Amazon.com: An E-Commerce Retailer
A case report prepared for Professor Stroud
MG 495/DLD Business Policy
Fall I 2011
August 21, 2011
THE WALT DISNEY COMPANY CORPORATE STRATEGY
A. Executive Summary
1. Summary statement of the problem: Considered to be the premier online retailers in the word, Amazon.com has had a short life (founded in 1994) but can be proud of the strides it has made. Jeff Bezos, founder of Amazon.com, had an idea that was rejected by his former employer. Bezos decided to take his idea and found a new type of company, one that could withstand the test of time. Bezos was future-thinking when he founded the company because at that time very few households had access to the internet. Despite changing markets and inconsistent profits, Amazon.com has been profitable because the company has been able to differentiate itself from the competition (Collins, Mockler and Gartenfeld, p.8).
2. Summary statement of the recommended solution: The obstacles that Amazon.com has faced in past years seem to have been addressed by the company very quickly. Amazon.com’s overall business theme has been “to get big fast, at all costs” (Collins, Mockler and Gartenfeld, p.3). The business strategy of Amazon.com’s management has shown a tremendous amount of flexibility which has afforded the company the ability to adapt and overcome each issue that they have faced. A few of the issues Amazon is facing in the future is fraudulent sellers and sales tax concerns. The company is also facing pressure from the stockholders to produce consistent operating profits and provide a stable business model that would prove that they are financially stable over the long-term. Amazon.com needs to prove that they can survive and prosper against growing and aggressive competition.
B. The Situation
Amazon.com was founded in 1994 when founder, Jeff Bezos left his job at D.E. Shaw to pursue his idea to provide products and services to the public via the growing internet market (Collins, Mockler and Gartenfeld, p.1). Bezos had attained invaluable experience in computer programming, finance and international markets while working at D.E. Shaw, Fitel and Banker’s Trust. Bezos had presented the idea of offering products over the internet but it was rejected. Bezos’ idea was too big for him to let-go so he left D.E. Shaw to step into the unknown markets of the internet. Bezos’ idea and aggressive business strategies have made Amazon.com a household name that claims to be the largest retailer in the world. Just like any other start-up company Amazon has experienced growing pains over the years.
As Amazon.com has grown over the years, so have the expectancies and expansion expectations for the company. The company competes in the ever-expanding internet world that has created a different type of competition over traditional brick-and-mortar businesses. Increasing globalization demands make this a volatile and fast-changing market. Amazon.com’s initial growth strategy was to increase market shares in spite of profits (Collins, Mockler and Gartenfeld, p.2).
One of the main issues that Amazon faced initially was the lack of internet access in households. When the company began it marketed its products through email but it turned out to be very labor intensive and costly. Bezos developed an online store that could be accessed by people who wished to purchase books through a web store. This strategy combined with the increasing number of personal computers in households formed a market that was there for the taking (Collins, Mockler and Gartenfeld, p.2). Bezos felt that this was more cost effective and would cut-down operating expenses and allow Amazon.com to attain first-mover advantage.
Another way Amazon.com has spread out costs is to collect customer payments immediately but float sales to vendors for 30 to 40 days. This affords the company a large amount of working capital. Since...
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