1.
! Corporate Strategy! E-Retailing Industry Analysis! Business Level Strategy! SWOT Analysis! Strategic Alternatives! Action Plan

2.
Began as one of the firstmajor companies to sell goods over the Internet Started as solely as an Online Bookstore Due to success diversified into many other product lines and services Multinational e- commerce company Worlds Largest online Retailer

3.
RETAIL NON-RETAIL Books, Music & Movies! ! Referrals/Commission! Consumer Electronics! Computer & Office based selling! Tools & Automotive ! Amazon Web Services (AWS) Food & Household Fulfillment by Amazon! !! Home Improvement! Toys & Video Games (Services to businesses)! Sports & Fitness! Clothing and Jewelry! Kids and Baby! Kindle

4.
! IMBD Helps Amazon to compete with! Exchange.com Google, Ebay, Apple! Bibliofind.com Absorb! Musicfile.com Technologies and employees into! Planetall.com Amazon’s IT operations! Junglee.com Improve retail software services

5.
Sellers Enterprises ContentConsumer Creators Amazon

6.
! Customer Obsession: We start with the customer and work backwards.! Innovation: If you dont listen to your customers you will fail. But if you only listen to your customers you will also fail.! Bias for Action: We live in a time of unheralded revolution and insurmountable opportunity--provided we make every minute count.! Bezos’ Goal is to be a Cost- Leader! Committed to leveraging Amazon’s core competencies in whatever ways they can find to realize the value of the company’s assets Mission statement: “Earth’s most customer centric company”

7.
Providing high value using technology to offer low costsolutions to the customer! Common technology and channel is what makes the businesses fit ! Amazon can use its core competencies to full effect in all areas of business

8.
ConcentricDiversification Creating value for customers by using their technology expertise The “Lowest cost customer centric online marketplace”

9.
! The strategy performs well, and is appropriate for the business! There is a high potential for long term success

10.
! Economies of scale (high)! Differentiation (high)! Total Capital Requirements (high)! Access to distribution (high)! Government policy (medium)Barriers to entry = high

11.
! Specialized assets (medium)! Fixed cost of exit (medium)! Management commitment (medium)! Contractual commitment (low) Barriers to exit = medium

12.
! Concentration (high)! Growth rate (high)! Fixed costs (high)! Storage costs (high)! Differentiation (high)! Switching costs (low)! Capacity additions (medium)! Diverse competitors (medium)! Exit barriers (medium)High Rivalry

13.
! Relative industry concentration! Importance of what is sold to the quality and success of final product (supplier)! Switching costs (buyer)! Threat of vertical integration (supplier)! Product differentiation (buyer)! Availability of substitutes (buyer)High buyer power

14.
! Brick and mortar retail stores (high)! Catalogs (low)! Rental services (high)

15.
! “Content creators”! Shipping industry: FedEx, UPS! Internet service industry! Computer industry

16.
AmazonSales revenue eBay Target.com Walmart.com Overstock .com B&N.com Range of products offered

17.
! Economies of scale (global)! Customer needs (global)! Competition (global)! Channels (global)! Transportation costs (global)! Product standards (global)Industry globalization = high

18.
! Technology  Expertise in technology  One-Click System! Economies of Scale! Talented workforce  Company Culture! Marketing  Brand name and reputation

19.
! Extensive product offerings! Extremely low prices  Shipping/deliveryadvantages  Manufacturing of Kindle as lowest-price e-reader

20.
! Most sustainable competitive advantages include:  Economy of Scale  Expertise in Technology  Talented workforce and culture of company

21.
! Difficult to differentiate products! Copying the business model! Can’t offer “instant gratification”

22.
Competitive Advantages Be Better Than Avoid Competitors CompetitionAttractive Industry Attractive S.G. Attractive Niche Cost Differentiation Advantage Entry Barriers Isolating Mobility Barriers Mechanisms

23.
! “Lowest possible prices”  “Amazon prime” members  Customers can avoid state sales tax  Free shipping offers  Small companies and individual sellers  Selling Kindle at a deficit  Amazon’s Price Check App

24.
Consolidated Net Sales (millions)25,000 21,37220,000 15,49715,000 11,68110,000 5,000 0 2009 2010 2011 Overall net sales increased 41%, 40% and 28% in 2011, 2010, and 2009

25.
North American Net Sales (millions) 25,000 21,372 20,000 15,497 15,000 11,681 10,000 5,000 0 2009 2010 2011North American sales growth rate was 43%, 46%, and 25% in 2011, 2010, and 2009

26.
International Net Sales (millions)25,000 21,37220,000 15,49715,000 11,68110,000 5,000 0 2009 2010 2011 International sales growth rate was 38%, 33%, and 31% in 2011, 2010, and 2009

27.
! New skills through acquisitions! Strong IT system! Extensive product lines at low prices! Strong brand image

28.
! No product differentiation! Low profit margins! Lose Focus

29.
! Global expansion! Online movies! Expand the technology service market! Growth in Cloud computing

