Designed presentation for group project in for GWU Strategy Formulation and Implementation course to analyze an Amazon business case.

1. Board of Directors Meeting
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. Corporate Strategy

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
• Online Bookstore
– Customer Friendly
– Easy to Navigate
– Providing Buying Advice
– Offer Broadest Selection at Lowest Price
• “Educate, Inform and Inspire”

7. Corporate Goals
To be the 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
• Concentric Diversification
• 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. Industry Analysis

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 & Buyer Power
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. Business Level Strategy

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-Commerce Imitation
• 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 Major Factors
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
How can we ensure our growth
potential stays in line with our
founding principles and
objectives?

36. Alternatives and Evaluation

37. Alternatives
Strategic Fulfillment
Acquisitions & Center
Partnerships Expansion
Key Leadership Forward Vertical
Insurance Integration

38. Partnerships & Acquisitions
Strategically invest 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
Increase quantity 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 leadership training 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. Action Plan

44. Goal
To increase acquisitions 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
• History of positive acquisitions
• “Pre-Purchase Contingency Plan” –
screening process prior to
commitment
– Investment and partial ownership
• Liquidate, if necessary

52. Summary
• How can we 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 Directors Meeting
2011
Senior Leadership
Gabbi Baker, Samantha Cloutier, Josh Majewski,
Marius Mocanu, Clifton Song, and Conor Wolchesky

54. Appendix 1: Warehouses

55. Appendix 2: Acquisitions