Amazon kindle.docx

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Amazonkindle

StrategyAnalysisofAmericaAmazon.Com

Contents

1.Introduction---------------------------------------------------------------------------------3

2.Externalenvironment----------------------------------------------------------------------3

2.1Industry’sbusinessandeconomictraits--------------------------------------------3

2.2Competitiveforces---------------------------------------------------------------------4

2.3Drivesandforcesofindustrychange------------------------------------------------6

2.4Marketpositionofindustryrivals---------------------------------------------------7

2.5Predictingthenextstrategicmovesrivalsarelikelytomake--------------------7

2.6Keyfactorsofsuccess------------------------------------------------------------------7

2.7Industryoutlook-------------------------------------------------------------------------8

3.Internalenvironment------------------------------------------------------------------------8

3.1HowwellistheAmazon’sstrategyworking----------------------------------------9

3.2SWOT------------------------------------------------------------------------------------9

3.3ValueChain------------------------------------------------------------------------------11

4.Strategyissue--------------------------------------------------------------------------------13

5.Conclusion-----------------------------------------------------------------------------------13

6.Reference------------------------------------------------------------------------------------15

1.Introduction

Inthisreport,wewilldiscusssomeissuesaboutAande-readerindustry.AisthepioneeringbookstoreontheInternetthatfirstopenedinJuly1995byJeffBezos[1]

（Velasco,2000）.Amazonhasdevelopedakindofe-readercalledKindle,whichhasenlargeditssaleseffectivelyandefficiently.

Followingisthestructureofthisreport.First,wewillanalyzethemacroenvironmentandindustrylevel,whichisalsoknownasindustry’sexternalenvironment.Second,wearegoingtodiscusstheinternalenvironmentofthefirm,includingresources,capabilitiesandcompetencies.Then,wehavetoidentifythemajorstrategicissues.Lastistheconclusion.

2.Externalenvironment

2.1Industry’sbusinessandeconomictraits

Whenitcomestomarketsizeandgrowthrateofthisindustry,wemustsaythatalthoughthisindustryisnotquitelarge,ithasbeendevelopedatfullspeedwithintheseyears.Itcanbeeasilyseenthattheindustryhasgetintothepositionofsaturationandstagnation,whichmeansthemarkethasbeenfullofthecompetitionandthedevelopmenthasbeenlimitedalready.Thesecondtraitisthattheindustryhasactuallybeendominatedbyafewlargecompanies,suchasAmazon,Barnes,NobleandSony,whichhasbeenfocusedonin2010.Theorderisalsotheirmarketshare,asisknowntoallthatAmazonistheleadermainlybecauseofitsseveralkindsofkindle[2]（ascitedinGriffey,2012,p.14）.Accordingtosomesurveys,thedemandofe-readersisactuallynotverylarge,amajorityofpeopleusethatforleisure,furthermore,highpriceisalsooneofthemainbarriers[3]（Foasberg,2011,p.108）.Thefinalpointisinnovation,whichhasbeenplayingacrucialroleine-readerindustry.Fortheinstance,theLCDscreenhasbeenreplacedbye-ink,whichfunctionstoprotecteyesandmakereadersbeabletoreadinthesun.Therefore,thepaceoftechnologychangeisquitefastandR&Disprettyimportant,whichhasledtotheshortproductlifecycleintheindustry.

2.2Competitiveforces

Inthissection,wewillusethefive-forcesmodelofcompetition[4]（Porter,1979,pp.137-45）toanalyzethecompetitionenvironmentofe-readerindustry.

Competenceofe-readerindustry

2.2.1Thecompetitiveforceofbuyerbargainingpowerandseller-buyercollaboration

Thepressurefrombuysisverystrong.Aswecansee,buyers’switchingcostisverylittle,becausealltheyhavetodoisjustthrowouttheoldoneandthentobuyanewone.Thequantityofbuyersareatmiddlelevel,bute-readerhasbeenacceptedbyincreasinglyamountofconsumers.Furthermore,manylargelibrariesstarttopurchaselargevolumesofe-readers,whichhasbeengraduallyutilizedbyacademiclibraries.Thelastpointisthat,consumersalwayscanwaitforaffordableprice,becausee-readersarejustanassistance,butnotessentialtodailylife.

2.2.2Thecompetitiveforceofsubstituteproducts

Thecompetitiveforceofsubstituteproductsisstrongaswell.Thebiggestcompetitoroutsidee-readerindustryisApple,especiallyipadandiphone,whichnotonlyhavecolorscreenbutalsohasallofthefunctionbelongingtoe-readers.Anothercompetitorispaperbooks,acertaingroupofindividualslikethefeelingofrealpaperandtheweightofrealbook.Thatistosay,somekindofbooks,suchasacademicbooks,cannotbesubstitutedbye-books,atleastrecently.

