Amazon.com: Expanding Beyond Books case study plus extra questions
Problems in Management
March 12, 2003
Amazon.com: Expanding Beyond Books
1. Analyze the company's history, development, and growth.
§Amazon.com founded in 1994 in Seattle by Jeff Bezos
§Virtual store front on the internet -No physical store
§As of now, 2 warehouses and 1600 employees
§$30 million cumulative customers
§1996 -$340,000 in the first half spend on advertising and marketing
§End of 1997, Amazon had found its millionth customer
§In 1998 Amazon.com added music
§In July 1998 profits at the 400% level
§In 1998- $26.5 million on marketing -equivalent to 23% of sales.
§Sales in 1998 were $587.6 million with operating margin of 10%
§In February 1999, stock at the 1000% profit level
§More than 3.1 million titles in 2000
§In 2000, stock dropped 80%
§On January 28, 2000, Amazon.com cut 150 employees
§Services unit contributed $225 million in revenue during 2001
2. Identify the company's internal strengths and weaknesses.
§Leader in e-commerce
§Strong in-house internet technology
§Excellent offline customer service
§A huge database of loyal customers - base of over 12 million shoppers
§Wide variety of products and services
§Distribution facilities to handle growth and fulfillment
§Building international presence in markets outside of the USA
§Has moved away from being a low price supplier of books toward a focus of delivering outstanding service and price.
§One-click purchase patent
§Low inventory and overhead cost (inventory turnover 26 times)
§Current alliances with ToysRUs, Circuit City, Yahoo!
§Well established web brand
§Leader in use of technology to deliver targeted content
§Consumer notification of shipping
§Database- five times bigger
§High advertisement cost
§High delivery cost
§Low bargaining power on suppliers
§Amazon.com brand has been diluted by entering a wide number of product segments, increasing competition.
§Need to restructure business to drive toward profitability has meant upward pressure on...
... make their web servers unavailable and prevent efficiently fulfilling orders. These problems reduce their net sales and the attractiveness of Amazon's service and products. Computer viruses, physical or electronic break-ins, and similar disruptions can also cause system interruption, delays ... of books and products through e-mail. Increase customer support staff and respond quickly to customers. Encourage customers to recommend Amazon.com to friends and relatives through discounts. 2.Research new technology and innovations: Expand databases to include new information about ...
... trend of purchasing with that of selling originated in the physical world (e.g., retail stores, wholesalers, mail order, etc.) Amazon has taken this trend a bit further by creating joint alliances with leaders in other market segments. Additionally, the integration ... e-business simply refers to the integration of business process on the Internet. With customer satisfaction being their main focus, Amazon.com benchmarks the business-2-consumer e-business process by integrating the process of purchasing with that of selling. In ...
External & Internal Analysis of Amazon during 1997. Example of a Strategic Management in the New Economy.
... frontier, characterized by rapid technological advancement, compounding change and an absence of formal structure, rules or expectations. To be successful, Amazon.com developed a department with a clearly defined system and methodology to study and understand the Internet environment as it ... research and development, marketing and operation factors and management organization. Finally, we took a value based approach to see how Amazon was benefiting the consumer with their cost reducing practices. Strengths: Pricing Strategy. In using the value chain resource analysis one ...
... place you cannot have fixed and static goals and strategies, you have to keep changing yourself, change is permanent and Amazon has been successful just doing that [Author not available, 2001]. Bezos commenting on the continuous success of the company says ... discount strategy. It is only through cutting prices that it can beat its rivals, thus it is very difficult for Amazon to maintain this kind of success in its other ventures, especially in electronic business which the company has said will ...
... constantly influenced by economic and social factors such as change in competition, customer confidence, religious, education and the business law. Amazon.com, as an organisation has always been facing these influences in business environment. However, there are some major factors, which ... the article in case study, Jeff Bezos has been performing the following management roles: Decisional roles: Bezos seeks to improve Amazon.com as his company expanding quickly, he created new department such as research & development department, information system department and materials ...
... . Analyze Structure and Control Systems I was unable to find any reference to this in the reading. 8. Recommendations If Amazon continues accumulating debt and making little profit it's future is limited. I recommend expansion of this company's product ... 1998, the company launched its online music and video stores, and it began to sell toys and electronics. By midyear, Amazon.com had attracted so much attention that its market capitalization equaled the combined values of rivals Barnes & Noble and Borders ...
... can choose not to provide certain information, but then they might not be able to take advantage of many of Amazon.com features. They use the information that customers provide for such purposes as responding to customer requests, customizing future shopping ... so you can give them new advertising information and offer new products and services. Another reason customers like buying from Amazon.com and its associates because they provide a unique and quality service as well as security in credit card transactions ...
... will also standardize the purchasing process thus reducing processing costs associated with traditional processing. Capturing and maintaining customer data by Amazon.com will help increase productivity by being able to have fast data through put. This practice also helps to "get ... technology3, and many other forms of technology are relied upon to ensure customer satisfaction, confidence, and enjoyment of their business. Amazon.com's web page supports their mission statement. Navigating, selecting and purchasing products are very fast and easy. Having a ...