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Copy of MGMT304 Presentation

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leonardo caiazza

on 19 February 2016

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Transcript of Copy of MGMT304 Presentation

Services Offered by Amazon.com
Recommendations; What does the future hold for Amazon.com?
Rent all kind of items, new ones and second hand
expand to a new countries
continue improving with new technology like kindle

We know the following things:
-Customers today favour fixed price formatting, provided those prices are lower than B&M stores
-Customers enjoy daily deals such as those pioneers by Groupon, Living Social - Amazon must captialize on this by working with these organisations

What exactly is Amazon.com?
- Customer centric American company
- Founded in 1995 - CEO: Jeff Bezos
- One of the largest dot com online retailers
- Originally online bookstore; diversified into music, movies, clothing, fresh produce + lots more
- Spawned out of Bezos identification for opportunities - he capitalized on these.
- One of the first online retailers - gained lots of attention, grew rapidly
- Focus on employee motivation & teamwork
- Amazon changed the nature of the industry
- Very customer-centric style CEO & heavily involved
Timeline of Amazon.com
Amazon founded in America by Jeff Bezos
Timeline of Amazon.com
In May of 1997, Amazon.com's stock began trading on the NASDAQ stock exchange.

This was in response to Bezos' identification of the need for capital to continue to grow the company and saw this the best way to do this.
Timeline of Amazon.com
Offered first cloud computing data storage product called S3; allowed users to store data for 15c per gigabyte a month.

This was rendered useless when Google began to offer customers free online data storage.
Would the company be better of if it changed the strategy? If so, how?
How Amazon.com Became the Leading Online Retailer by 2011
Group 5 - Case study 21

Laura Elliott S00095440
Leonardo Caiazza S00164842
Bertrand Debeuf S00164908
Eugenia Peniche S00164836
Chris Pryde S00138352

Amazon.com - Business Level Strategies
How did Jeffrey Bezos apply the theory to develop Amazon.com Strategy?
Early adopters
are often people who envision how the technology may be used in the future and they try to be the first to profit from its use.

In 1994,
Jeffrey Bezos
was an early adopter of the Internet technology. Before anyone else, he saw that Internet could be used in innovative ways to sell books.
Amazon.com Strategy
Broad Differentiation
Bezos understood that, with intense global competition and rapid technology changes he must control Amazon cost structure and,
, he must find ways to differentiate the product to
enter new market segment
and to
attract more customers
in order to
increase market share and profits
Exploit network effects and positive feedback loops
Establish significant brand loyalty
Increase sales volume ahead rivals-Economies of scale-
Cost advantages
Create switching costs for its customers
Valuable knowledge of customer needs, distribution channels, product and process technology
Significant pioneering costs (technology, customers' education about the product)
So many uncertainties in a new market
Risk of building wrong resources and capabilities (hit only innovators and early adopters)
May invest in inferior or obsolete technology
Is Amazon successful in using the business strategy it has chosen ?

Cost Leadership

Strategy for established
Cost leadership
Established company
Established company
Associates program
Your website
“A successful business model results from business-level strategic”
"The business level strategic create a competitive advantage over rival and superior performance in industry"

Relative advantage thata have shop in amazo.com

Companies that have developed business –level strategies to better differentiate their products and lower their cost structures simultaneously to offer customers the most value

Broad Differentation

Generic Business level strategic
Three generic business level strategics

-Cost leadership
Cost leadership
This strategy pursues

-Do everything possible to lower its cost structure , allowing the company sell goods or services at a lower prices than its competitors, trying to offer the same kind of value from a product at lower price.

-Wait until customers want a feature or service before providing

-Ignores the many different market segments

-The principal threats is that competitors are able to develop new strategies that lower their cost structure and sell a lower price than them
Focused Cost Leadership
Combined of cost leadership and focused business-level strategic to compete for customers in just one or a few market segments

-Focused cost leaders concentrate on a narrow market segment which may be defined geographically, by type of customer or by segment of the product line

Always implementing a business model in a superior way and adopting advanced technology, for reduce cost

-Create a unique product , that customers perceive that is different or distinct some important way

-Satisfaction of customers in ways that competitors can´t .

