{
Agenda
KEY STRATEGIC ISSUES CAUSES RECOMMENDATION EXTERNAL & INTERAL ANALYSIS ALTERNATIVES IMPLEMENTATION OF RECOMMENDATION
Key Strategic Issue “to maintain market dominance in the online retail market, while also sustaining growth into the future.â€? Â
Causes
1
COMPLEXITY OF CONSUMER DEMAND
2 DEVELOPMENT OF TECHNOLOGY 3 INCREASED COMPETITION
Recommendation THE OPTIMAL STRATEGY IS TO EXPAND ITS PRODUCTION OF INHOUSE PRODUCTS
External Analysis OPPORTUNITIES • INCREASE PENETRATION OF MARKET • EDUCATED CONSUMERS • TARGETS NICHE MARKETS
THREATS – ATTRACTS COMPETITION DUE TO LOW CAPITAL ENTRY – LOW DIFFERENTATION & OBSOLETE – ONLINE PRIVACY ISSUES
Porter s 5 Forces Porter’s Five Forces Threat of substitutes: high • Many companies with a physical presence also have an online store • Books: purchase from store or borrow from library • Music: purchase at retailer (i.e. Virgin) or iTunes • All other products are in competition with retailers
Supplier power: low • Amazon is an industry giant, so it can dictate terms for supplier relationships • Suppliers must provide products in timely manner to accommodate business model • Can choose from global suppliers
Rivalry: high • Many products and industries, so many competitors (eBay, Wal-Mart) • Many giants in the industries in which Amazon competes (i.e. Apple)
Threat of new entrants: moderate • First-mover advantage, known brands in the market • Internet breaks down barriers • Low initial investment required for online sales • Economies of scale from large-scale production
Buyer power: high • Many competing online and brickand-mortar stores – customers can choose • Increasing information access to customers: can price shop
Competitor Analysis
& EVERYONE ELSE‌.
Industry Life Cycle NEW E-COMMERCE (APPS & MOBILE) TRADITIONAL E-COMMERCE
INTERNAL ANALYSIS
Resource-based View • CUSTOMER EXPERIENCE • TECHNOLOGICAL INNOVATION • SOPHISTICATED SUPPLY CHAIN
Strength
• INDUSTRY LEADER & PIONEER • LARGEST ONLINE RETAILER IN THE WORLD • CUSTOMER FOCUSED STRATEGY
WEAKNESS • HIGH DEBT LEVEL BECAUSE OF EXPANSION • MATURING PRODUCT CATEGORIES • CHANGE IN CONSUMER PREFERENCES
Value-Chain • STRONG AND HIGHLY EFFECTIVE SUPPLY CHAIN • FAST RESPONSE TO CUSTOMER DEMAND
Financial Analysis
45%
PROFIT MARGIN in 2011 RETURN ON ASSET AND EQUITY in 2011
HIGH DEBT TO EQUITY RATIO
OPERATIONAL EXPENSES
ALTERNATIVES
1
STATUS QUO: FOCUS ON CURRENT STRATEGY
2 FOCUS ON IN-HOUSE PRODUCTS 3 AFRICA: RISE OF M-COMMERCE
WHY SHOULD AMAZON CONTINUE DEVELOPMENT OF IN-HOUSE PRODUCTS?
THE OPPORTUNITIES ARE ENDLESS
THANK YOU
Q&A