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Amazon - Pros and Cons

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ASSIGNMENT 1: E BUSINESS

NAME: AKINOLA OGUNDIMU

NAME OF INSTITUTION: STRAYER UNIVERSITY

NAME OF INSTRUCTOR: DR LISA WITZIG

COURSE TITLE: BUSINESS ENTERPRISE

DATE: APRIL 30, 2011
1. Discuss the pros and cons of Amazon’s growth and diversification of business and specialization, and make recommendations about what Amazon could have done differently.
As a company strives for growth in any industry, at some point they will face the challenge to diversify or not. Diversification is a risk management technique that allows companies to mix a wide variety of investments in a portfolio, if one investment fails then the other’s success make up the difference. Amazon is widely known to use the internet as the sole method for selling extensive selection of goods to its consumers. Amazon has grown from a book seller to a virtual Wall Mart of the Web selling diverse products. Amazon’s growth and diversification of business offers the following advantages: 1. Cost Leadership is pursued by Amazon.com by differentiating itself primarily on the basis of price. Due to this strategy, Amazon.com always makes sure that it offers the same quality products as other companies for a considerably less price. 2. Cost Savings: Amazon’s business strategy has helped it reduce costs associated with operations and staffing. A reduced cost gives increased revenue. 3. Provides current and prospective customers with different design, quality or convenience. Amazon.com always selects a differentiator that is different among the competitor. So, Amazon.com consumers can recognize and differentiate its product. 4. Existing expertise, knowledge and resources in the company is a major advantage when expanding into new activities 5. Provide better risk control through no longer being reliant on a single market or product. 6. In case of unrelated diversification as

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