Selection

• Strategy
„To „Get Big Fast‟ by investing aggressively in new product categories and new businesses, by spending money on brand awareness and getting new customers.‟

Three Customer Sets
Who want to buy products on Amazon

Consumers

Sellers

Developers

Who want to sell products on Amazon

Who want to use Amazon developing services

SWOT MATRIX

Opportunity

Threat

To be perceived by Internet users as • Wall-Mart, Best Buy, the performed online “department Costco, etc are store” to exploit accelerating online increasing their presence retail sales on the Internet • Brand recognition • Extensive experience in • Convenient online order entry online marketing, system advertising and fulfilment • Information technology like satisfying customer infrastructure orders • Fulfilment infrastructure for selected products like books. • Inadequate warehousing and • Substantially smaller inventory management systems to retail sales volume limits support rapid sales growth ability to exploit. • Limited experience in • Limited name recognition merchandising non-core retail in selected markets like products like pharmaceuticals, sport consumer electronics equipment etc. • Retail management • Limited financial resources depth

Weaknesses

Strengths

Value Chain Analysis

“ We don‟t make money when we sell things; we make money when we help customers make purchase decisions” - Jeff Bezos, Founder.

Operational Strategy
• Cost-Leadership • Low and Fixed Prices • Bundle Discounts • Future Discounts. • Customer Differentiation • Personalization • Convenience • Quality. • Focus Strategy • Takes one of the above applies to a market niche a specialized area within a customer group.

Strategy cond…
• Relationships matter • Customers
• Effective Process management • Satisfied Customer • Low costs

• Competitors • Turn them into collaborators • Superior Technology Platform – value for competitors to use the

platform, advantage for Amazon to offer wider choice
• Collaborators • Amazon Marketplace – Customers and retailers can sell their new and

old items • Amazon Merchants – Larger third party • Merchants Amazon Affiliate Programme- Amazon Associates – Advertising Amazon‟s Products on website.

Strategy cond…
• Technology innovation: Amazon‟s cloud • Corporate Responsibility: Amazon‟s idea of Green • Amazon‟s environment
• Amazon's evolution from Web site to e-commerce partner to

development platform is driven by the spirit of innovation that is part of the company's DNA. • The world's brightest technology minds come to Amazon.com to research and develop technology that improves the lives of shoppers and sellers around the world.

Cooperative Strategy
• Partnerships : • Drugstore.com, Living.com, Pets.com, Wineshopper.com, HomeGrocer.com, Sothebys.com(auction) ,Kozmo.com etc Amazoning a sector • Alliances : • Amazon formed alliances with many portals, internet search engines and Internet Service Providers (ISP‟s) • Acquisitions : • The first acquisition started in 1998 from Bookpages (one of the largest online bookstores in the United Kingdom) • Telebook (operating through its ABC Bücherdienst subsidiary, was Germany‟s number one online bookstore) • Internet Movie Database (largest repository for information on movies and television) on April 27, 1998. • Recent acquisition was in August 2008 AbeBooks.

Amazon‟s Success based on strategies
• Customer is the King – Create an experience for him • „Culture of Metrics‟- Customer‟s each „click‟ on website is recorded- a • • • •


• •

valuable asset for Amazon Allows clear sensing of customer needs & preferences Customer is the key at all levels in the Organisation Customer Loyalty and repeat purchase Amazon do not over emphasise competitors – It has turned some of them like Borders in to collaborators Strategic change in vision from being an online bookstore in 1995 to becoming world‟s largest online store Leveraged on the strength of brand value and business model Very low fixed costs Geographical expansion in Canada, Western Europe, Japan & most recently China.

Conclusion
• Amazon‟s online business model is very successful and

advantageous to the company. • Though facing many challenges and opportunities they are constantly improving customer experience, investing in the existing platform and focusing on optimizing free cash flow. • “Innovation is the Foundation of Everything We Do” – Amazon, 2009 • Amazon is not merely a store, but an immense repository of facts.

Thank You

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