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What are the corporate level strategies of Amazon.com and explain each corporate level strategies?

What are the corporate level strategies of Amazon.com and explain each corporate level strategies?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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What are the corporate level strategies of Amazon.com and explain each corporate level strategies?

Case 25 Amazon.com: Competitive Advantage and Functional Strategy C-237 to fulfill customer orders more rapidly and at a lower cost, thereby solidifying its competitive advantage over smaller rivals. the digital distribution of books-a market segment where Amazon is the clear leader. Digitalization of books is disrupting the established book-retailing in- dustry and strengthening Amazon's advantage in this segment. To store digital media, from books to films and music, and to enable rapid customer download, Amazon has built huge server farms. Its early invest- ment in “cloud-based" infrastructure has turned it into To make its distribution centers even more ef- ficient, Amazon is embracing automation. Until recently, most picking and packing of products at Amazon distribution centers was done by hand, with employees walking as much as 20 miles per shift to pick merchandise off shelves and bring it to pack- ing stations. Although walking 20 miles a day may be good for the physical health of employees, it represents much wasted time and hurts productivity. In 2012, Amazon purchased Kiva, a leading manufacturer of robots that service warehouses. Postacquisition, Kiva announced that, for the next 2 to 3 years, it would take no external orders and instead focus on automat- ing Amazon's distribution centers. Kiva robots pick products from shelves and deliver them to packing stations. This reduces the staff needed per distribu- tion center by 30 to 40%, and boosts productivity accordingly. On the innovation front, Amazon has been a leader in pushing the digitalization of media. Its invention of the Kindle digital reader, and the ability of customers to use that reader either on a dedicated Kindle device or on a leader in this field. It is now leveraging its expertise and infrastructure to build another business, Amazon Web Services (AWS), which hosts websites, data, and associated software for other companies. In 2018, AWS was projected to generated over $22 billion in revenues, making Amazon the leader in the rapidly emerging field of cloud computing. Jeff Bezos is on record as stating that he believes AWS will ultimately match Am- azon's online retail business in sales volume. Sources: "Amazon to Add 18 New Distribution Centers," Supply Chain Digest, August 7, 2012; A. Lashinsky, “Jeff Bezos: The Ultimate Disrupter," Fortune, December 3, 2012, pp. 34-41; S. Banker, "The New Amazon Distribution Model,“ Logistics Viewpoints, August 6, 2012; G. A. Fowler, "Holiday Hiring Call: People Vs Robots," The Wall Street Journal, December 10, 2010, p. B1; R. J. Hottovy, “Advertising, AWS, prime engagement, and third- party sales reinforcing Amazon's cash flow potential," Morning- star, July 27, 2018. a general-purpose device such as an iPad, turbocharged
Transcribed Image Text:Case 25 Amazon.com: Competitive Advantage and Functional Strategy C-237 to fulfill customer orders more rapidly and at a lower cost, thereby solidifying its competitive advantage over smaller rivals. the digital distribution of books-a market segment where Amazon is the clear leader. Digitalization of books is disrupting the established book-retailing in- dustry and strengthening Amazon's advantage in this segment. To store digital media, from books to films and music, and to enable rapid customer download, Amazon has built huge server farms. Its early invest- ment in “cloud-based" infrastructure has turned it into To make its distribution centers even more ef- ficient, Amazon is embracing automation. Until recently, most picking and packing of products at Amazon distribution centers was done by hand, with employees walking as much as 20 miles per shift to pick merchandise off shelves and bring it to pack- ing stations. Although walking 20 miles a day may be good for the physical health of employees, it represents much wasted time and hurts productivity. In 2012, Amazon purchased Kiva, a leading manufacturer of robots that service warehouses. Postacquisition, Kiva announced that, for the next 2 to 3 years, it would take no external orders and instead focus on automat- ing Amazon's distribution centers. Kiva robots pick products from shelves and deliver them to packing stations. This reduces the staff needed per distribu- tion center by 30 to 40%, and boosts productivity accordingly. On the innovation front, Amazon has been a leader in pushing the digitalization of media. Its invention of the Kindle digital reader, and the ability of customers to use that reader either on a dedicated Kindle device or on a leader in this field. It is now leveraging its expertise and infrastructure to build another business, Amazon Web Services (AWS), which hosts websites, data, and associated software for other companies. In 2018, AWS was projected to generated over $22 billion in revenues, making Amazon the leader in the rapidly emerging field of cloud computing. Jeff Bezos is on record as stating that he believes AWS will ultimately match Am- azon's online retail business in sales volume. Sources: "Amazon to Add 18 New Distribution Centers," Supply Chain Digest, August 7, 2012; A. Lashinsky, “Jeff Bezos: The Ultimate Disrupter," Fortune, December 3, 2012, pp. 34-41; S. Banker, "The New Amazon Distribution Model,“ Logistics Viewpoints, August 6, 2012; G. A. Fowler, "Holiday Hiring Call: People Vs Robots," The Wall Street Journal, December 10, 2010, p. B1; R. J. Hottovy, “Advertising, AWS, prime engagement, and third- party sales reinforcing Amazon's cash flow potential," Morning- star, July 27, 2018. a general-purpose device such as an iPad, turbocharged
