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Amazon.Com-E Business Model

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Question 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. Amazon.com serves consumers through its retail websites. The company provides merchandise and content purchased for resale from vendors and those provided by third party sellers, and also manufactures and sells the Kindle e-reader. In addition, the company provides services such as Amazon Web Services, fulfillment, miscellaneous marketing and promotional agreements, such as, online advertising and co-branded credit cards. Amazon has two principal segments. North America, which consists of retail sales of consumer products and subscriptions through North America focused websites; and International, which consists of retail sales of consumer products and subscriptions through internationally focused locations (Mergent Online, 2010). Diversification is a form of growth strategy. Growth strategies involve a significant increase in performance objectives beyond past levels of performance (Mason, 2008). Many organizations pursue one or more types of growth strategies; however, there are many pros and cons pertaining to diversification. In the case of Amazon’s growth, two of the pros are innovation and infrastructure (Taulli, 2011). Innovation involves introducing new products. As companies get larger, it can be extremely tough to introduce the products. This hasn’t been a problem for Amazon because the company has developed a thriving internet hosting business whom customers include the New York Times and Washington Post (Taulli, 2011). Amazon’s infrastructure involves quicker shipments and higher inventory turnover, which boosts cash flows. It’s important to remember that Amazon.com generally gets paid before it needs to pay its vendors. It’s an advantage that is extremely

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