|Bangalore Management Academy | |Business Strategy – Case Study 2 | |Amazon.Com |
Dr. Amrita Saxena
Clareena Shafali Serrao
Summary of the Amazon Case:
Means to Innovate and Enhance Customer Experience:
Amazon.com - The Wal-Mart of the Internet
Summary of the Amazon Case:
Amazon.com was founded in 1995 by Jeff Bezos, the CEO of Amazon.com. Jeff Bezos strategy was to offer its clients lowest possible prices and world leading customer experience thereby becoming the biggest bookstore and the leading global online service in the world. They wanted to remain customer focused and innovate continuously to improve the online shopping experience whereby customers can buy anything online. Even though there was stiff competition from Barnes and Noble, had the advantage as the “first mover”. Between the year 1997 and 1999, it entered into promotional and strategic relationship with internet players like Yahoo.com, America Online, Excite and Dell Computers which reinforced Amazon.com’s position as the leading online bookseller. With growing customer expectations, Amazon.com introduced new products like Amazon.com Advantage, Amazon.fr, and Amazon.com Kids and also expanded operations in Germany and UK. During this phase it also went into acquiring a series of companies like Bookpages, Internet Movie Database, Junglee and Planetall for e-commerce; and announced strategic investments in companies like Drugstore.com, Della & James, Pets.com. Most importantly Amazon launched its most successful music store with over 200,000 CD’s were being offered. However in April, 2000 led to heavy losses within Amazon.com resulting in cost cutting and closing of service centers in Hague, Netherlands, Seattle. However from 2001 onwards positive signs had begun to show with Amazon recording highest quarter sales over $1b in the fourth quarter. In 2002 by opening a website in Canada, it became the company’s 6th website and thus expanding its international sale as well. Amazon’s biggest achievement was to receive from the American Customer Satisfaction Index in 2002 the highest score in customer satisfaction ever recorded. Hence Amazon’s success shows its willingness to innovate, invest, acquire and form strategic alliances with other companies that offered products, technology and application for better customer experience.
A business model is an explanation of the operation of the business which comprises all the element of business, the task carried out in the business and includes the way the business generates revenues (Rayport, 2002). The business model of Amazon.com – a U.S.A based multinational e-commerce company, is well established because of the delivery of goods, services and information provided to its customers. Continuous development of operational efficiency will lead to sustainable competitive advantage of Amazon.com. This model takes title to the newly manufactured products that they sell and often rely on third party. Amazon.com requires third party source, such as Borders.com and Barnesandnoble.com, to maintain its sufficient supplies. To check whether the existing business model will work in future or not we have to do SWOT analysis.
➢ The company themselves developed key competencies in technology development, computer science and software.
➢ Variety of products available at low prices.
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