30.
! Dependence on vendors! Fierce competition! Government

31.
! Find new areas of growth! How to maintain long term profitability

32.
Consistency Consistency Growth with Amazons with Strategy MarketplaceConsistency Short and Competitive with Long Term Advantages Resources Profitability

33.
1. Eliminate Kindle Fire2. Expansion to Scandinavia 3. Expansion of AWS

34.
Discontinue the the Kindle Fire, in favor ofthe Kindle and licensing media content to existing devices. VS Kindle Fire Kindle

35.
Cost perCost more to Highly shareproduce for High Cost competitive decreased what it is Short Term Market since launch sold for of Kindle Fire

36.
Would Amazon Want to Engage High would enter theConsumers expected make a lot tabletinto Online returns of money market Retailing on Media

37.
Inconsistent with Consistent with the Consistent withStrategy because we marketplace since resources since new are favoring Short- we are subsidizing technologies areterm Profitability over our own product needed Long-term

38.
Expand E-Commerce Globally into the Scandinavian Market

39.
Modern ICT Sophisticated and ITHigh Use of Infrastructure infrastructures High Income Internet for Importing to support and Exporting services

40.
! Complex Road System  Bridges to connect Denmark and Sweden! Port of Copenhagen in the Baltic Sea  24 hour ship handling  Short turnaround times and some of the lowest storage times in Europe

41.
ExperiencedNot as High Online 4 DifferentGrowth as Shoppers Exchange the BRIC can find Rates Nations other Alternatives

42.
! Result in 5-20% Adverse Change $50 $220 Million Million for 5% for 20% $110 Million for 10%

43.
Consistent with Consistent with Consistent with Strategy because the Market Place Resourcesit favors long term because there is because we have profitability over growth in Global E- the Capital to short term Commerce expand Abroad

44.
Expanding Amazon Web Services (AWS) to Meet the Needs of Developers

45.
OffersBusinesses low Offers Broad Pay As You Go fixed capital Functionality Reliable Data Model Based expenses in and Global Management on need exchange for Scale variable cost

46.
Short-Term Long-TermProfitability is Low Profitability is Highbecause of Large because it is a high Capital growth market Investments

47.
Expanding Large Our Market Available IndustryCustomer Leader Capital Growth Base

48.
Large Short Life InvestmentUntested Span of in Fixed Market Technology Capital Assets

49.
Consistent with Consistent with Consistent with Marketplace because Resources becauseStrategy because we it’s a Proven Area of We are Expanding on are favoring Long- Future Growth Where Existing DataTerm Profitability over we are Already a Centers, and Short-Term Market Leader Investing Free Capital

50.
Discontinue the Global Expansion Expansion of AWS Kindle Fire into Scandinavia Short-term 4 (.1) = .4 2 (.1) = .2 2 (.1) = .2 Profitability (.1) Long-term 0 (.3) = 0 4 (.3) = 1.2 5 (.3) = 1.5 Profitability (.3) Growth (.2) 0 (.2) = 0 5 (.2) = 1 5 (.2) = 1 Consistency with 3 (.2) = .6 4 (.2) = .8 4 (.2) = .8 Marketplace (.2) Consistency with 2 (.2) = .4 5 (.2) = 1 5 (.2) = 1 Strategy (.2) Totals* 1.2 4.2 4.5*criteria weighted out of 1, alternatives scored from 1-5, for a possible score of up to 5 points total, 0 = no value,5 = most value

51.
Expanding Amazon Web Services (AWS) to Meet the Needs of Developers

52.
Moving from Simply Moving from Infrastructure to Infrastructure as a Offering Platform Service to Platform as Services a Service (IaaSPaaS)

53.
Offering aFree Package Promoting to meet the Freeware vs AWS through needs of Trial-ware Freeware Basic Developers

54.
Expanding Data Centers Globally to Necessary to Keep UpIncrease Data Storage with Increasing and Throughput Demand

55.
• Develop and Implement a Platform (PaaS) for Developers • Create basic version of AWS and offer as Freeware1 • Refine Platform offering based on user feedback • Based on Demand, invest in fixed capital asset IT infrastructure2 • Re-evaluate the current strategy • If strategy proves successful, allow for additional investment in3 IT infrastructure

56.
DEPARTMENTS Year 1 Year 2 Year 3 Total (Million of $)R&D $30 $20 $20 $70Marketing $15 $10 $5 $30Data Centers $0 $100 $100 $200Total $45 $130 $125 $300

57.
! Strong competition in PaaS offering from Microsoft Azure! Losing paying customers with basic needs to the free package of AWS! Risk of losing large investments in Fixed Capital Assets should demand not be as expected

58.
! Liquidating un-needed data centers to an IT competitor (Azure)! Modifying the Freeware offering of AWS to Trialware

59.
questions?

60.
Budget for Alternative 2- Expansion into ScandinaviaDEPARTMENTS Year 1 Year 2 Year 3 Total (Million of $)Acquire CDON $150 $0 $0 $150Marketing $35 $25 $15 $75R&D $50 $45 $30 $125Total* $235 $65 $45 $350*Cost of to Acquire CDON: 856 Billion Swedish Kronor = 150 Million US Dollars