1- Analysis of amazon task environment:

The five forces of Michael porter

● Supplier power
Low; due to:
● Amazon always has the upper hand over the suppliers in the supply chain
● In February 2000, Amazon signed a five-year agreement with Living.com that
guaranteed the company as the exclusive supplier for the Amazon.com Home
Living store.
● Amazon made similar deals with numerous other new, high-potential
start-ups.
● The company partnered with Greenlight, an online car-buying service, to list
Greenlight’s products directly on Amazon and with Drugstore.com to list
pharmaceutical products.
● In November 2000, Amazon launched Amazon Marketplace, which allowed
sellers to sell new and used items next to Amazon’s product selection.
● 2005, estimated more than 1 million third-party retailers, one-third of
Amazon’s profit came from third-party retailing.

● Threat of New entry

● Low; there are certain industry entry barriers to compete with amazon
● It would take a lot of investments and time.
● Moreover, new market entrants will not have problems with access to
distribution channels due to the readily available courier services such as DHL,
TNT, UPS and others.

● Competitive Rivalry
● The Rivalry in the online retail industry is very High
● This is because the number of players in the recent years has grown
● there is also immense competition from the traditional retail brands. Walmart
and Costco are important competitors of the e-retail giant.
● also the small brands that are fighting for market share and creating competitive
pressure. 
● So, how the level of competition will continue to increase for Amazon is not
unimaginable.

● Buyer power
 Bargaining Power of Buyers - High
● Customers who purchase from Amazon marketplace possess the highest
bargaining power because they are able to switch to a competition or substitute
products and services and they are price sensitive to a significant extent.
Moreover, buyer’s ability to go for substitute website may be great due to highly
intensive competition in the marketplace.

● Threat of substitution
Threat of substitution - High
● The substitution to Amazon are retailers like Walmart and branded outlets
● Since amazon doesn’t sell anything unique, it faces very high threat of substitution.
● A single bad experience will drive a customer away from online retailers.
● Moreover, there still many other people prefer to visit retailer rather shop online
for their needs.
● This all creates high threat of substitution for amazon

2- Analysis of Amazon Internal Environment:

●Strengths:

● Efficient and charismatic leadership by founder Jeff Bezo

● In the wake of this difficult year, Amazon slimmed down, focused on
profitability, and restructured. Bezos hired Joseph Galli as president, Jarren
Kesnon as CEO, and Jeffrey Wilker as chief logistics officer. These hires came
from Black & Decker, Delta Air Lines, and AlliedSignal. Bezos remarked that
prior to 2000, he had failed to create a more formal strategic planning
process. He noted, “We have done a reasonable job in that area, but it’s been
by the seat of our pants. Not with finesse, but because we have tons of smart
people who care, which is great, but needs to be much more of a process.

● Experience in extensive utilization of the first mover advantage

● After a year of software development with a team of 10 employees,
Amazon’s website was launched in July 1995.
● a store opens 365 days a year, 24 hours a day

● Cost leadership due to efficient cost structure

● focus has been on offering customers compelling value.
● prices were often deeply discounted compared to physical retailers.

● Market leadership in the global scale.

▪ In May 1997, Amazon went public at $18 a share, raising $54 million and
valuing the company at $438 million.
▪ Amazon also began to expand internationally, acquiring Bookpages (U.K.) and
Telebook (Germany) in 1998.
▪ In 1998, Amazon moved beyond the book category with the acquisition of
IMDB
▪ In 1999, the company aggressively entered more categories, including toys
and electronics (July), home improvement and tools (November), video
games and software (November), and patio furniture and kitchenware
(December).
● In addition to these category entries, Amazon also released a new online
marketplace called zShops in 1999.
● it purchased Zappos, an online fashion apparel and footwear company
● In 2010, Amazon acquired Diapers.com (Quidsi), an online baby supplies
company
▪ Amazon acquired Woot, a daily deal site, for $110 million
 ● In 2011, Amazon completed the acquisition of Lovefilm, a U.K.-based DVD
rental and online video company

● Synergies between Marketplace, Amazon Web Services and Prime.

