Amazon.Com – from Start-Up to 2004 - Business Strategy

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TABLE OF CONTENT

EXECUTIVE SUMMARY

1 INDUSTRY OF AMAZON AND COMPETITIVE DYNAMICS

1.1 DEFINING THE INDUSTRY
1.2 COMPETITIVE DYNAMICS
1.3 DIRECT COMPETITORS
1.4 INDIRECT COMPETITORS
1.5 SUBSTITUTE PRODUCTS AND SERVICES

2 KEY SUCCESS FACTORS

2.1 DEFINITION KEY SUCCESS FACTORS
2.2 KEY SUCCESS FACTORS OF AMAZON
2.2.1 Key success factors concerning customers
2.2.2 Key success customer concerning competitors

3 ANALYSIS OF AMAZON’S RESOURCES AND COMPETENCIES

3.1 THE VRIN MODEL
3.2 ANALYSIS

4 AMAZON’S EXTERNAL AND INTERNAL ENVIRONMENT

4.1 EXTERNAL ENVIRONMENT AND EXTERNAL FOCUS
4.2 INTERNAL ENVIRONMENT AND INTERNAL FOCUS

CONCLUSION

Executive Summary

Throughout this case write-up we will look into the industry of Amazon, and try to determine the reasons why the company has become a leading e-commerce business.

We start out by defining the industry Amazon operates in, and present the competitive dynamics of that industry. We also look into who Amazon’s competitors are.

Further, we explore the key success factors in the industry Amazon is operating in, which has been and still are essential for success. We will look at these factors both in relation to customers and their competitors.

After exploring the key success factors in the industry, we will analyze Amazon’s resources and competencies, based on the VRIN model.

Finally, we look into Amazon’s external and internal environment, and investigate the threats for Amazon of either having too much of an external or internal focus.

1Industry of Amazon and Competitive Dynamics
1.1Defining the Industry

Amazon was founded in 1994 by Jeff Bezos. Amazon is now one of the most recognized brands in the world and is the number one global online service provider. Initially selling books, Amazon.com has diversified its activity to entertainment and culture. Today it is possible to buy almost everything on Amazon.com: books, toys, music, videos, guides, software, beauty products, other merchandises and food. Amazon is a US-based company in the worldwide e-commerce industry. Even if Amazon now has direct and indirect competitors the company has been a pioneer in e-commerce business. 1.2Competitive dynamics

Amazon.com has some important and competitive features which have contributed to making Amazon a leader in the e-commerce market.

First of all, Amazon has invested in technology. The company has developed a secure payment system, routines for fast delivery (agreements have been signed with deliveries companies), and several different payment services (loans, several times payments). Amazon always maintains a wide and very close to customers’ stock. The company decided to build warehouses near airports to make sure goods are always ready to leave by plane and to be delivered as quickly as possible. Because the company has no stores and therefore fewer expenses than some of its competitors, Amazon can offer low prices. Finally, Amazon gives its customers the possibility of reimbursement if the product delivered does not fit with its expectations. 1.3Direct competitors

A direct competitor delivers identical or near-identical products or services.

The first direct competitor is Barnesandnoble.com which is mainly operating in the United States. Barnes and Noble is a major threat to Amazon.com as it also has a physical infrastructure. Barnes and Noble’s revenues in 2003 were less than 12 % of Amazon’s revenues. Priceline and Yahoo! also tried to compete with Amazon.com, but did not achieve a leading position in the market. In comparison with Amazon, their revenues on e-commerce market are very low and they have a small market share. 1.4Indirect competitors

Indirect competition can be determined as competition among suppliers of different types of products that satisfy the same needs.

Local retailers and supermarkets are indirect competitors because they provide the same...
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