The document discusses Amazon's business model and strategy. It analyzes Amazon using Porter's Five Forces model and Value Chain analysis. It finds that Amazon has advantages over suppliers due to payment terms. It focuses on customer service and uses technology and low prices to attract and retain customers. However, new entrants pose a threat due to examples of other companies achieving success online in short periods.

2. The Porter’s 5 Forces Model is a simple but powerful tool for
understanding where power lies in a business situation. It helps
understanding both the strength of the current competitive
position and factors affecting the strategy development.

4. AMAZON.COM HAS MARKED ADVANTAGES WITH MOST OF THEIR PROVIDERS
(BOOKS, AUDIO, TECHNOLOGY) FOR THE REASON THAT THESE COMPANIES DO
NOT CHARGE THEIR PRODUCTS UNTIL THE MOMENT THAT AMAZON.COM SELL
THEM (FREQUENT STRATEGY FROM BIG COMPANIES)
AMAZON.COM PAYS SUPPLIERS FOR THOSE PRODUCTS ONLY 35 DAYS AFTER
THE ITEM HAS BEEN SOLD, NEVERTHELESS COMPANIES ARE PREPARED AND
READY TO PROVIDE SERVICES AND PRODUCTS TO AMAZON.COM
AMAZON.COM HAS SWITCED ITS PRIMARY OPERATIONAL SYSTEM , FROM
WINDOWS-BASED TO LINUX-BASED, THIS MOVEMENT IS ESTIMATED TO SAVE
MORE THAN 15 MILLIONS OF DOLLARS TO THE COMPANY

5. CONSUMERS THAT BUY GOODS IN AMAZON.COM TEND TO BECOME REGULAR
CLIENTS DUE TO THE LOW PRICES THAT AMAZON.COM CAN OFFER, WHICH IS
HARD TO REACH BY THE COMPETENCE
LOW PRICES IS THE PRINCIPLE ATTRACTION THAT AMAZON.COM OFFERS TO
EACH INDIVIDUAL BUYER
THE LOW AVERAGE OF CLIENTS SWITCHING FROM AMAZON.COM PRODUCTS AND
SERVICES TO THOSE OF THE COMPETENCE IS SATISFACTORY

6. AMAZON.COM IS ONE OF THE FIRST COMPANIES INTO THE E-COMMERCE FIELD
THIS GIVES TO AMAZON.COM A CERTAIN LEVEL OF TRANQUILITY INTO THE
MARKET
AMAZON.COM HAS INNOVATED ALONG THE YEARS REACHING HIGHEST LEVELS OF
CUSTOMER’S SATISFACTION WHICH CAN ASSURE THEIR POSITION INTO THE
MARKET FOR FUTURE YEARS

7. THE NAME OF AMAZON.COM IS WELL RECOGNIZED AND TRUSTED INTO THE
FIELD
THEREFORE, AMAZON.COM DOES NOT PRESENT THREATS OF
SUBSTITUTION AT LEAST IN THE SHORT TIME

8. INTERNET HAS SHOWN THAT A SIMPLE IDEA WELL DEVELOPED CAN OFFER
AN EXTRAORDINARY RESULTS, SUCH AS FACEBOOK.COM, YOUTUBE.COM,
TWITTER.COM AND SO FOURTH, THESE COMPANIES HAVE DEVELOPED
THEIR WEBSITES IN A SHORT PERIOD OF TIME WITH INCREDIBLE FINAL
RESULTS
THIS CAN BE THE PROOF THAT A THREAT OF NEW ENTRIES INTO THE
MARKET IS POSSIBLE

9. A Value Chain describes the sequence of primary activities
implied by a firm’s business model that add value to
shareholders. This sequence of value-adding activities converts
inputs into the products or services described in the firm’s
business model. Porter then continued to define business
strategy relative to the set of activities in a value chain.

10. Amazon.com has chosen to both perform similar activities to its rival but in different ways. Instead to be a virtual
store, allowing Amazon in principle to offer customers anything they want.
Amazon.com wants to be the “world’s most customer-centric” company, and so their focus is on the “Customer
Service” as a part of the Value Chain.
The emphasis on growing large, in terms of the range of products offered by Amazon.com itself and also
growth in launching new companies and partnering with existing companies.
Amazon.com offers the lowest prices possible to their customer through low everyday product pricing and free
shipping offers, including through membership in Amazon Prime. They also provide easy-to-use functionality, fast
and reliable fulfilment and timely customer services.

11. INBOUND
LOGISTICS
OPERATIONS
OUTBOUND
LOGISTICS
SALES AND
MARKETING
SERVICE
PROCUREMENT TECHNOLOGY
HUMAN
RESOURCES
FIRM
INFRASTRUCTURE

12. • The goods are received from the Amazon’s suppliers. They are stored until
there are needed to sale online
INBOUND
LOGISTICS
• Individual operations could include room packing of books/video/goods by
an online retailer or customer OPERATIONS
• The goods are now finished and they need to be sent along the supply chain
to wholesalers, retailers or the final consumer
OUTBOUND
LOGISTICS
• At this stage, the Amazon prepares the offering to meet the needs of
targeted customers. This area focuses strongly upon marketing
communications and the promotion mix
SALES AND
MARKETING
• This includes all areas of service such as installation, web training,
complaints handling and aftersales service SERVICE

13. • It responsible for all purchasing of services, goods and material
• The aim is to secure the lowest possible price of purchases of the highest
possible quality
• They will be responsible for outsourcing and e-purchasing
PROCUREMENT
• It is an important source of Amazon’s competitive advantage
• Amazon.com has innovated to reduce costs and to protect and sustain
competitive advantage
• This could include the customer relationship management, lean
manufacturing, Internet marketing activities and production technology
TECHNOLOGY
• Employees are an expensive and vital resource
• Amazon.com manages recruitment and selection, training and development
and rewards and remuneration
• The objectives and mission of the Amazon.com would be driving force
behind the human resource management strategy
HUMAN RESOURCE
• This activity is driven by Amazon’s corporate or strategic planning
• It includes the Management Information System (MIS) and other
mechanisms for planning and control such as the finance department
FIRM
INFRASTRUCTURE

14. Inbound Logistics (20%)
Operations (20%)
Outbound Logistics (80%)
Sales and Marketing (60%)
Customer Centric (100%)
Procurement (60%)
Human Resource Management
(10%)
Infrastructure (10%)
(Amazon.com, Feb 2012)
Technology Management (100%)
In term of the value chain, most of the focus by Amazon.com is on Sales and
Marketing and Customer Service including Outbound Logistics and Technology
Management. Their customer-centric focus still implies most weight provided to the
customer. Meanwhile, Amazon.com placed very little weight on Inbound Logistics,
Operations, Human Resource Management and Infrastructure.