Abstract Science Construction’s business is in planning, developing and building road projects. The major of its clients are municipalities, city governments, and other public sector entities. While the bankruptcy rates for these clients is very low, when economic downturns happen, their ability to pay in a timely fashion also suffers. This leads to businesses such as Science Construction needing to take on additional debt and to find creative methods in order to stay afloat during times of recession. Methods such as selling accounts receivables at discounted rates and taking larger lines of credit through banks and other lending institutions are some of the ways organizations can remain viable when their cash inflows have turned into a trickle. Science Construction is asking the Turkish Courts to postpone their bankruptcy proceedings for a year while they attempt to restructure. Through this, suggestions such as forcing shareholders to pay their debt to the organization, gaining credi...
The most widely used model for understanding competitive advantage is Michael Porter’s competitive forces model. This model provides a general view of the firm, its competitors, and the firm’s environment. All firms share market space with other competitors who are continuously devising new, more efficient ways to produce by introducing new products and services, and attempting to attract customers by developing their brands and imposing switching costs on their customers.
In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers.
Value chain is a tool that charts the path by which products and services are created and eventually sold to customers. The term value chain reflects the fact that, as each step of this path is completed, the product becomes more valuable than it was at the previous step. For example, the boards created from a tree can be sold for more money than the price of the tree (Ketchen, & Short, 2012).
Value chains include both:
- Primary activities: An action directly involved in the creation and distribution of goods and services.
- Secondary activities: Activities used to attract potential customers and convince them to make purchases.
Figure below shows the primary and secondary activities of a chain role (Ketchen, & Short, 2012):
o Analyze Amazon.com using the competitive forces and value chain models.
Amazon.com, Inc. is a US-based multinational e-commerce company. Headquartered in Seattle, Washington, it is America’s largest online retailer, with nearly three times the internet sales revenue of the runner-up, Staples, Inc., as of January 2010. In 1995, former investment banker Jeff Bezos took advantage of new business opportunities created by the Internet by setting up a Web site to sell books directly to customers online.
A “virtual” bookstore offers a much larger selection of titles. Amazon.com was able to charge lower prices than physical bookstores because it did not have to pay for maintaining physical storefronts or a large retail sales staff.
Amazon tried to provide superior customer service through e-mail and telephone customer support, and the ability to pay for purchases with a single click of the mouse “1-Click express shopping” using credit card and personal information which made the shopping experience even more convenient.
Amazon faces powerful online retail competitors such as eBay and Yahoo! who also are very adept at using information systems to develop new products and services. Google is emerging as a competitor because so many consumers use its search. Google is expanding into other shopping services: Google Base offers free classified listings of goods for sale and Google Checkout provides an online service that stores users’ financial information to facilitate purchases from participating Internet vendors. Amazon is countering with new offerings, such as a digital mapping service with street-level photographs, a grocery store for non-perishable items sold in bulk, and selling short stories online for 49 cents apiece, along with additional expenditures to improve customer convenience and the shopping experience.
Amazon refined its business model further to focus more on efficient operations while maintaining a steady commitment to keeping its 49 million customers satisfied. In early 2001, Amazon closed two of its eight warehouses, lay off 15 percent of its workforce, and consolidated orders from around the country prior to shipping to reduce shipping costs.
Amazon used six sigma quality measures to reduce errors in fulfillment. These measures reduced fulfillment costs from 15 percent of revenue in 2000 to 10 percent by 2003. It continues to innovate with IT-enabled services: free unlimited two-day shipping for $79 a year (Amazon Prime) and entered the dry goods grocery business in 2006 (Laudon & Laudon, 2007).
Amazon has nearly 49 million active customers. They bought more electronics during last year’s than books. Because of the company’s straight on customer view on business, they depend on secrets to satisfy the customers view and need. The 5 critical secrets for Amazons.Com are (Fleerackers, 2010):
· Work from the customer backward. Focus on value you want to deliver for the customer.
· Force developers to focus on value delivered to the customer instead of building technology first and then figuring how to use it.
· Only way to manage as large distributed system is to keep things as simple as possible.
· Create a frugal culture. Amazon used doors for desks, for example.
· Embrace innovation. In front of the whole company, Jeff Bezos would give an old Nike shoe as a “Just do it” award to those who innovated.
o Describe Amazon’s evolving business strategy. Why did the company change its strategy?
Amazon has grown to become one of the largest internet retailers on earth. But the real significance of Amazon for this growth is Amazon’s continuous innovation in business strategy and information systems. It is an early e-commerce leader that has adjusted it strategy multiple times trying to become a one-stop source for online shoppers. In 1998, Amazon started selling music, CDs, videos, and DVDs, revising its business strategy “to become the best place to buy, find, and discover any product or service available online”—the online Wal-Mart ((Laudon & Laudon, 2007).