Amazon is involved in 3 key businesses:

● Amazon Marketplace
● Amazon Web Services (AWS)
● Amazon Prime

All three Amazon offerings support each other and create benefits that would
not be achieved if the businesses operated independently.

Figure 3. Amazon’s synergies

● A strong worldwide network of sellers. Wide database of customers

● Efficient customer relationship management

● By early 2000, Amazon operated 10 distribution centers (in Seattle, Delaware,

Georgia, Kansas, Kentucky, Nevada, North Dakota, the United Kingdom, and
Germany) totaling 4.5 million square feet of space, offering a capacity of $10
billion worth of sales
● The company also had six customer service centers across the United States, the
United Kingdom, and Germany.

● Customer convenience is a key focus area and it has taken an extra step in this
direction by adding Amazon prime. Its customers can receive several benefits by
paying an annual charge of $99. The benefits include free two days shipping on
 eligible purchases as well as unlimited streaming of movies and videos with
Prime video. Overall, Amazon’s growing popularity is because it has engaged its
customers successfully.

● A vast range of products

● Amazon’s product range is amazingly large; another major strength of the brand.
It is supported by a vast number of sellers found on its global network.
● In fact, Amazon is considered a pioneer in terms of excellent customer service.

● Very qualified employees, process

● Quality & speed services.
● Aggressive strategies in entering market

●WEAKNESSES
● Low profit margins
● Before 2000, Bezos’s focus was on market share and revenue growth over
profitability.
● In 1995, Amazon had limited financial resources
● In 2000, all deals with startups cut its payment to amazon
● In 2000, Bezos had failed to create a more formal strategic planning process
● In 2001, Company share price fell below $20
● In 2001, Bezos lost 80% of his net worth
● 2006 operating expenses rising 34%
● Technological and content costs rising 58%
3-Amazon CEO Jeff Bezos has changed the vision statement of Amazon
from “to be the biggest book store on earth” to be the biggest anything
store on earth”

When and why do you think Bezos has made such change?

Amazon Vision Statement

“Our vision is to be Earth’s most customer centric company; to build a place where
people can come to find and discover anything they might want to buy online”.

This vison statement tells what Amazon wants to create and that they will sell almost all
what people need in life, in private and at work, they have a vision that drives them in
the right direction!

To connect this new vision to the old one which depended mainly on book sales, we will
go into a briefly historical back ground about Amazon:

Amazon.com opened its virtual doors in July 1995 with a mission to use the Internet to
transform book buying into the fastest, easiest, and most enjoyable shopping experience
possible. While their customer base and product offerings have grown considerably
since their early days, they still maintain their founding commitment to customer
satisfaction and the delivery of an educational and inspiring shopping experience.

While Amazon’s first slogan “Earth’s Biggest Bookstore” did describe the business they
were in, it did not describe the vision of the business they are becoming. That vision, as
defined by Amazon’s founder and CEO, Jeff Bezos, had no boundaries, and apparently
still does not. Books were always just the beginning in Bezos’s mind.
Why did Mr. CEO decide to change his company visions?

Theoretically speaking, any vision is supposed to be a dream that the organization is

working hardly to achieve it totally or even partially and once achieved it doesn’t t
become a dream anymore and this is our case, when Bezos started Amazon in 1994 in a
small garage in Seattle, his ultimate dream was to make it the biggest book store on
earth, after lots of efforts and proper business planning he succeeded to make it
happen, hence he is required to change or upgrade his attainable dream to a more
challengeable one which is to make Amazon the biggest anything store on earth.

Bezos has stressed the point that Amazon must provide enormous added value to
change consumers’ shopping behavior. In fact, early on he called the Internet “a
primitive infant technology.” By now, of course, Amazon has taken that technology light
years beyond its infancy, but, would concede there are light years remaining for its
growth.

So, how big is Mr. Bezos’s vision of the “biggest store on earth?” Who knows? And I
would suggest that even he does not have a volume number in mind. Currently, Walmart
holds the “biggest” position, at almost $450 billion, against Amazon’s $34 billion in 2010.

