Amazon.com Case Study Essay

1-2 Amazon Discussion Questions

1. On a graduated table of “1” ( Very Poor ) to “5” ( Excellent ) . how would you rate Jeff Bezos as an enterpriser? How would you rate him as an operating director? Support your evaluation from instance particulars.

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I would rate Jeff Bezos 10 as an enterpriser. and 7 as an operating director.

On one manus. he identified book retailing as an industry section that could work the power of emerging Internet engineerings and found the Amazon. com. which enjoyed several old ages of enormous growing. from an online bookshop into an online superstore. spread outing the online concern from retailing to auctions and market places. He propelled the company through the point com clang by partnering with traditional retail merchants and on to being a extremely profitable online retail merchant.

On the other manus. in order to back up its quickly turning and progressively complex concern. he invested to a great extent to develop state-of-art digital concern substructure and operations which could supply the best-in-class retailing. fulfilment. and client service capablenesss. but built with rapid growing in head. the distribution substructure provided approximately 70 % to 80 % overcapacity in late 1999.

In early 2001. the company faced enormous force per unit areas from Wall Street and the company’s stockholders to accomplish profitableness. From 1997 to 2000. the Gross border increased from 29 million to 655 million. However. the operating disbursals besides increased quickly. from 61 million to 1519 million! The company merely could non do net income!

2. Trace the development of the Amazon. com concern from the company’s launch
in 1995 to the point. com prostration in 2000. How did the company’s scheme alteration over clip? How did IT capabilities germinate? What value did it present to all stakeholders?

From its online bookshop launch in July 1995 boulder clay it went public in May 1997. the company located itself as an on-line retail bookshop. focused on redefining and heightening the on-line shopping experience. including shoping. seeking. personalized shop layout and recommendations. transportation carts. 1-Click shopping. wish lists and recognizing cards.

Get downing in 1998. the company began sharply spread outing into new merchandise classs and into international markets. going an on-line superstore selling a broad assortment of merchandises in over 160 different states.

During 1999. the company began researching new concern theoretical accounts including auctions and market places. For these new concerns. the company provided package and services but did non presume control of stock list. As such. it played the function of an agent. non a retail merchant.

During early 2000. the company expanded its market place concern theoretical account through a series of equity partnerships with taking on-line retail merchants.

How did the company’s scheme alteration over clip? Within the first six old ages of its origin. Amazon transformed itself from an online bookshop into an on-line superstore selling a broad assortment of merchandises both nationally and internationally. Amazon set out with the scheme of going “Earth’s Biggest Bookstore” and to back up its rapid growing it aligned its concern theoretical account to “get large fast. ”

How did IT capabilities evolve: Capabilities enable a company to put to death its current scheme and besides supply a platform for future growing. Amazon used its IT capableness as a powerful tool to enable operational cost nest eggs. gross growing chances. drive plus efficiencies and to make for itself a sustainable advantage.

Phase I: Using IT to drive cost nest eggs: Amazon used IT to command and convey down its raising fulfilment costs by computerising and complecting even the notoriously labour-intensive activities like picking and packaging.

Phase II: Using IT to drive gross growing: Amazon used IT to make concern intelligence to acquire to cognize its clients. markets and competition better and leveraged this capableness to increase its grosss by pulling more clients and besides by increasing the per client purchase value.

Phase Three: Amazon created for itself a alone plus base comprising of its trade name. client relationships. the proficient and fulfillment substructure. and leveraged it to make for itself a capableness that could non be easy imitated by its rivals ( online and traditional ) or new entrants.

Phase Four: Using IT to make sustainable advantage: Amazon’s digital concern substructure. which linked its client facing processes to its backend procedures. helped it make a sustainable advantage for itself which served as an entry barriers for competition. The IT enabled commercialism platform that Amazon built for itself is the key to its success.

The value it delivered to all stockholders is its trade name. client relationships. engineering. substructure. fiscal strength. people. and leading in the point com industry

At the bosom of Amazon’s value proposition is the fact that it leveraged its bing IT system and transformed it into a commercialism platform. and this allowed Amazon to prosecute new IT enabled strategic growing enterprises. In this procedure Amazon created value for all its stakeholders.

Customers: Amazon’s sophisticated shoping experience with enhanced hunt capablenesss. wish list. recommendations. shopping carts. one chink shopping. individualized consumers shopping experience.

Industry: Amazon’s concern construct non merely helped Amazon turn. instead it developed a value web for all the industry participants. Amazon’s acceptance of digital concern capablenesss compelled the retail industry to follow and turn. or at least see the new concern theoretical account.

Stockholders: In the early old ages. since Amazon had fewer physical assets. its plus turnover was highly high. As Amazon. com began puting in its IT substructure and distribution web it increased its plus base and hence had to look for new avenues to increase its grosss and to fuel its germinating concern theoretical account.

3. Make you degree with the determination to prosecute the Toy’s “R” Us cover? Support your determination with instance particulars. Why did Amazon. com do the trade? Should Amazon. com do more trades like this? What impact does the Toys “R” Us trade have on the Amazon. com concern theoretical account in early 2000?

I agree with the determination to prosecute the Toy’s “R” Us trade.

Amazon. com found that its digital concern substructure was a proprietary plus that would supply sustainable advantage. while supply concatenation. stock list direction. and order fulfilment procedures were hard to expeditiously scale across a diverse scope of merchandises. The dot-com stock market clang exacerbated the company’s jobs and. by mid-2000. many of its on-line retail spouses had declared. or were heading toward. bankruptcy.

This caused Amazon. com executives to reassess the company’s concern theoretical account. Rather than spouse with dot-com retail merchants. attending shifted to traditional retail merchants that wished to develop on-line retailing capablenesss and to upgrade their traditional distribution and fulfilment capablenesss to enable the end-to-end visibleness and velocity required when making concern online.

They should make more trades like this.

The Toy’s “R” Us trade enabled the company to research a new concern theoretical account as a logistics services supplier ( Toy’s “ R” Us would keep control of merchandise sourcing and selling. every bit good as ownership of stock list ) as it at the same time expanded into a new market ( traditional retail merchants ) with its
bing on-line retail merchandise.

4. See the challenges confronting the company. As a member of the Amazon. com board of managers in 2001. what actions would you take?

Two of the biggest challenges that Amazon faced in early 2001 were whether it’s new “infrastructure services” theoretical account could develop into a competitory advantage that would be hard to copy by the competition and how to guard itself from increasing competition from traditional retail merchants.

One manner to cover with competitory menaces from traditional retail merchants is to construct an confederation with them. Amazon should go on to spread out in the traditional retail market by pulling more retail merchants to sell to their merchandises utilizing its commercialism platform.

Teaming up with traditional retail merchants would necessitate a delicate balance as it is of import that this confederation between Amazon and its retail clients represents a win-win scenario. This will assist Amazon utilize its fixed cost distribution web to capacity thereby increasing its benefits of scalability. Further it would let Amazon to leverage its capablenesss. addition grosss and develop its commercialism platform into a strategic advantage that would be difficult to copy by new entrants or by traditional retail merchants.