25 CASE AMAZON.COM: COMPETITIVE ADVANTAGE AND FUNCTIONAL STRATEGY This Case was Prepared by Charles W. L. Hill of the School of Business, University of Washington, Seattle. When Jeff Bezos founded Amazon.com in 1995, the online retailer focused solely on selling books. Music and videos were soon added to the mix. Today, one search engines. This indicates that Amazon is increas- can purchase a wide range of media and general- ingly becoming the starting point for online purchases merchandise products from Amazon, which is now the and has developed its own powerful search capabili- world's largest online retailer, with over $200 billion in annual sales in 2018. According to Bezos, Amazon's success is based on three core factors: a relentless focus on delivering value to customers, operating ef- ficiencies, and a willingness to innovate. Amazon offers customers a much wider selec- tion of merchandise than they can find in a physical software analyzes customer purchasing patterns and store and does so at a low price. Amazon both stocks and sells merchandise directly, and acts as an online market place for third-party sellers (who accounted for more than 50% of total units sold in 2017). Online inventory holding costs while always having product shopping and purchasing is made easy with a user- in stock. The increasingly dense network of distribu- friendly interface, product recommendations, cus- tomer wish lists, and a one-click purchasing option for repeat customers. The percentage of traffic that delivery costs. As Amazon grows, it can support a Amazon gets from search engines such as Google has been falling for several years, whereas other online re- tailers are becoming more dependent on third-party ties. As a result, its active customer base in 2018 num- bered around 400 million. To deliver products to customers quickly and accu- rately, Amazon has been investing heavily in a network of distribution centers. In the United States alone, there are now over 100 such centers. Sophisticated informs the company what to order, where to store it in the distribution network, what to charge for it, and when to mark it down to shift it. The goal is to reduce tion centers enables Amazon to reduce the time it takes to deliver products to consumers and to cut down on denser distribution network, which it turns enables it C-236
Transcribed Image Text:25 CASE AMAZON.COM: COMPETITIVE ADVANTAGE AND FUNCTIONAL STRATEGY This Case was Prepared by Charles W. L. Hill of the School of Business, University of Washington, Seattle. When Jeff Bezos founded Amazon.com in 1995, the online retailer focused solely on selling books. Music and videos were soon added to the mix. Today, one search engines. This indicates that Amazon is increas- can purchase a wide range of media and general- ingly becoming the starting point for online purchases merchandise products from Amazon, which is now the and has developed its own powerful search capabili- world's largest online retailer, with over $200 billion in annual sales in 2018. According to Bezos, Amazon's success is based on three core factors: a relentless focus on delivering value to customers, operating ef- ficiencies, and a willingness to innovate. Amazon offers customers a much wider selec- tion of merchandise than they can find in a physical software analyzes customer purchasing patterns and store and does so at a low price. Amazon both stocks and sells merchandise directly, and acts as an online market place for third-party sellers (who accounted for more than 50% of total units sold in 2017). Online inventory holding costs while always having product shopping and purchasing is made easy with a user- in stock. The increasingly dense network of distribu- friendly interface, product recommendations, cus- tomer wish lists, and a one-click purchasing option for repeat customers. The percentage of traffic that delivery costs. As Amazon grows, it can support a Amazon gets from search engines such as Google has been falling for several years, whereas other online re- tailers are becoming more dependent on third-party ties. As a result, its active customer base in 2018 num- bered around 400 million. To deliver products to customers quickly and accu- rately, Amazon has been investing heavily in a network of distribution centers. In the United States alone, there are now over 100 such centers. Sophisticated informs the company what to order, where to store it in the distribution network, what to charge for it, and when to mark it down to shift it. The goal is to reduce tion centers enables Amazon to reduce the time it takes to deliver products to consumers and to cut down on denser distribution network, which it turns enables it C-236
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