And, while Walmart has 200 million visitors a week, Amazon is now hosting over 300
million per month, and saw its traffic rise by 15% on Black Friday weekend. Amazon now
has an over 20% share of total worldwide e-commerce traffic. Also, more than half of
Walmart’s revenues come from groceries and other nondiscretionary items, categories
that Amazon has not even attempted to break into.

Furthermore, Amazon is growing beyond just being the biggest store on earth to being
the biggest marketplace on earth where anybody and everybody can set up shop.

Bezos stated his strategic vision: that Amazon was focusing on investing in all of the
“challenging opportunities” provided by the Internet, where e-commerce sales were
growing at 2300% a year.

“get big fast” was his long term vision. Quarterly earnings are not the drivers of his
vision. Investing in “getting big fast,”. Share gains now mean profits later. His belief is that
first movers can get big fast if they focus more on gaining share of a totally new market
than worrying about revenues.

Amazon keeps investing in acquiring, expanding and innovating itself to ever-greater

volume and share. And, those investments pay off in another way. With no physical
stores and faster inventory turns, Amazon’s five-year average return on invested capital
is 17% vs. traditional retailers’ average of 6.5%. This gives Amazon a market value of
$100 billion

Bezos can literally put anything and everything known to mankind into the Amazon
marketplace instantaneously, and for incredibly low costs. And then, of course, Amazon
delivers whatever is ordered, often the very next day. Thus, it gets even bigger, faster.

Bezos’s vision has no end, because the Amazon model is limitless.

Amazon, as the biggest river in the world, now has its name attached to an Internet
phenomenon on its impressive rise to becoming the biggest marketplace on earth

4- In Amazon Case study there is a combination of strategies has been

adopted as following:

Grand strategies:
 A- Integration strategies

1- Backward integrations:
In 1998, Amazon.com Advantage, (independent authors and publishers).
In 2000, 10 distribution centers offering a capacity of $10 billion worth of
sales.
Also in 2000 , Amazon signed a five-year agreement with living.com that
guaranteed the company as the exclusive supplier for the Amazon.com home
living stores & made the similar deals with numerous other new, high
potential start-ups.

2- Horizontal Integrations:
1998 acquiring Bookpages (U.K.) and Telebook (Germany).
1998, acquisition of IMDB (the Internet Movie Database).
2007 Amazon purchased Brilliance Audio.

B- Intensive strategies:

3- Market Penetrations:
1995 prices were often deeply discounted compared to physical
retailers
1996 Associate Program allowed rapid expansion
1998 Amazon.com Kids (online book purchase)
2000 expand its customer base from 13 million to 25 million.
2000 Amazon also began offering free shipping for orders over $100
2001 provide “e-commerce solutions” to traditional retailers; through
three programs: [email protected]., the Merchant program and
the syndicated stores Program.
2002 discounted all books over $15 by 30%, and offered Free Shipping.

4- Product / service Development:

Amazon has also focused on product development to grow its market
presence. In this way, Amazon has used product development to grow
its market share.
1995 online book shopping experience is attractive, secure, and easy
1997 1-Click Shopping
2000 six customer service centers
2000 Amazon launched Amazon Marketplace (new and used items)
next to Amazon’s product
2001 provide “e-commerce solutions” to traditional retailers; three
programs of which [email protected];: was an outgrowth of
Amazon Associates, and bookseller Borders used it for its website.
 2005, Amazon Prime
2005, an online service browse chapters of books before publication,
evolved into a preliminary e-book purchasing service, which allowed
users to buy short stories and chapters of books.
2006, Fulfillment by Amazon.
2006 Elastic Compute Cloud (EC2), use Amazon’s server and computing
space on a by-need basis for a much lower price than was traditionally
available. a pay-as-you-go service. And not to make this giant
investment upfront
2006 Amazon Unbox that sold movies (new releases)
2006 introduced audio books

5- Market Development:
Jeff Bezos had launched Amazon out of his garage. Today, Amazon has
grown into a global company. 
1998 International expansion (U.K. and Germany).
2000 expand its operations into Japan and France.
2013 Amazon had entered India Market.

