E-Business Model of Amazon.com--Assignment #2 Questions and Answers
Discuss whether or not Amazon has lost its identity by expanding into markets well beyond books. After reviewing the Amazon.com annual report, I feel that it has not lost its identity by expanding into different online markets beyond selling books. Online merchandising is a large and lucrative market that most competitors are taking advantage of this profitable business. Furthermore, online commerce has saved time and money for consumers, so Amazon made the right business decision to pursue this window of opportunity. Next, Amazon is more competitive than any other online bookstore such as Barnes and Noble and Borders. After browsing the Barnes and Noble and Border websites and reading their reviews, I feel that Amazon ranks high in content, professionalism, effectiveness, and functionality as shown in Table 1. Amazon has a diverse collection of products, its customer service support is both professional and effective, and the functionality of its website is easy to navigate. The goal of Amazon is to bring new value to its consumers through online commerce and merchandising and continue to solidify and extend its brand and customer base (Amazon.com, Inc., 2009).
Recommend what Amazon should do to protect its brand. Many current and potential competitors of Amazon have greater resources, longer histories, more consumers, and greater brand recognition (Amazon.com, Inc., 2009). Amazon strives to develop and maintain brand loyalty among consumers because it has created a successful system of personalized marketing (Alsop, 2001). Personalized marketing is a strategy that tries to make a unique product offering for each consumer. Therefore, Amazon will have to continue to invest aggressively to expand and leverage its customer base, brand, and infrastructure as it moves to establish an enduring franchise (Amazon.com, Inc., 2009). Next, Amazon must continue to focus on selection, price, and convenience of products (Amazon.com, Inc., 2009). Also, Amazon must continue to offer services and tools with quality, speed, and reliability to its sellers and developer services (Amazon.com, Inc., 2009). Amazon will have to continue to secure long-term vendor relationships and devote more resources to technology and marketing (Amazon.com, Inc., 2009). Next, Amazon will have to enter into more commercial agreements, business relationships, or alliances that will strengthen its competitive position (Amazon.com, Inc., 2009). Three operational strategies that can continue to help Amazon enhance its competitive advantage, includes cost-leadership, customer differentiation, and focus strategies (Saunders, 2001). Consumer satisfaction and operational frugality complement the operational strategies of Amazon in achieving and maintaining an effective competitive advantage (Spann, Tse, and Er, 2004). In the cost-leadership strategy, Amazon should continue to ensure that it offers the same quality products as other companies for a considerably lesser price (Spann et al., 2004). Next, consumers can recognize and differentiate the products of Amazon from its competitors through design and quality, so Amazon should always select a differentiator that is different from the competitor (Spann et al., 2004). The focus strategy takes the cost-leadership and customer differentiation strategies and applies it to a niche within the market (Saunders, 2001). Amazon needs to continue to focus on outstanding customer service as a niche but not the whole market because each niche has its own demand and requirement (Spann et al., 2004). Technology, distribution, consumers, and products are entailed in the focus strategy as well. Amazon has to expand its business through the distribution arena to a more worldwide customer base (Spann et al., 2004). Finally, Amazon has to make good investment decisions but consider execution risks and growth challenges (Amazon.com,...
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