Uploaded byGabbi Baker
Strategy Presentation on Amazon
The document outlines a 2011 board of directors meeting focused on Amazon's corporate strategy, including industry analysis and business-level strategies aimed at maintaining growth potential while aligning with founding principles. Key areas of discussion included opportunities for international expansion, strategic acquisitions, and the challenges posed by competition and regulation. The plan emphasizes enhancing customer service through fulfillment center expansion and technology investments.
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Strategy Presentation on Amazon
- 1. Board of DirectorsMeeting 2011 Senior Leadership Gabbi Baker, Samantha Cloutier, Josh Majewski, Marius Mocanu, Clifton Song, and Conor Wolchesky
- 2. Overview I. Corporate Strategy II. Industry Analysis III. Business Level Strategy IV. Major Factors & Key Challenge V. Strategic Alternatives & Evaluation VI. Action Plan
- 3.
- 4. Businesses: E-Commerce • Internet Retail • Smartphone Applications • MP3 – Cloud Player • Instant Video • Grocery • Technological Services • Audiobooks • Digital Gaming • Cloud Drive
- 5. Customers Consumers Sellers Content Enterprises Creators
- 6. Founding Vision • OnlineBookstore – Customer Friendly – Easy to Navigate – Providing Buying Advice – Offer Broadest Selection at Lowest Price • “Educate, Inform and Inspire”
- 7. Corporate Goals To bethe earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online. • Customers • Profits • Employees • Costs
- 8. Fit Among Businesses Smartphone Applications MP3 – Cloud Instant Video Players Internet Technological Retail Amazon Services
- 9. Corporate Strategy • ConcentricDiversification • Online & Accessible • Common channel – amazon.com • Common technology – web-based • Common customer – wide audience
- 10. Long-Term Success Potential Annual Revenue (Billions) $40 $35 $30 $25 $20 $15 $10 $5 $0 2007 2008 2009 2010 2011
- 11. Long-Term Success Potential Net Income (Millions) $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2007 2008 2009 2010 2011
- 12.
- 13. Strategic Map E-Commerce Retailers Barnes & Noble Best Buy Product Price Overstock Target eBay Amazon Wal-Mart Product Breadth
- 14. Barriers to Entry High Total Capital Requirement Moderate High Learning Differentiation Curve Moderate High High Access to Barriers Economies of Distribution to Entry Scale
- 15. Barriers to Exit High High Contractual Management Commitments Commitment High High Fixed Specialized Costs High Assets Barriers to Exit
- 16. Barriers to Entry& Exit LOW LOW EXIT HIGH ENTRY HIGH
- 17. Rivalry High Low Low Concentration Growth Rate High High Fixed Costs High Storage Costs High Differentiation Low Switching Costs High Capacity Additions Diverse Competitors Low High Exit Barriers
- 18. Supplier & BuyerPower Supplier Buyer Supplier Relative Industry Supplier Power Competition Power Importance of What is Sold Buyer Switching Costs Buyer Supplier Threat of Vertical Supplier Power Integration Power Supplier Product Differentiation Supplier Availability of Substitutes Buyer
- 19. Substitutes • Physical-World Retailers • Online E-Commerce & Mobile Sites • Indirect Competitors • E-Commerce Service Providers • Infrastructure Web Service Providers • Digital Media Device Companies
- 20. Complementors • Technology • Manufacturing • Shipping • Business Affiliates & Associates • Payment Providers
- 21. Industry Globalization National Global Economies of Scale Global National Customer Needs Competition Global National Channels Transportation Costs Global Product Standards Global (country v. industry)
- 22. Industry Globalization High Global Transnational Forces for Global Coordination / Integration Multinational Average Low Forces for National High Responsiveness / Differentiation
- 23.