In 1995, Amazon started as a Web site to sell books directly to customers online. In 1998, Amazon started selling music, CDs, videos, and DVDs, revising its business strategy to become the best place to buy, find, and discover any product or service available online (Laudon & Laudon, 2007).
o Product Marketing is based upon the five P’s (Product, Place, Promotion, Price, and Profit). Discuss the Amazon.com approach to each and how this contributes to competitive advantage.
Amazon.com Inc. uses its marketing mix as a powerful approach to attract consumers to its e-commerce website. A company’s marketing mix or 4Ps (Product, Place, Promotion and Price) is the combination of strategies and tactics used to implement a marketing plan. In this regard, Amazon reaches out to its target online market through its marketing mix, which focuses on the place and price components as major selling points. As the biggest e-commerce organization in the world, Amazon continually faces increasing competition, which can reduce the company’s market share and global growth potential. To address this issue, the company must ensure that its marketing mix is up-to-date relative to market trends. Through a suitable marketing mix, the company enables organizational resilience while supporting innovation for long-term competitiveness of its online retail business (Ferguson, 2017).
- Product Mix:
Ø Retail service
Ø Retail goods
Ø Amazon Prime
Ø Consumer electronics
Ø Digital content distribution service
Ø Amazon Video
Ø Amazon Web Services (AWS)
Ø Amazon Publishing
Ø AmazonFresh
Ø Amazon Prime Pantry
Ø Amazon Dash
Ø Video Direct
- Place Mix:
Ø Official e-commerce websites
Ø Amazon Books
Ø Others
- Promotion mix:
Ø Advertising (most important)
Ø Sales promotions
Ø Public relations
Ø Direct marketing
- Price:
Ø Market-oriented pricing strategy
Ø Price discrimination strategy
Ø Value-based pricing strategy
I think Amazon can continue to be successful if they promote the innovations that could keep the firm leading in the market. New competitors, new facilities, software, services, and programs are innovated everyday and entering to the market. Amazon should be able to change and innovate with the changes in environment and with the new innovations.
References:
- Ferguson, E. (2017). Amazon.com Inc.’s Marketing Mix (4Ps) Analysis. Retrieved from: http://panmore.com/amazon-com-inc-marketing-mix-4ps-analysis.
- Fleerackers, T. (2010). Case: Amazon.com. Retrieved May 23, 2016, from https://flatworldbusiness.wordpress.com/flat-education/intensify/creating-a-flat-business/case-amazon-com/
- Ketchen, D & Short, J. (2012). Strategic Management: Evaluation and Execution. This book is licensed under a Creative Commons by-nc-sa 3.0 license.
- Laudon, K. C., & Laudon, J. P. (2007). Information Systems, Organizations, and Strategy. Management Information Systems: Managing the Digital Firm 10th ed. Upper Saddle River, NJ: Prentice Hall.
In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers.
Value chain is a tool that charts the path by which products and services are created and eventually sold to customers. The term value chain reflects the fact that, as each step of this path is completed, the product becomes more valuable than it was at the previous step. For example, the boards created from a tree can be sold for more money than the price of the tree (Ketchen, & Short, 2012).
Value chains include both:
- Primary activities: An action directly involved in the creation and distribution of goods and services.
- Secondary activities: Activities used to attract potential customers and convince them to make purchases.
Figure below shows the primary and secondary activities of a chain role (Ketchen, & Short, 2012):
o Analyze Amazon.com using the competitive forces and value chain models.
Amazon.com, Inc. is a US-based multinational e-commerce company. Headquartered in Seattle, Washington, it is America’s largest online retailer, with nearly three times the internet sales revenue of the runner-up, Staples, Inc., as of January 2010. In 1995, former investment banker Jeff Bezos took advantage of new business opportunities created by the Internet by setting up a Web site to sell books directly to customers online.
A “virtual” bookstore offers a much larger selection of titles. Amazon.com was able to charge lower prices than physical bookstores because it did not have to pay for maintaining physical storefronts or a large retail sales staff.
Amazon tried to provide superior customer service through e-mail and telephone customer support, and the ability to pay for purchases with a single click of the mouse “1-Click express shopping” using credit card and personal information which made the shopping experience even more convenient.
Amazon faces powerful online retail competitors such as eBay and Yahoo! who also are very adept at using information systems to develop new products and services. Google is emerging as a competitor because so many consumers use its search. Google is expanding into other shopping services: Google Base offers free classified listings of goods for sale and Google Checkout provides an online service that stores users’ financial information to facilitate purchases from participating Internet vendors. Amazon is countering with new offerings, such as a digital mapping service with street-level photographs, a grocery store for non-perishable items sold in bulk, and selling short stories online for 49 cents apiece, along with additional expenditures to improve customer convenience and the shopping experience.
