Amazon.com Case Study Essay

1-2 virago Discussion Questions1. On a scale of 1 (Very Poor) to 5 (Excellent), how would you gait Jeff Bezos as an entrepreneur? How would you rate him as an operating(a) handler? Support your rating from case specifics.I would rate Jeff Bezos 10 as an entrepreneur, and 7 as an operating manager.On one hand, he identified carry sell as an industry segment that could feat the power of emerging Internet technologies and found the amazon.com, which enjoyed several(prenominal) geezerhood of tremendous harvest-feast, from an online bookstore into an online superstore, expanding the online cable from sell to auctions and marketplaces. He propelled the connection through the dot com scud by quislinging with traditional sellers and on to being a highly profitable online retailer.On the other hand, in aim to support its rapidly growing and more and more complex business enterprise, he invested heavily to fetch state-of-art digital business stem and operations which could pull up stakes the best-in-class retailing, fulfillment, and customer service capabilities, but create with rapid process in mind, the distribution infrastructure provided roughly 70% to 80% all overcapacity in late 1999.In azoic 2001, the familiarity faced tremendous pressures from Wall route and the companys shareholders to achieve profitability. From 1997 to 2000, the Gross shore adjoind from 29 million to 655 million. However, the operating expenses alike increased rapidly, from 61 million to 1519 million The company simply could not make profit2. proffer the evolution of the virago.com business from the companys emitin 1995 to the dot.com collapse in 2000. How did the companys strategy change over time? How did IT capabilities develop? What economic value did it deliver to all stakeholders?From its online bookstore set in July 1995 till it went public in whitethorn 1997, the company located itself as an online retail bookstore, rivet on redefining and enhancing the online obtain experience, including seek, searching, personalized store layout and recommendations, exile carts, 1-Click shopping, wish lists and greeting cards.Beginning in 1998, the company began aggressively expanding into bracing product categories and into international markets, suitable an online superstore selling a wide variety of products in over 160 different countries.During 1999, the company began exploring new business exercises including auctions and marketplaces. For these new businesses, the company provided software and function but did not assume control of inventory. As such, it played the role of an agent, not a retailer.During primeval 2000, the company expanded its marketplace business model through a series of equity partnerships with guide online retailers.How did the companys strategy change over time? Within the first six years of its inception, Amazon transformed itself from an online bookstore into an online superstore selling a wide variety of products both nationally and internationally. Amazon set out with the strategy of becoming realms Biggest Bookstore and to support its rapid suppuration it aligned its business model to get tolerant fast.How did IT capabilities evolve Capabilities modify a company to make its current strategy and also provide a platform for future growth. Amazon used its IT cogency as a powerful tool to alter operational represent nest egg, r notwithstandingue growth opportunities, go asset efficiencies and to create for itself a sustainable advantage. phase I development IT to drive cost savings Amazon used IT to control and bring bolt down its raising fulfillment costs by computerizing and interconnecting even the notoriously labor-intensive activities like picking and packaging. distributor point II Using IT to drive revenue growth Amazon used IT to create business parole to get to know its customers, markets and competition better and leveraged this readiness to increase its rev enues by attracting more customers and also by change magnitude the per customer purchase value.Stage 3 Amazon created for itself a unique asset dwelling house comprising of its brand, customer relationships, the technical and fulfillment infrastructure, and leveraged it to create for itself a capability that could not be easily imitated by its competitors (online and traditional) or new entrants.Stage IV Using IT to create sustainable advantage Amazons digital business infrastructure, which linked its customer face up processes to its backend processes, helped it create a sustainable advantage for itself which served as an entry barriers for competition. The IT enabled commerce platform that Amazon built for itself is the key to its success.The value it delivered to all shareholders is its brand, customer relationships, technology, infrastructure, financial strength, people, and leadership in the dot com industryAt the heart of Amazons value advise is the fact that it leverag ed its real IT system and transformed it into a commerce platform, and this allowed Amazon to act new IT enabled strategical growth initiatives. In this process Amazon created value for all its stakeholders.Customers Amazons sophisticated browsing experience with enhanced search capabilities, wish list, recommendations, shopping carts, one click shopping, personalized consumers shopping experience. constancy Amazons business concept not only helped Amazon grow, rather it developed a value network for all the industry participants. Amazonsadoption of digital business capabilities compelled the retail industry to adopt and grow, or at to the lowest degree consider the new business model.Shareholders In the early(a) years, since Amazon had fewer physical assets, its asset derangement was extremely high. As Amazon.com began investing in its IT infrastructure and distribution network it increased its asset tooth root and therefore had to look for new avenues to increase its revenu es and to go off its evolving business model.3. Do you degree with the decision to pursue the Toys R Us voltaic pile? Support your decision with case specifics. Why did Amazon.com do the contend? Should Amazon.com do more deals like this? What cushion does the Toys R Us deal have on the Amazon.com business model in early 2000?I agree with the decision to pursue the Toys R Us deal.Amazon.com found that its digital business infrastructure was a proprietary asset that would provide sustainable advantage, while supply chain, inventory management, and order fulfillment processes were uncorrectable to efficiently scale across a diverse range of products. The dot-com pedigree market crash exacerbated the companys problems and, by mid-2000, many of its online retail partners had declared, or were heading toward, bankruptcy.This caused Amazon.com executives to valuate the companys business model. Rather than partner with dot-com retailers, attention shifted to traditional retailers t hat wished to develop online retailing capabilities and to upgrade their traditional distribution and fulfillment capabilities to enable the end-to-end visibility and speed required when doing business online.They should do more deals like this.The Toys R Us deal enabled the company to research a new business model as a logistics services provider (Toys R Us would maintain control of product sourcing and marketing, as well as ownership of inventory) as it simultaneously expanded into a new market (traditional retailers) with itsexisting online retail product.4. Consider the challenges facing the company. As a member of the Amazon.com board of directors in 2001, what actions would you take? twain of the biggest challenges that Amazon faced in early 2001 were whether its new infrastructure services model could develop into a competitive advantage that would be difficult to imitate by the competition and how to guard itself from change magnitude competition from traditional retailer s.One way to deal with competitive threats from traditional retailers is to build an chemical bond with them. Amazon should continue to expand in the traditional retail market by attracting more retailers to sell to their products development its commerce platform.Teaming up with traditional retailers would require a delicate balance as it is important that this alliance between Amazon and its retail customers represents a win-win scenario. This will help Amazon use its fixed cost distribution network to capacity thereby increasing its benefits of scalability. Further it would allow Amazon to leverage its capabilities, increase revenues and develop its commerce platform into a strategic advantage that would be hard to imitate by new entrants or by traditional retailers.