Midterm 1 - Amazon

Midterm 1 - Amazon - Bus 189 Tu. 3-5:45 Dr. Mark Fruin...

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Bus 189 Tu. 3-5:45 Dr. Mark Fruin 10/6/2009 Midterm 1 – Strategic Business Analysis Short Essays 1. In Amazon’s success I believe that functional level and not business level strategies have been the greatest contributor. When we analyze Amazon’s strategy we can see that their functionality has proven to be a key in all aspects including: superior efficiency, superior quality, superior customer responsiveness, and superior innovation. We first want to analyze the superior customer responsiveness when analyzing this case. When entering a desirable industry one can always expect competition to either already be there or, to be on their way there. In Amazon’s case the competition was on their way there. This is where Amazon gained the majority of their competitive advantage: first-mover advantage. By being the first to the market and having superior customer responsiveness, Amazon was able to build customer loyalty, which made it hard for the competition to enter the online book selling industry. Other ways Amazon built customer loyalty was through rapid release of new offerings and promotions, for instance their 1-click shopping, bottom of the page deals, and later down the road, zShops. The ability to focus on the customer and deliver quality and speedy products at a lower cost was just one reason they were so successful, another is their superior efficiency. When Jeff Bezos first entered into the Amazon venture he had no idea how much capital it would take to deliver products in a timely and quality fashion. This lack of understanding was the same thing that caused so many of Amazon’s competitors to leave the online book selling industry. One thing that differentiated Amazon from the competition was their ability to adjust their cost structure. To do this Bezos used a decentralized decision making, empowered employees, and gave them stock in the company. With harder working employees you get more for what you pay for, increasing efficiency. Increased efficiency and employee output as well as customer loyalty lead to increased quality. Amazon increased quality as stated above by motivating its employees to work hard. The quality of an organization is a direct reflection of the quality of their products and their customer loyalty. In this case Amazon was able to successfully
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increase quality which gave them an edge on the competition, allowing them to successfully gain the largest market share. The increase in the quality of the work environment and company culture lead to an increase in innovation. Amazon has done a great job of innovating new products and services since
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Midterm 1 - Amazon - Bus 189 Tu. 3-5:45 Dr. Mark Fruin...

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