- 24. Strategic Resources Tangible Intangible • Data Centers • Brand Equity • Fulfillment • Technology Centers • Reputation • Employees • Patents
- 25. Competitive Advantages • Differentiator– Process • Cost Leadership – Products & Pricing • Convenience • Technological Capabilities
- 26. Sustainability • Technological Innovation– R&D • Brand Name & Reputation • Corporate Goals & Leadership
- 27. Competitive Disadvantages • E-CommerceImitation • Too Many Business Lines • Dependency on Partners • Government Regulation & Lawsuits
- 28. Generic Business Strategy Cost Leader Broad Differentiator Differentiated Medium
- 29. Major Factors &Key Challenge
- 30. Summary of MajorFactors Strengths Weaknesses Opportunities Threats
- 31. Strengths • Brand Name • Wide Breadth of • Patents Products • Economies of Scale • Price • Channels of • Associates/ Distribution Acquisitions • Technology • Focus on Customer Software (SOA) • Growth with • Employee-Pizza Direction Teams
- 32. Weaknesses • Security • Fulfillment Centers/Data Center Costs • Seasonality • Internet Access • Third Party Reliance • Limited to Android (AppStore)
- 33. Opportunities • Speed of Delivery • International Expansion • Acquisitions/Partnerships • Media Devices
- 34. Threats • Government Regulation • Easy to Imitate • Increasing Transportation Costs • Economic Conditions • International Backlash • Lawsuits for Third Party Sellers
- 35. Key Strategic Challenge Howcan we ensure our growth potential stays in line with our founding principles and objectives?
- 36.
- 37. Alternatives Strategic Fulfillment Acquisitions & Center Partnerships Expansion Key Leadership Forward Vertical Insurance Integration
- 38. Partnerships & Acquisitions Strategicallyinvest in companies that have distinctive competencies and could further improve Amazon’s sales ability and knowledge PROS CONS • Long term profits • Expensive • Market share • Government • Entry barrier intervention avoidance • Overestimating • Past experience economic benefits • Risk of synergy
- 39. Fulfillment Center Expansion Increasequantity of Amazon fulfillment centers in areas of high density to provide faster delivery and service PROS CONS • Speed of operations • Operating and • Long-term cost inventory costs savings • Hiring and training • Sustain current • Taxes competitive advantage • Complexity of supplier • Control over scheduling support
- 40. Leadership Insurance Develop leadershiptraining and replacement process in case of loss of key senior management personnel PROS CONS • Employee loyalty • Impact current • In line with company company environment goals • Hiring and training • Prepared for sudden • Shareholder change in company implications structure
- 41. Forward Vertical Integration Invest in the creation of an Amazon-owned distribution service to manage the shipping and handling processes PROS CONS • Control over • Cost distribution • Company goals • Cut long-term • Contractual transportation costs relationships • Direct contact with • Threat to current customers competencies
- 42. Solution Strategic Acquisitions & Partnerships
- 43.
- 44. Goal To increaseacquisitions and partnerships in an effort to solidify Amazon’s position as the largest fixed price product Internet retailer. A1 A2 A3 Automation Book & Media International Technology in Retailers and E-Commerce Fulfillment Publishers Platforms Centers
- 45. Who Is Responsible Jeffrey Thomas Blackburn, Szkutak, Senior Vice Senior Vice President for President and Business Chief Financial Development Officer
- 46. Divisional Structure Coordination & Integration Team
- 47. Timeline Analyze Research & Analyze & Evaluate A1 Current Observe Acquisition: Automation Technology Effectiveness of Operations Key Players Investments Analyze Research & A2 Current Observe Acquisition: Book Retailers & Publishers Operations Key Players Analyze Research & Current Observe A3 Operations Key Players Year One Year Two
- 48. Timeline A1 Analyze & Evaluate A2 Effectiveness of Investments Analyze & Evaluate A3 Acquisition: International E-Commerce Effectiveness of Investments Year Three Year Four
- 49. Budget $4,500 4200 $4,000 $3,500 $3,000 Purchases of Fixed $2,500 Assets (Millions) 2200 $2,000 Acquisi@ons and $1,500 Partnerships (Millions) $1,000 $500 $0 2012 2013 2014 2015
- 50. Major Impediments • Lack of synergy and integration • Incorrect research • Strict regulations & government involvement • Overestimating financial and market benefits • Barriers to exit and entry
- 51. Contingency Plans • Historyof positive acquisitions • “Pre-Purchase Contingency Plan” – screening process prior to commitment – Investment and partial ownership • Liquidate, if necessary
- 52. Summary • How canwe ensure our growth potential stays in line with our founding principles and objectives? • Strategic Acquisitions and Partnerships – Automated Fulfillment Technology – Book & Media Retailers and Publishers – International E-Commerce Platforms
- 53. Board of DirectorsMeeting 2011 Senior Leadership Gabbi Baker, Samantha Cloutier, Josh Majewski, Marius Mocanu, Clifton Song, and Conor Wolchesky
- 54.
- 55.