Amazon Case Study Strategy essay

Supplied policies: Due to Amazon’s other ventures and activities this could enable them to invest in their video streaming services and lower costs to nullify the threat posed by new entrants and as well provide competition to Nettling. 3. Bargaining Power of Customers: Influence of powerful customers who are ca pa able to force own price, demand more customized features and force up service levels. Lo w switching cost will prove to be a hurdle to Amazon. Fifth company is not able to match the selection of video services of Nettling then customers will subscribe to Nettling. Switching co SST are low because of the convenience of the Internet.

Since Nettling already has an diva mintage of the number of countries it operates in Amazon may be forced to offer low prices t o lure customers away from Nettling when attempting to venture in to new countries that Nettling already has a strong customer base, this will enhance the bargaining power of customers. . Bargaining Power of Suppliers: Licenses maybe the only method which supply errs could have power over Amazon, however Amazon produces its own shows and movies w which one has already won an award, Transparent, and therefore an assumption can be ma De that the bargaining power of suppliers IS not influential.

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The world is becoming more digital and the example of The Simpson, where producers are going to stop the sale of DVD’ s and instead offer online streaming proving that the market trends are becoming more dig ITIL and this may reduce the bargaining power of suppliers. However suppliers could threaten t open up their own streaming service due to the ease of development through the internet a ND examples include HOBO, Fox TV and Comedy Central where they broadcast their own fan favorite shows such as the Simpson, Family Guy, South Park and other hit TV shows. 5. Threat of Substitutes: Cable TV, Satellite TV.

On demand services offered by BRB disasters such as Sky on Demand or Catch Up, could be considered as substitutes as us bickers already pay for this service with their television packages. For example Sky us bickers rose by 74,000 in 2014, growing demand for Satellite TV and other providers co old prove to be n obstacle as Sky are trying to gain market share and compete with Nettling a ND Amazon with Newton. STRATEGIC RESOURCES: Strategic resources are organizational assets or attributes which when combo Ned in ways that are uniquely specific to an organization constitutes its competitive advantage.

Strategic Resources are not economic resources, because they are valuable o only to the organization that uses them and they have no external value. Amazon’s retail service utilizes their strategic resources and attributes to ensue area wide customer base. Amazon abides by a strategy of ‘Customer first, profits later’ and is known for offering low com appetite prices. Therefore this attribute is likely to ensure online shoppers are likely to consist ere Amazon when look for certain products online. BRIO Framework: Jay Barnes offers criteria to identify strategic resources, which he calls the IVR O framework.

He suggests that above average profits are likely if an organization’s attribute s are: 1. Valuable: Enable an organization to implement strategy that improves its effectiveness and efficiency. Jeff Bozos stated in an interview with Fortune (2012) that Amazon operate on ‘three big ideas: long term thinking, customer obsession and the willingness to invent. An interpretation of this statement suggests that Amazon are constantly thinking of new ways to improve customer satisfaction and target a long term growth of customers which cool d be considered an effective strategy to retain and increase customers. 2.

Rare: Few, if any, other competing organizations have these valuable attributes. Amazon in terms of its retail site have very few competitors, eBay would be considered a close competitor however eBay is more of a marketplace rather than an online retail firm, therefore Amazon’s customer if strategy and the offering Of the lowest price possible can be considered a rare tribute that very few organizations can match. Inimitable: Amazon’s established site and delivery methods as well as constant developments and experiments to improve its services, for example testing a drone delivery system (BBC, 201 5) which is named ‘Prime Air (Amazon. Mom, 201 5) make it difficult to replicate as they have patented ‘Prime Air’ in the U. S (BBC, 2015). Imitating certain developments could result in legal consequence s for competitors while other attributes such as low prices and customer obsession could prove to be costly for certain organizations. 4. Recognizable: Amazon ensures these attributes are held firm within the organization which enables the business to constantly improve the SE;ices o n offer, expand and remain a dominant force in certain industries. Competitors of Industries: eBook: Apple books are the competitors to Amazon’s Kindle eBook store.

Eve n though Amazon’s kindle store is rated higher than books, a recent article published b y Forbes suggests that books is gaining on the Kindle. In the age group of 1 824 Amazon n holds a 2% advantage over Apple in this industry however with the growth of Apple prod cuts being used such as the pad and phone Amazon are predicted to lose this advantage eve r Apple. However the Amazon have enabled the Kindle App to be used on a number of products including the pad and phones in order to provide competition and maintain TTS lead over Apple. Books is very close to Amazon in this industry and they offer the same service. Mobile Applications: Amazon’s applications attribute for $0. 5 billion of net Inc mom while Apple APS yield $ban of net income and Google an estimated value of $4. 6 billion. They sis significant gap in favor of Apple and Google compared to Amazon. Amazon do not show any signs of reducing the gap and it can be perceived that Apple and Google will increase this gap to Amazon with their devices recording higher sales.

Amazon is not a major c impetigo in this industry and have been surpassed by Apple and Google. Video Streaming: At the present time Nettling are the dominant company in HTH s industry with 57. 5% Market share and operate in over 50 countries and over 57 million sub scriber while Amazon Prime operate in only 6 countries and are perceived to have a relative Ely low market share compared to Nettling. Amazon generates $0. 1 billion from streaming me did compared to Nineteen’s $3. 4 billion in the U. S.