C- Defensive strategies:

6- Retrenchment:
2000 Amazon slimmed down, focused on profitability, and restructuring.
2001 sell only products that are profitable
And find alternative ways of making product lines profitable; selling items in
packs to save on shipping, reducing inventory levels, pressing vendors for
more discounts
2006 Under pressure from the market, Amazon dropped the rate of its
technology spending growth.

7- Divestiture
2001, Amazon laid off 1,300 employees, around 15% of its workforce, and
closed a distribution facility.
The company also created a policy named “Get the Crap Out.” Where it cut
unprofitable products

D- Diversification

8- Concentric / related diversification

 From being a book seller, Amazon has grown into a brand that offers a diverse
array of products and services.
Concentric
1998, Amazon became the leading online video retailer & music CDs
1999 introduced toys and electronics, home improvement and tools, video
games and software, patio furniture and kitchenware.
1999 a new online marketplace called zShops
1999 Auctions is launched
1999 Launches Camera & Photo Store.
2001 provide “e-commerce solutions” to traditional retailers; three programs;
[email protected], the Merchant Program, and the Syndicated Stores
Program.
2004, fine jewelry market.
2006, AWS was officially launched; Simple Storage Service (S3), Elastic
Compute Cloud (EC2), Simple DB (database storage), Simple Queue Service,
Amazon Flexible Payment Service, Amazon Premium Support, and Amazon
Elastic Block Store.

Generic Strategies:
● Regarding to generic strategies of Porter’s Amazon is settled in :
1- Focus :
Bezos began exploring the idea of founding an online retail service company.
He considered over 20 categories of products for his venture and ultimately
chose to focus on books.

2- Leadership in cost reduction.

Choosing of Seattle, Wherever Bezos shipped a book in the United States, he
would not have to levy sales tax, which put him at an immediate advantage
over local bookstores.
Launched Amazon associates & there was no cost to join the program.
Amazon deals direct with the publishers, which cut out the process of 2
intermediaries: distributers & wholesalers, which enabled amazon to provide
more discounts on books.
Amazon.com advantage (independent authors and publishers).
5- If you were the CEO of Egypt branch of amazon

b- Where would you place “reading” as a human need in hierarchy?

Why? And where it should be?

Due to current economic situation in Egypt, people spend most of time trying to secure the
basic needs hence reading considered in the higher level of the quadrant of self-esteem.

This is because the cultural background is not consider reading as top priority. We believe
that the Reading should be in the safety quadrant for Egyptians, as it would increase the
awareness & the knowledge of all threats in one’s life.

c- The top three challenges that you would face

 Challenges in Egyptian market:

● Infra-structure; Would affect the delivery in general and specially for

(Amazon PRIME)
● The killing routine; In initiating & running the Egyptian branch
● High rate of illiteracy & people’s trust in online shopping 

d- The top three actions that you would take

Actions

● Marketing research for internet users and their locations; Locate the
distribution center near them. And use a domestic courier for shipping
and delivery (outsourcing).
● Meet the Egyptian government representatives and explain to them
what would be the impact of Amazon.com services in Egypt and reach to
a gentle agreement with them.
● Campaigns for awareness (booths in clubs, Malls & public areas in upper
Egypt big cities). Also open a physical customer service center in
downtown Cairo.

e- Three SMART objectives for your Egypt branch

Objectives;

● within one-year reach to 50% of market share in online shopping in Egypt

● Acquisition for Jumia within 2 years
● Develop a new category for grocery serving Egyptians households within 2 years
6-Would you support Bezos in the decision to open a hamburger stand
in addition to lemonade stand? Why?

Based on the case circumstances we definitely support Bezos in his decision to open a
hamburger stand in addition to the lemonade stand. We would do so as from our strategic
perspective we would go for a BCG matrix while we would place lemonade as (Cash cow) and the
hamburger as (Star).

This explains the decision motives as the lemonade already took its time and reached a
well-sustained profitable position (maturity state) where it became a cash cow. Finally, it is time
for new star (Hamburger) to raise up by means of investment feed from source of income (Cash
cow).

We think that this also one of the causes which drives Jeff Bezos to change the vision statement
for amazon.com from “To be the biggest book store on earth” into “To be the biggest anything
store on earth” as discussed in the third question answer.