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Amazon Case

In: Business and Management

Submitted By vaibha12k
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Strategic Management: Principles and Practice
Case Study B: Amazon
1) Jeff Bezos founded Amazon in 1995. By 2008, Amazon had truly become a global company with a market capitalization of some US$29.4 billion and 20,700 employees. Its success has been based on a critical success factor consisting of constant technological innovation. This strong sustainable competitive advantage has been placed side by side with a continual effort in catering for the needs of Amazon’s different customer groups.
Barriers to Entry If we analyze the online retailing industry according to Porter’s five forces framework, we can state that the industry presents high barriers of entry in terms of technological knowledge/experience and distribution channels. More specifically, the expensive start-up (or switching) and maintenance costs of equipment and expertise often deter new entrants in e-retail business. In terms of government regulation, the online retailing industry may face some issues with national authority restrictions, as is the case of China with the social networking site Facebook, as well as compliance issues on data protection and privacy. On the other hand, the industry presents low barriers in terms of the ease with which an online retailing store can differentiate their products and services offered to a new market. Nonetheless, if the start-up company lacks the technical capabilities and proprietary resources in establishing itself, penetration in such a market is more difficult than not. As such, given Amazon’s extensive market share and customer base, new entrants to the market do not pose a serious threat to their company.
Threat of Substitutes The industry may, however, suffer from substitutes: traditional retail stores give customers the opportunity to physically browse their products with assistance from a salesperson. Nonetheless, Amazon has been a primary force

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