2.2.3Thecompetitiveforceofsupplierbargainingpowerandsupplier-sellercollaboration

Thecompetitiveforceofsuppliersarequiteweak.Let’stakebooksasanexample.Therearenumerousbooks,suchasnovels,biography,academicbooks,comingoutcontinuouslyeveryday.Thusbooksareoneofthemaininputoftheindustry.Firstly,booksareavailableeverywhere.Secondly,sellers’switchingcostisquitelow,sometimestheyhavetopayforbreakingthecontracts,sometimesthereisnorestrictionsatall.Lastbutnotleast,industrymembersarealsoabigthreattothesuppliers,fortheemergenceofintegratebackward,suchasAmazon,theyhaveconservedaplentyofbookswhichistheirownresources.

2.2.4Thecompetitiveforceofpotentialnewentrants

Theforceisweakaswell.Oneofthemainreasonisthatthebarrieristoohigh,suchasthelackofhigh-techandknow-how.Anotherpointistheindustrymembersaretoostrong,Amazonisthebiggestonlinebookstore,whichistheactualforcesupportingkindle.InadditiontoKindle,therearemanyotherfamousbrandsuchasSonyandNoble.Brandloyaltyhasalsobeenconsidered.

2.2.5Rivalryamongcompetingsellers

Theinnercompetitionisstrongaswell.First,theseveralbigbrandsofe-readerareactiveinupdatingandpromotingtheirproducts.Second,innerindustrydifferentiationisprettysmall,mainfunctionisalwaysthesame.Third,therequirementisgrowingslightly,mainlybecausethepriceisalittlehigh.Thelastpointistheswitchingcostislittleofcustomers.

2.3Drivesandforcesofindustrychange

Drivingforcesarethemajorunderlyingcausesofchangeinindustryandcompetitiveconditions[5]（Gamble,2011,p.58）.Thechangeofe-readerindustrymainlyduetoR&Dandthechangeofpeople’slifestyle.

IntermsofR&D,developmentoftechnologyhasmadethedesignofe-readerbecomemoreattractiveande-inkscreenhasmadepeoplebeabletoreadwithoutthehurtofeyes.Technologyalsohasloweredthemakingcost,whichhasmadee-readerbeaffordabletothepublic.However,thecopyrighthasbeenthreatandcompanieslikeApplehavebeencomingtosharethemarket.Thelastpointisactuallyquiteserious.

Intermsoflifestyle,peopleprefermulti-functiondevicessuchasipad,whichcomeswithfunctionsmuchmorethane-reader,becausefinancialdevelopmentmakepeopleaffordmoreexpensivedevices.

Inconclusion,thedrivingforceshasincreasedthedemand,madecompetitionmoreintensiveandledtohigherindustryprofitability.However,asisknowntoall,theindustryhasalreadybeenmatureandthedevelopmentislimited,themostimportantissueisthecopyrightandbrandloyalty,companiesshouldbefocusedontheresourcesofe-booksandbrandloyaltydeveloping.

2.4Marketpositionofindustryrivals

Themarkethasbeendividedbyseveralseniorbrands,suchasAmazon,Barnes,NobleandSony,thusitishardforlittlebrandstosurvive.Amazonistheleaderofallofthebrands,whichhasoccupiedthelargestmarketshareinAmerica,mainlybecauseofitsconvenientdesign,affordablepriceandwell-establishedbrandloyalty.BarnesandNobledonothavethelargee-bookresourceasAmazonwhileSonyhasmanyotherhigh-techdevicesandignoredthenichemarketofe-reader.

2.5Predictingthenextstrategicmovesrivalsarelikelytomake

ThemostimportantrivaloftheindustryisApple.AlthoughAppledoesn’tproducee-reader,yetalmostallofitsproductshavethefunctionofreading.OnepointisthatApplecanmakeitsipadmoreportable,anotherpointisthatApplewouldcompeteforthecopyrightwithAmazonbecauseofitsstore,whichcanprovidealargenumberofbooksforconsumersaswell.

2.6Keyfactorsofsuccess

Keysuccessfactorarethestrategyelements,productattributes,competitivecapabilities,orintangibleassetswiththegreatestimpactonfuturesuccessinthemarketplace[6]（Gamble,2011,p.67）.Firstly,tech-relatedfactorisessential.Itishigh-techinnovationandupdatethatdeterminewhetherthebrandorproductcanattract,orevendominantthemarket.Secondly,distributionisalsocrucial.ItisstrongdistributionsystemthatmakesKindleandAmazonbesuchpopular,becauseitissaidproductscanbesenttoreceiverswithinoneday.Thirdly,marketingcanmakeproductmoresuccessful,suchastheestablishmentofbrandimage,whichcanattractplentyofconsumerstobeloyaltoacertainbrand.ThefansofKindleissuchanexample.Finally,thecapabilityandskillsofproductmatter.Alltheuniquetraitsofe-readeristhereasonwhyconsumerschooseit.Forexample,comparedwiththeforthrightofKindle,ipadisnotonlyexpensivebutalsohastoomanyannoyinginformationwhichisquitedisturbed.

2.7