AmazonCom Case Analysis Essay Research Paper AMAZONCOM

Amazon.Com Case Analysis Essay, Research Paper

AMAZON.COM CASE ANALYSIS

Johnny J. Kane

BUSN 6200

OUTLINE

I. Executive Summary

II. Introduction/Background

III. Mission Statement Analysis

IV. External Evaluation

A. Opportunities and Threats

1. External Factor Evaluation Matrix

2. Competitive Profile Matrix

B. Opportunities and Threats Summary

V. Internal Evaluation

A. Ratio Analysis

B. Strengths and Weaknesses

1. Internal Factor Evaluation Matrix

C. Strengths and Weaknesses Summary

VI. Objectives

VII. Alternative Objectives

VIII. Strategies and Alternative Strategies Evaluation and Selection

IX. Bibliography

X. Exhibits- SWOT Matrix, SPACE Matrix, Grand Strategy Matrix,

Internal & External Matrix, Matrix Analysis and TOWS Summary,

and Quantitative Strategic Planning Matrix

Executive Summary

This case analysis serves the purpose to provide an analytical framework to evaluate Amazon.com from an internal and external perspective, and to provide strategic direction based upon the internal and external evaluation. The case will begin with an introduction to Amazon.com.

Introduction/Background

Jeffrey Bezos, formerly a senior vice president for D. E. Shaw & Company, founded Amazon.com in 1994. D. E. Shaw is a Wall Street-based investment bank, and Mr. Bezos was assigned to find good Internet companies in which to invest. During the summer of 1994, he stumbled across a Web site that showed the number of Internet users was growing by 2,300 percent per month. He quickly realized the vast potential of the Internet, and began putting together a list of possible products that he could sell on the World Wide Web. He eventually narrowed his list to music products and books. Although music products and books both had enormous potential, he eventually selected books because he believed that he could compete more evenly in the book segment due to the lack of a very dominant player. “In contrast, the music industry had only six major record companies. These companies controlled the distribution of records and CDs and, therefore, had the potential to lock out a new business threatening the traditional record-store format” (Kotha, p.11).

To begin his new venture, Mr. Bezos left New York and moved to Seattle. He decided to move to Seattle for two reasons: 1) Ingram Book Group’s warehouse is located near Seattle; and 2) Because of the Seattle area’s reputation for computer expertise. In 1995, Amazon began selling books entirely online, operating out of a rented facility and using doors laid across sawhorses for desks. He soon was able to generate several million dollars from venture capitalists, and sales were astounding. Sales for 1995, 1996, 1997, 1998 and 1999 were $0.5, $16, $147, $610 and $1,640 million respectively.

Amazon’s customer base has increased dramatically from 180,000 in 100 countries in 1996 to 12 million in 160 countries by mid-1999. In 1998, Amazon began to expand into other product categories. The Company began to sell music products and videos, and within two months of these additions, Amazon became the number-one seller of books, music, and videos on the web. During 1999, the Company further expanded its product line. Amazon now offers toys and video games, electronic greeting cards, electronics and software, home improvement supplies, online auctions, DVDs, and an online mall called zShops. More recently, Amazon has begun to expand internationally (Bartlett, p.21). Next, an analysis of Amazon’s mission statement will be performed.

Mission Statement Analysis

A mission statement should be comprised of, or address, nine essential components: customers; products or services; markets; technology; concern for survival, growth, and profitability; philosophy; self-concept; concern for public image; and, concern for employees. While Amazon does not have a formal mission statement, the basic mission and goals of the Company are evident in the words of Mr. Bezos, “We have one strategy at Amazon.com – provide the customer with the best shopping experience.” Additionally, “.our goal is nothing short of building the world’s most customer-centric Company.” Lastly, “our Company mission is to leverage technology and expertise to provide the best buying experience on the Internet” (Balanced Scorecard, p. 1). These quotes from Mr. Bezos could be combined to create an effective mission statement, as follows: The mission of Amazon.com is to leverage technology and the expertise of our invaluable employees to provide the best buying experience on the Internet. Our goal is nothing short of building the world’s most customer-centric Company capable of providing our customers with the best shopping experience online today, and into the future. An evaluation of the aforementioned mission statement follows:

Essential Component Evaluation Justification for Evaluation

Customers Strong Customers are frequently mentioned and are clearly the focus of a “customer-centric” Company.

Products or Services Moderate Identifies online shopping as service.

Markets Moderate The market is the online community.

Technology Strong “.leverage technology.” indicates that

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