Assignment

Assignment

http://www.scribd.com/doc/24854038/Amazon-Strategic-Plan#

Amazon overview:

Amazon.com was one of the first major companies to sell goods over the Internet and as become a worldwide established name. Amazon.com is an American e-commerce company that is based in Washington. It was founded by Jeff Bezos in 1994 and began as an online bookstore but due to its success, Amazon has diversified into other product lines and services such as groceries, electronics and Merchant Program (see Appendix 1 for detailed portfolio).

Amazon.com's stock price has fluctuated in recent years from $105 in 1999 to $5 in 2001 (Lauden and Traver, 2000). Amazon.com has developed separate websites for Canada, UK, Germany, France, China and Japan. Amazon.com vision is to become (Amazon.com, 2007):

Strategic Options

3.3.1 Strategic Option 1: Market Development - Acquire a growing, profitable e-retailing

company in India to take advantage of the growing market.

Suitability

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The PESTEL analysis reveals consumer spending is rising in India (Times Online, 2007)

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From the analysis of global internet trends India ranked as the fifth highest in Internet

usage (Internet World Stats, 2007)

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Government policy has targeted three million broadband users, therefore increasing

consumers' likeliness to shop online (Euromonitor, 2007)

•

From the strategic group's analysis competitors such as Wal-Mart and Tesco aim to

increase their geographic scope and thus may enter the Indian market (Research and

Markets, 2005). Therefore it is vital for Amazon.com to gain from first mover advantage

to establish its presence

Feasibility

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The SWOT (Appendix 4) reveals that one of the strengths of Amazon.com is the

experience and knowledge in successful acquisition and integration such as

booksurge.com and dpreview.com and Brilliance Audio

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Amazon.com need to borrow to finance the acquisition, which may be problematic as

they are already highly geared at 68%

•

By acquiring an Indian e-commerce company they will also be acquiring the local

knowledge

Acceptability

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Internet users are forecasted to increase 254% from 2006 to 2015, presenting a

growing market and, therefore reducing risk and increasing the potential of high returns

(Euromonitor, 2007).

•

Shareholders are more favourable towards long- term investments, such as this

strategy therefore there is a higher chance of acceptability (CEO Letter to Shareholders,

Amazon.com 2006 Annual Report, see Appendix 5)

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By acquiring a company there is the risk of cultural conflict

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3.3.2 Strategic Option 2: Service Development - Providing a ‘greener' delivery option.

Consumers will be given the choice of selecting the standard delivery option or the ‘greener'

delivery option. The ‘green' option means that the items will be delivered in a biodegradable

plastic container. The consumer will be encouraged to return the box after use in return for a

‘green point'. After collecting a certain amount of points, the consumer will be sent an e-

voucher to be spent at Amazon.com. Boxes will be re-used by Amazon.com in future