Amazon Case Study

Executive Summary

Amazon.com seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online and endeavors to offer its customers the lowest possible prices. In spite of the company’s great success and significant growth in the past decade, profit growth has been insignificant and shareholders returns minimal (see Exhibit 2). This report analyzes different opportunities that Amazon may consider to increase company profits and improve its competitiveness:

1. Stop diversification and focus just on online bookstore

2. Further expansion through product diversification and improvements to the strategic and tactical/operational activities of supply chain management

3. New strategic partnerships with suppliers, third party logistics and implementation of a quick response replenishment system, especially for the large bulky items

We recommend that Amazon.com uses alternative#2 to support its current growth strategies together with continuous effort in providing exceptional value to its customers. This report also suggests a contingency plan that Amazon.com may undertake to enhance its competitiveness and stimulate further growth.

Problem Statement

Amazon.com’s tremendous growth in revenues and customer base was not accompanied by a proportional rise in profits. Amazon.com needs to re-design its expansion and diversification strategies and improve its supply chain management to achieve a better competitive advantage over its competitors.

Objective and goals

Amazon.com’s objective is to offer its customers exceptional value through innovative use of technology, low prices in addition to good quality and wide selection of products. Amazon.com’s goal is to maximize the use of existing capacities to increase its market share and maximize shareholders returns.

Background and situation analysis

Amazon.com was incorporated in 1994 by Jeff Bezos, Amazon.com founder and CEO and launched its web operations in 1995. It has been growing at tremendous rate since its inception, and is currently the largest internet retailer in the world. Its revenues have increased from $1.5 million in 1997 to $19 billion in 2008. Amazon.com had over 1.4million customers after only two years of being online. Now, over 45 million satisfied customers shop at Amazon.com for everything from books (most popular) to fashion apparel, fine jewelry and Christmas toys.

Amazon's mission is to be "Earth's most customer-centric company, where customers can find and discover anything they want to buy." Amazon’s competitive strategy is to offer customers low prices, convenience, and a wide selection