Amazon.com

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CASE STUDY

Amazon.com© 2007–early 2009
Gary J. Stockport

This case study is concerned with the continual roll-out of Amazon’s global strategy through the development of resources and strategic capabilities. It is about global dominance through the development and use of technology and acquisitions and alliances to offer an increasing array of products and services and continually enhancing customer experience. The case discusses the widening of Amazon’s business through serving three distinct and different groups of customers. The case highlights a number of potentially disruptive technologies including Kindle and cloud computing. G G G G G

Introduction
By 2008, Amazon.com had a market capitalisation of some US$29.4 billion1 (£19.3bn or x21.4bn) (see Appendix 6) and employed around 20,700 employees. It was a truly global company and it had established websites in Canada, the UK, Germany, France, Japan and China and 47 per cent of consolidated sales were outside its home country (see Appendix 2). The company sold everything from books to jewellery to digital music and it had recently established itself as a major player in cloud computing with the development and provision of services in ‘the cloud’. Amazon had faced many challenges over the years. It had ‘weathered’ significant challenges such as the technology bubble ‘bursting’ during April 2000 as well as deteriorating shareholder sentiment at various times. The organisation had survived and overcame all these challenges, and even within the ‘eye’ of the recent global financial crisis, Amazon continued to make strategic investment decisions for the longer term. CEO Jeff Bezos pointed out: ‘When we plant a seed, it tends to take 5 to 7 years before it has a meaningful impact on the economics of the company.’ As 2009 rolled on, some strategic issues that Bezos had himself identified and needed to consider included the following: 1

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How might depressed consumer sentiment in the global financial crisis affect its growth? Is the continued heavy investment in technology and innovation the right strategy for building and maintaining Amazon’s sustainable competitive advantage? What is the optimal balance between catering for the needs of Amazon’s different customer groups? As Amazon developed from being just an online retailer to a web services provider for sellers and now moving into providing web technology infrastructure development, it may face challenges in trying to reconcile its vision of being ‘customer-centric’ through having to consider which group(s) of customers should take priority. Generally, is Amazon’s business model the right model looking ahead five years or more?

The founder – Jeff Bezos
At the age of 14, Jeff Bezos, the stepson of a petroleum engineer, admitted to wanting to become an astronaut or a physicist, or something that would allow him to use cutting edge technology. During his high school years he founded his first venture, the DREAM Institute, which was a summer school programme aimed at stimulating creative thinking in youngsters. By the age of 30, Jeff Bezos, the Princeton ‘summa cum laude’ graduate with a Bachelor degree in Electrical

$1 ≈ £0.66 ≈ x0.73.

This case study is an update of a number of case studies written about Amazon.com and published in earlier editions of this textbook. This version of the case was written by Professor Gary J. Stockport and MBA students Tricia Ong, Celina Chien, Eun-Ah Lee, Wentao (Mark) Wa, Mary Ngusaru and Michael Yoo: Business School, The University of Western Australia. It is intended as a basis for class discussion and not as an illustration of good or bad practice. © Gary J. Stockport 2010. Not to be reproduced or quoted without permission.

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AMAZON.COM © 2007–EARLY 2009

Engineering and Computer Science, was the youngest Senior Vice President of D.E. Shaw, running a Wall Street hedge fund. Whilst working at Shaw, Bezos came up with the statistic that the electronic...
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