Fall 2 Term
October 28, 2012
THE AMAZON COMPANY CORPORATE STRATEGY
A. Executive Summary
1. Summary statement of the problem: Amazon.com Company is a business that was started by a man by the name of Jeff Bezos. The goal of the business was to provide the people with a way to purchase books and other items over the internet. Amazon has experienced a lot of success but, they come have come across some potential issues. One of the issues the company faces the high cost of staying competitive against other companies in the same industry. Another issue that is visible is the high cost of maintaining the products they sell. 2. Summary statement of the recommended solution: The issues that the Amazon Company faces are very real threat to the future success of the company. These problems need to be addressed as soon as possible. The high cost of staying competitive against other companies can possibly be offset by offering products that other companies don’t supply. This will help with ease some of the cost. The high cost of maintaining the products they sell can be offset by getting other companies to sell their products through Amazon. This will allow the company to regain their money as well as make money. B. The Situation
Jeff Bezos founded Amazon.com in 1994. Originally the business was based out of his garage in his Bellevue, Washington home (“History,” 2011). A businessman by the name of Nick Hanauer believed in Bezos' idea and decided to invest $40,000 in the venture (“History,” 2011). When Amazon first decided to go online, its layout was not as flashy as it is today (“History,” 2011). In fact, the site looked very plain and unattractive to most visitors, causing the business to start out on shaky ground (“History,” 2011). A man by the name of Tom Alburg decided to invest $100,000 in Amazon in 1995, which helped the company fund a better looking website and hosting capabilities (“History,” 2011). When people began purchasing books from Amazon, Bezos was in awe that he had customers from all over the country, not just Washington State, purchasing books (“History,” 2011). The company was rapidly growing and becoming a well-known name but, they have experience some issues along the way.
The expectations and growth of Amazon have increased over the years. Bezos decided that he had to create more than just a bookstore if he wanted people to come back as customers (“History,” 2011). He added the option of buyers to write their own book reviews, which is a huge credit to Amazon.com's success (“History,” 2011). People began to look at Amazon as more of an online community and not just a place to purchase things (“History,” 2011). By 1997, Amazon.com had generated $15.7 million in revenue (“History,” 2011). Once the company went public the same year, they decided to add CDs and movies to the website (“History,” 2011). In 1998, Amazon added some new items to the roster: software, electronics, video games, toys, and home improvement items (“History,” 2011). Once the company began showing signs of success, people became skeptic and claimed that Amazon was getting too large in too short an amount of time (“History,” 2011).
This is where some issues for Amazon began. One of the main issues was the cost of competing with other companies in the same industry. Therefore, by offering a place where people can buy multiple products in the same place kept the company ahead of others in the same industry. This is one of the items that help them stay successful.
Amazon was also dealing with another issue which was maintaining the products they sell. They offset this issue by gathering other businesses to sell their products through Amazon. The idea worked (“History,” 2011). Companies such as Target, Toys R Us, Old Navy, and many others have agreed to sell their items through Amazon...