Moreover, the financial times reported that NV esters are prepared to back Nineteen’s proposed global expansion project. Shares surged in afterthoughts trading after the company said it would reach 200 global markets with broadband Internet by 201 6, earlier than it previously expected, and forecast “material gal Oval profits” from 2017. Nettling have surpassed Amazon’s services in this industry with their mar get dominance not only in the U. S but also within Europe and Other countries. Amazon Strategy/Competition: Amazon operates on a customer first and profit later strategy.

Amazon based their online retail on offering low prices as well as a wide selection of products rang ins from groceries to electronics and providing different reliable delivery methods for customers. (Environmental School). Amazon always attempts to Offer the lowest price possible to customers. This highlighted in the Financial times article on Amazon, where it states that Ama zoon considers profits to be secondary to efficiency and customer satisfaction. Jeff Bozos said, with the interview with Forbes, that Amazon’s big projects have been De fined by customers’ desire rather than engineers’ taste.

In addition, he said ‘ If customers don’t want something it’s gone, even if that means breaking apart a once powerful department’. Customers are always looking for better prices and with the internet and a nu ember of online retailers, comparison and price competition is fierce therefore the ext renal environment requires these retailers to provide competitive prices and fast d methods in order to gain the attention of customers. Amazon, recently, has m dad its Amazon prime instant video users be able to stream free with their devices o n Getable airlines planes via Stable’s free Wife (Yahoo finance, 2015).

Amazon Prime Video is relatively new compared to Nettling. Amazon video first appeared in 2006 while Nettling was developed in 1997. This could be a reason for the significant gap in market share. Nettling can be considered to be in the growth stage, where they were the first movers and this means they are well established a ND this results in their dominant position in the industry. The video streaming industry is in the shakeout stage of the industry life cycle where there are many competitors and competition from businesses offering similar for example in the U.

K Nettling, Amazon Prime Video and Newton offer similar treating services and are priced similarly on a monthly basis between E. 99 E. 99. Amazon was late to enter the industry. Since the development and growth of the internet established companies such as Nettling were able to grow with the into erne t, while Amazon were still in the development process of the video streaming SE race. Amazon were disadvantaged from the beginning as Nettling was able to penetrate ate new markets in a number of countries while Amazon was establishing itself in the US.

Presently this age difference meant that Nettling was able to benefit from the g Roth of he internet and the increased demand and growth Of streaming services hi chi enabled the company to assert dominance and Amazon were behind due to t his late entry. Amazon pricing is $99 per year (an approximate of $8. 25 per month) that inch dudes the delivery charges of any retail product purchased, when an individual subscribe sees to Amazon Prime. While Nettling offers a subscription service of $7. 99 per month to watch their online shows. Hull Plus is priced the same as Nettling at $7. 9, however n either Hull or Nettling offer retail products and eBooks with free delivery. Nettling have wider selection of TV programmers that are produced by the com pan as compared to Amazon and HULL who have fewer. Availability: Amazon prime is only available in the united States, The United Ski mongo, Japan, Australia, Austria and Germany. Nettling is available in the United States, United Kingdom, Canada, Australia, N Zealand, France, Italy, Germany, Netherlands, Switzerland, Nordic Countries, L attain America, Belgium, Ireland, Luxembourg and Austria.

The financial times reported that investors are prepared to back Nineties prop used global expansion project. Shares surged 15% in afterthoughts trading after the c many said it would reach 200 global markets with broadband Internet by 201 6, earlier ere than it previously expected, and forecast “material global profits” from 2017. After Nineteen’s European expansion, the total countries that the company proper a test within rose to 50. Further more Nettling is quoted in the Financial Times to be ” exploring options” in China and other emerging economies.

Nettling states the driving force behind the desired and proposed goal of opera Zion in 200 markets is the growth of Internet and complimentary technologies such a s tablets and smart TV’s Amazon can benefit from its distinctive capabilities where the relationship it h as with its consumers may result in growth. Amazon are known for being price competition eve and put their customers first, this image may work in favor of Amazon when trying to attract more subscribers to their video streaming service.

Innovation can be seen through their Kindle success and the success Of their s produced show ‘Transparent’ as well as acquiring certain deals with broadcast errs. For example Amazon revived BBC show Ripper street and was an exclusive to Am axon Prime which meant anyone who wanted to view the show had to subscribe to Prime instant video, however Nettling has a number of exclusives such as Breaking B ad which is a favorite amongst a number of viewers and are producing the prequel ‘B teeter Call Saul’ which seems to attract many viewers and fans of ‘Breaking Bad’ to cubs rib to Nettling.

Variety magazine reported that ‘Better Call Saul’ was this years top seer which finished with high ratings. Such offering by Nettling are hindering and oaf acting Amazon’s distinctive capabilities. Core competencies: Amazon have offered an extra package with their video SST reran-mug service. Subscription complements their retail business, which offers faster De every methods for free on an unlimited number of order together with the online vi doe streaming service. This differs from Nettling where only video services are avail able.

This could be a distinctive capability as well as it cannot be replicated by the competition very easily and would prove to be costly. ‘If Amazon signs you up to Prime and you watch video it makes you more likely to use to use their other service (Financial Times). To What Extent Has Amazon’s Innovation Disrupted The Industry? Based on the research conducted a conclusion can be derived that Amazon’s innovation has ad a minimal disruption to the industry with nettling still the dominant firm in this Industry.

Despite offering a unique package that is not matched by any other company Amazon Prime still is behind Nettling in terms of market share, revenue and coverage by a sigh infants margin. With Nettling revenue generated from the U. S alone is significantly greater corn pared to Amazon Prime. Why and How Attractive Is The Online Retail Industry? High street retail shops have been struggling to make profits and compete wit h the growing success of internet based retail companies.