Case Study - Amazon and the Future
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Transcript of Case Study - Amazon and the Future
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THE PRESENT AND THE FUTURE
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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Low-cost leadership
strategy
Continuous alignment of operations• Made market expansion and
product development
possible
Wide range of products &
servicesGlobal coverage
Customer satisfaction and
retention through premium
subscription
Rode out the storm of global
crisis
PROBLEM DISCUSSION
The wonderings of Bezos: Is amazon spreading too thin, or are your investments positioning the company for the future?
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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PROBLEM DEFINITION
How can Amazon Acquire new-to-company customers?
Long Term Problems Short Term ProblemsCost reductionGrowthMaintenance of profitabilityDifferentiation
Finding new areas of growthIncrease of profits
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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MULTINATIONAL E-COMMERCE COMPANY
B2C B2B C2C
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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Retail Non-retail
• Books (e & physical), music & movies• Consumer electronics (smartphones,
tablets, e-readers)• Computer & office• Tools & automotive• Food & household• Home improvement• Toys & video games• Sports & fitness• Clothing and jewelry• Kids and baby• Catalogue
• Commission based selling• Amazon Web Services (AWS)• Fulfillment by Amazon (Services to
businesses)• Prime Music (ad-free music streaming for
Prime subscribers)• Amazon Instant Video• UpNext (3D mapping company)• Appstore
RANGE OF PRODUCTS AND SERVICES
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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ACQUISITIONS
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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CORPORATE GOALS
Innovation
Cost-leadership
Bias for action
Customer obsession
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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COMPETITIVE ADVANTAGES
Technological expertise
Economies of scale
Talented workforce
Brand reputation
and recognition in
established markets
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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FINANCIALS$74 billion in revenue 2013
237 million customer accounts
Workforce of 117,100
Stock has risen 17,000 % since launch
Net income ≈$300 million
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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CHALLENGES
Differential difficulties
Online retail not able to offer
fast gratification
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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PROBLEM DEFINITION
How can Amazon Acquire new-to-company customers?
Long Term Problems Short Term Problems• Cost reduction• Growth• Maintenance of
profitability• Differentiation
• Finding new areas of growth
• Increase of profits
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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ALTERNATIVES
Recommendation
C: Expansion of Amazon Web
Services
B:Tablet and
Smartphone Development
A: Scandinavian
expansion
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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SCANDINAVIAN EXPANSION
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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WHY SHOULD YOU MOVE INTO THE SCANDINAVIAN
MARKET?Amazon has no
warehouse and e-commerce in
Sweden
Will come closer to customers, being
able to be cost leader
Market untapped, moving here would
open up for new customers
Aligns with long term profitability
Aligns with corporate goals
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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Pros Cons• Well-developed
infrastructure.• Internet usage is high• High income per capita• Great export and import
possibilities
• Different exchange rates• Price comparison sites often
used• Swedish government planning
to increase taxation on businesses
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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TABLET AND SMARTPHONE DEVELOPMENT
A way to differentiate and diversify
Increases brand recognition
Integration of product software with e-commerce solutions
Better products – potential customer acquisition and development• Increase of revenue through up-selling and cross-selling
Aligns well with strategy of long term profitability• Potential increase of customers• Customer referrals (if product is good)• Links to corporate goals – customer obsession, innovation, bias for action
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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Pros Cons
• Long term potential.• Consumers more engaged in Amazon
and online retailing.• Higher expected return on
investments• Increased sales of media
• Tablet – Production costs higher than selling price.
• Fierce competition from established brands (such as Apple, Samsung, Sony).
• High costs.
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EXPANSION OF AWS (AMAZON WEB SERVICE)
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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WHY SHOULD YOU FOCUS AWS?
Currently only 5 % of the revenue Young service
Have potential to increase the number of customers
Cloud service got potential for
growth
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
Aligns with long term perspective
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Pros Cons
• Large industry growth• Wider the Customer base• Have potential to become very
profitable
• Requires large investments• Highly competitive, with large
players such as IBM• Takes time to become profitable
and gain market share
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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SWOT MATRIXStrengths
•Low prices A B C
•Visibility/Trustability A B C
•Efficient distribution channel A B
•Extensive product catalog A B C
•High profits A B C
•Scalable IT-system infrastructure A B C
•Optimal inter-connection between services A B C•Stable finances
A B C•Technological expertise
A B C•Economies of scale
A •Talented workforce
A B C•Good brand name and reputation
A B C
Weaknesses• Small product margins
A B C• Lower brand awereness outside domestic A • Low differentiation
B C• Delayed gratification
A
Opportunities• Global expansion – unestablished markets A• Cloud computing growth
A C• Growth in online streaming
A B
Threats• AWS in competitive environment
C• Rise of taxes in Sweden
• Well established competitorsA B
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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RECOMMENDATION– SCANDINAVIAN EXPANSION
Why?
• Aligns with corporate goals
• Utilizes strengths and opportunities of company and environment
• Minds about weaknesses and threats, long and short term problems
Potential
• New-to-company customers
• Better customer experience for Scandinavians• Loyalty• Customer
development
Expansion
• Increased growth
• Maintenance of profitability
• Cost reduction• Competitive
pricing
Scandinavia as an opportunity
• Well-develop infrastructure
• High internet usage
• Great import/export possibilities
• High income per capita
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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RECOMMENDATION – SCANDINAVIAN EXPANSION
Look at promising warehouse sites
Create tailored websites
Research potential retailing
of books in Scandinavian
languages
Scandinavian Expansion
Introduction – Problem – Amazon – Problem – Alternatives – A – B – C – SWOT – Recommendations
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CONCLUSION
Amazon achieves further positioning as low-price leader Increased brand recognition
Larger customer base
Long term growth