-Premium prices because they have high level of services, they must control its cost structure to ensure that product prices do not exceed the price customers are willing to pay for them

-Product´s appeal to customers for psychological desires (prestige, status, superior shopping experience, safety etc)
Differentiation threats

-Powerful buyers offering a distinctive product that commands brand loyalty (only them can supply the product)

-Substitutes that satisfies a customer need

-Imitation of a differentiators product

¿What is Broad Differentiation?
Companies that have developed business –level strategies to better differentiate their products and lower their cost structures simultaneously to offer customers the most value

Focused differentiation
Differentiation to focus on competing customers by making unique to customized products specialize in making distinctive products for 1 or 2 market segments

They reach the value frontier when they have developed a distinctive product that better meets the needs of customers in a particular segment than the differentiators

Bezos tried to exploit all the main advantages of being a First-mover avoiding the disadvantages related to this strategy.
He decided therefore to implement a

Broad Differentiated Strategy
Toys'r'us manage inventory and Amazon handle website development, customer service and housing inventory
of total 2011
revenue for
USD 62 Billion Revenue
for 2012

80 Million Monthly visitors

152 Million Active Accounts

About costs...
- Lower costs of physical B&M infrastructure
- Keep a short supply chain (especially no production)
- Establish alliances with B&M companies
- Avoid high product stocking and distribution costs
- Decrease costs compared to brick-and-mortar retailers
- Online Virtual Store: no physical store, no personnel
- Ready to cut down prices at any moment
About differentiate...
- Internet and excellent IT software
- "Amazon Associates Program" (1996)
- CDs (1999)
- Rapidly increase range of products: 35 storefronts (2006)
- Agreement with Sotheby's online auction
- Globalization: UK 1996, Germany 1998, Canada France China Japan in 2006
- Forcing weaker companies to become Associates
- Acquisition of small specialized retail and IT companies
- Become an IT services company selling its SOA
1.5 million books
This strategy enables Amazon to be highly profitable and become an
increasing threat to both differentiators and cost leader over time
Jeffrey Bezos as an early adopter
Major Competitors
- the iPad Vs. the Kindle Reader
- iTunes Vs. Amazon's Audible

- Amazon attempted to break into the auction market segment but failed as eBay had the first mover advantage
- Still a major competitor of Amazon.com today
YouTube & NetFlix
- Amazon Unbox - movie streaming service
- Due to the poor software and lengthy download times this has been no match to YouTube and NetFlix
Mission Statement:
"To be the earth's most customer centric company for 3 primary customers: consumer customers, seller customers and developer customers"
Mission Statement:
"To build an online bookstore that would be customer friendly, easy to navigate, provide buying advice and offer the broadest possible selection of books at low prices."
Original Mission Statement:
Hill C. Jones,G. (2010) Strategic Management: An Integrated Approach.
Hill C. Jones,G. (2010) Strategic Management: An Integrated Approach.
"To use the internet to offer books that would educate, inform and inspire."
For Amazon.com to identify effective business strategies they must first identify their competitors in the industry.

Amazon.com has a broad range of competitors due to the number of service offerings.

- Amazon Fresh – Groceries right to your door
- Amazon Local – Local deals in your city
- Amazon Supply – business, industrial and scientific supplies
- Amazon Web Services (AWS) – Cloud computing services
- AbeBooks – Rare books
- AfterSchool.com – kid’s sports, outdoor and dance gear
- Audible – download audible books
- BeautyBar.com – Beauty products delivered
- Book Depository – Books with free worldwide delivery
- Whispersync – Kindle Service – accessing notes, music, bookmarks on all devices
+ Many more...

- The strategies that Amazon has drawn on have brought about prominent 'Value Propositions': Price & Convenience.
- This has enabled Amazon to be a dominant force within the market place and provides the opportunity to extend into the new markets and deepen customer relationships.
- Amazon acts as a 'Logistic Facilitator'' worldwide, where it appears their services on offer are endless, with continual growth into different fields. E-bay as their major competitor, have failed to capitalize on the 'Fixed Price Market', therefore have seen a major drop in their market price.
"E-commerce Innovation", with the expertise Amazon holds within their staff. Ensuring retention of key staff members is a must!
Scandinavian Market
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