Amazon refined its business model further to focus more on efficient operations while maintaining a steady commitment to keeping its 49 million customers satisfied. In early 2001, Amazon closed two of its eight warehouses, lay off 15 percent of its workforce, and consolidated orders from around the country prior to shipping to reduce shipping costs.
Amazon used six sigma quality measures to reduce errors in fulfillment. These measures reduced fulfillment costs from 15 percent of revenue in 2000 to 10 percent by 2003. It continues to innovate with IT-enabled services: free unlimited two-day shipping for $79 a year (Amazon Prime) and entered the dry goods grocery business in 2006 (Laudon & Laudon, 2007).
Amazon has nearly 49 million active customers. They bought more electronics during last year’s than books. Because of the company’s straight on customer view on business, they depend on secrets to satisfy the customers view and need. The 5 critical secrets for Amazons.Com are (Fleerackers, 2010):
· Work from the customer backward. Focus on value you want to deliver for the customer.
· Force developers to focus on value delivered to the customer instead of building technology first and then figuring how to use it.
· Only way to manage as large distributed system is to keep things as simple as possible.
· Create a frugal culture. Amazon used doors for desks, for example.
· Embrace innovation. In front of the whole company, Jeff Bezos would give an old Nike shoe as a “Just do it” award to those who innovated.
o Describe Amazon’s evolving business strategy. Why did the company change its strategy?
Amazon has grown to become one of the largest internet retailers on earth. But the real significance of Amazon for this growth is Amazon’s continuous innovation in business strategy and information systems. It is an early e-commerce leader that has adjusted it strategy multiple times trying to become a one-stop source for online shoppers. In 1998, Amazon started selling music, CDs, videos, and DVDs, revising its business strategy “to become the best place to buy, find, and discover any product or service available online”—the online Wal-Mart ((Laudon & Laudon, 2007).
In 1995, Amazon started as a Web site to sell books directly to customers online. In 1998, Amazon started selling music, CDs, videos, and DVDs, revising its business strategy to become the best place to buy, find, and discover any product or service available online (Laudon & Laudon, 2007).
o Product Marketing is based upon the five P’s (Product, Place, Promotion, Price, and Profit). Discuss the Amazon.com approach to each and how this contributes to competitive advantage.
Amazon.com Inc. uses its marketing mix as a powerful approach to attract consumers to its e-commerce website. A company’s marketing mix or 4Ps (Product, Place, Promotion and Price) is the combination of strategies and tactics used to implement a marketing plan. In this regard, Amazon reaches out to its target online market through its marketing mix, which focuses on the place and price components as major selling points. As the biggest e-commerce organization in the world, Amazon continually faces increasing competition, which can reduce the company’s market share and global growth potential. To address this issue, the company must ensure that its marketing mix is up-to-date relative to market trends. Through a suitable marketing mix, the company enables organizational resilience while supporting innovation for long-term competitiveness of its online retail business (Ferguson, 2017).
- Product Mix:
Ø Retail service
Ø Retail goods
Ø Amazon Prime
Ø Consumer electronics
Ø Digital content distribution service
Ø Amazon Video
Ø Amazon Web Services (AWS)
Ø Amazon Publishing
Ø AmazonFresh
Ø Amazon Prime Pantry
Ø Amazon Dash
Ø Video Direct
- Place Mix:
Ø Official e-commerce websites
Ø Amazon Books
Ø Others
- Promotion mix:
Ø Advertising (most important)
Ø Sales promotions
Ø Public relations
Ø Direct marketing
- Price:
Ø Market-oriented pricing strategy
Ø Price discrimination strategy
Ø Value-based pricing strategy
I think Amazon can continue to be successful if they promote the innovations that could keep the firm leading in the market. New competitors, new facilities, software, services, and programs are innovated everyday and entering to the market. Amazon should be able to change and innovate with the changes in environment and with the new innovations.
References:
- Ferguson, E. (2017). Amazon.com Inc.’s Marketing Mix (4Ps) Analysis. Retrieved from: http://panmore.com/amazon-com-inc-marketing-mix-4ps-analysis.
- Fleerackers, T. (2010). Case: Amazon.com. Retrieved May 23, 2016, from https://flatworldbusiness.wordpress.com/flat-education/intensify/creating-a-flat-business/case-amazon-com/
- Ketchen, D & Short, J. (2012). Strategic Management: Evaluation and Execution. This book is licensed under a Creative Commons by-nc-sa 3.0 license.
- Laudon, K. C., & Laudon, J. P. (2007). Information Systems, Organizations, and Strategy. Management Information Systems: Managing the Digital Firm 10th ed. Upper Saddle River, NJ: Prentice Hall.
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