Hc3141 ISM week 5 tutorial Amazon case

• Summary
• Formed in 1995 with a focussed strategy, selling books online. Rapidly became
largest seller and displaced established retailers in the industry. Diversified into
e-books ( integrated vertical backward strategy) moving into the supply chain.
• Quickly understood the drivers of its competitive advantage and diversified
horizontally into unrelated products. Core competencies in supply chain
management, inventory and distribution management , coupled with a
commitment to innovation and customer- focus.
• Latest turnover $280 billion. Retail online and stores and Amazon advertising
are major contributors. There are now 57 subsidiaries.
• Amazon confirmed that its sales grew by 17% to touch $59.7 billion in Q1 of

2019. The company is currently guided by its principle of customer obsession,
      vast scale of innovation and operational excellence across its operations.
      Amazon announced Shipment Zero, the company’s vision to make all customer
      shipments net zero carbon, with the goal of making 50% of all shipments net
      zero by 2030.
      • Amazon robotics manufactures robotic systems used in warehouse distribution
      facilities and amazon prime distributes entertainment content globally,
      promoting its production company creative output (Amazon Studios).
      5.1 functional level strategies
      • Amazon has increased its efficiency using a dense global distribution
      network, using automation and new systems. Amazon’s network of
      distribution centres also increases its customer responsiveness,
      because having more centres allows the company to respond to
      customer requests more quickly.
      • In addition, Amazon has huge server farms, which allow customers to
      download digital material more quickly.
      • For Amazon, product quality simply means getting the right product
      to the right customer quickly. Amazon is using automation to improve
      its retail service quality. It is also developing new businesses based on
      its technological expertise, which will also boost financial indicators.
      • While it has concentrated on related growth strategies it successfully
      acquired Wholefoods in 2017, integrating this into the shared
      business model. It had operated Amazon Fresh from the early 2000’s.
      • This is similar to Wesfarmers locally with core retailing businesses in
      hardware, office supplies and Kmart.
      The Role of Innovation
      • Amazon has developed new ways of digitalizing media, and products
      such as the Kindle allow the company to deliver customer requests
      more quickly, increasing customer responsiveness. Product quality was
      improved because the digitized materials contain exactly what the
      customer ordered and are delivered directly to the customer’s home.
      • Amazon is efficient in its conventional warehouse and distribution
      systems as well.
      • Amazon’s CEO Jeff Bezos is an intuitive strategist and values change
      and improvement. The busines s model involves ways to receive,
      consume, and store information, entertainment, and products that are
      sold by Amazon.
      • Currently the company is researching the use of drone technologies in
      distribution systems.
      • There have been failures- Amazon Dash Button consumer devices were
      launched in 2015 but withdrawn in 2019. they were superceeded by
      Google voice technology and Amazon’s own Alexa voice assistant. The
      virtual dash board survives in online reordering .
      Resource- Dependence Analysis
      • Amazon’s technological expertise is a rare and valuable
      resource, and it is used in all the company’s value creation
      activities.
      • Because Amazon was an early entrant into the online retail
      business, it created a competitive advantage for itself that will
      be difficult to overcome. Amazon’s size also gives it an
      advantage among current online retailers.
      • However, Amazon must continue to update its technologies and
      innovate regarding its businesses to maintain its position in the
      industry. In addition, Amazon will have to keep looking for
      economies of scale that allow it to continue its low-price
      policies.
      • The Amazon Case also shows Blue-Ocean Strategising being first
      adopters of new technology and active pursuit of new markets

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