Analyze Amazon.com using the competitive forces and value chain models. How has it responded to pressures from its competitive environment? How does it provide value to its customers?
Porter’s competitive force modelThe Value Chain Model
Porter’s competitive force model
Amazon shares market with many traditional competitors like e-bay, yahoo etc which also work as online retailing stores. Internet being widely used around the world and businesses being dependent on it, there is an easy access and possibility of new market entrants as well. This is a threat for the company. E.g. Google is expanding into other shopping services and creating a threat for Amazon. There are huge competitors but there are no remarkable substitute services for virtual retail store yet. Customers of Amazon are in abundance making it one of the largest Internet retailers in the world even though the profits are dropping currently. But other fact is that there are many options for customers as well. If it’s not for Amazon then they will go for other sites easily. Customers hold the power. Similarly, there are great numbers of suppliers as well in the business ranging from companies like Nordstrom, The Gap, Target as well as the individual suppliers. But Amazon needs to have good relation with suppliers to keep doing business with them or the suppliers can also shift to other companies. Value Chain Model
Primary activities are related to the production and distribution of products and services. For Amazon, this means products and services online, online auctions, warehouse and distribution etc. The secondary activities make the delivery of the primary activities. In this case, those activities are, hiring large number of employees, business innovations, online tracking etc. Amazon has been facing high competition from many online retail competitors such as eBay and yahoo. As a response to pressure from competitive environment,...