Amazon Case Study

Historical Perspective

Jeffrey Bezos, founder and current CEO of Amazon.com, started the company as an online bookstore in 1994. Within several months, Amazon spread its operation to all 50 states and abroad. Presently, customers from over 45 countries buy at Amazon. Over a short period of time, the company expanded sales to electronics, video games, software, CDs, DVDs, MP3 downloads, food, furniture, apparel, jewelry, and toys. Today, the company even produces its own products such as the Kindle series. Also, Amazon.com is one of the major providers of cloud computing services. Currently, the company is the largest global online retailer responsible for 20% of online retail market share.

Key Success Factors and Strategies

The key strategies and distinctive competencies that have led the company to success and its present position of a world leader in the Internet sales can be identified as follows.

Firstly, Amazon.com employed the cost leadership strategy by offering products and services at lower costs than competitors. The key to making this strategy successful were the economies of scale that allowed the company to offer the largest range of products to its customers.

Secondly, Amazon.com expanded internationally, pursued strategic acquisition and bought new firms to bring new services, assets, capabilities, services, and skills.

Thirdly, the company is committed to delivering superior quality of products and services. It earned a reputation of a convenient and reliable brand that offers the lowest prices, one of the fastest and lowest shipping, widest selection of goods, and many additional features with its services.

The fourth key factor was efficient logistics and distribution that allowed spreading warehouses geographically, so that goods could be dispatched faster and with lower costs to each country.

Therefore, the key factors that have made Amazon.com successful in the past were cost leadership strategy, economies of scale, international expansion and strategic acquisitions, as well as superior quality of products and services, and efficient logistics and distribution (Mirov, 2005; Chaffey, 2012).

Current Issues that the Management Faces

Issues that the management faces today and has to make decisions about are: (a) discontinuing direct sales and selling through third party providers; (b) maintaining a high level of adaptability to changing conditions via introducing EC 2 software, improving Amazon Prime features and developing additional features of cloud computing and cloud storage to enhance ease and convenience of Amazon web services and increase the customer traffic through the company's website for promoting repeat purchases; (c) as well as entering Smartphone and tablet markets on a larger scale. Solutions to problems that senior management faces will aim at strengthening the company's competitive advantage through enhancing its capabilities and customers satisfaction (Eule, 2013; Tsuruoka, 2014).

Evaluation of Strategic Managers

CEO

Jeffery Jeff Bezos (born January 12, 1964) is an American investor and technology and the Internet entrepreneur. As the founder and CEO of Amazon.com he played a vital role in the development and growth of e-commerce. Under his management, Amazon.com became the largest online retailer in the world. Bezos forte is a field of computer science and international trade. Amazon's CEO is known for his attention for his attention to business details. He is described as a notorious micromanager who pays attention to every little detail of the business operation. Bezos seems to pay a lot of attention to newspapers and media and the coverage that his statements and company's performance receive. He shows intense scientific interest and is interested in experimentation and innovation, particularly in decreasing costs and improving the customer's experience when it comes to services his ventures provide. Bezos was awarded titles of person of the year (1999), Americas best leader (2008), Businessperson of the year (2012), and second best CEO in the world after Steve Jobs (2013). Bezos is known to be a person willing to operate the business at a loss for a while, but the one who keeps the eyes on a long-term profitability (Forthys, 2013). Forthys (2013, p.7) said about Bezos,

He has shown the cash and the audacity to do things differently, with the intent of building up something (instead of leveraging up the balance sheet and sacking everybody when revenue comes short, or shuttering the whole things, as some moguls have done).

Bezos is known to pay great attention and discuss in detail possible strategies and business opportunities. He is interested in investing into what others might consider risky ventures or technologies of the future, be it near or distant future.

Executive Officers

Besides Bezos who hold titles of the President, CEO, and Chairman of the Board, top management is comprised of Bezos and twelve officers, and board of directors with Bezos and eight board members. Conclusion can be made that Amazon's officers are a well-functioning team that covets issues of business development, seller services, web services, international consumer business, accounting, finances, e-commerce platform, consumer business, and general counsel. Twelve of the executive officers are males, and one is female; all are internal company members.

Board of Directors

Members of the board of directors (BOD) seem to be a well-knit team as well. Since 2005, there were no changes in the membership of the BOD. It can serve as evidence that board members work well together and complement each other. Directors bring with them wide range of experiences that benefit the company. Most of them serve or served as CEO's or top executives of world's leading corporations. There are scholars and advisors among board members, some members of the BOD come from venture capital and investment companies, software and gaming industry, technology and innovation driven companies, and non-profit sector. There are eight males on the board and one female. They are aged 50, 73, 73, 62, 63, 63, 55, 69, and 57 respectively. All members are educated upper class professionals. Out of the BOD members, Jeff Bezos is internal member; two external members are currently involved only with Amazon.com, and six people are external members.

Analysis of executive officers and BOD members professional characteristics, previous performance in working with the company allows concluding that board members and top executives are the people who think in terms on investment, innovation, technologies, and rapid scientific progress. Also, one can conclude that current BOD members and executives are suitable and capable to serve on the board considering the issues and challenges the company faces.

Company Mission Statement

Current Mission Statement

The mission of Amazon.com is, Our vision is to be earth's most customer centric company; to build a place where customers can come to find and discover anything they might want to buy online (Amazon.com, n.d.).

The company has had this clear focus and mission since it began. Jeff Bezos publicly referred to the company's mission statement as a driving force behind many decisions during the company's history. Therefore, one can conclude that the company's success as the world's top online retailer is due at least in part to management's commitment to the execution of the mission. The company's mission statement clearly articulates its values that will guide organizational actions (to be earth's most customer centric company). It does not specify some narrow market; it rather expresses the company's vision to perform on a global scale. The statement does not describe means by which company intends to develop in the future. The reasons for this are that means by which the company plans to develop might change and it would not be feasible to adjust statement accordingly every time. Products and services are not specified because the company sales wide range of products and offers various services. Inclusion of all these details would make mission statement too complex and ineffective in reaching the general public. However, the current mission statement provides good context for action, and company's actions are consistent with the mission.

Suggested Mission Statement

Following mission statement can be offered to Amazon, Our vision is to offer the most convenient, innovative and cost-efficient way of buying online anything our customers need and want. The author of this paper included elements of innovation, cost, and convenience because these factors are what attracts new customers the most and helps build vendor-customer relations to retain current customers and encourage repeat purchases. Moreover, attractive prices, customer satisfaction, and convenience and reliability that Amazon.com offers are real. Therefore, offered mission statement is an actual working document and not a public relation statement that declares company's claims, which are not supported by practice.

Suggested mission statement in not connected to a particular product or service since Amazon.com offers a wide range of products/services. The statement is inclusive in that it implies that the company targets a wide range of customers and does not exclude anybody. Anyone who wants to buy something can do this with Amazon's help. The statement refers to customers as our customers and indicates a relation between the company and its current and potential clients. Remodeled statement points out that the company intends to grow and develop via innovative online retail that offers to customers its convenience of purchases. It provides a good context for action, indicates the company's intentions to pursue the cost leadership strategy, and offers the widest range of products. According to the offered statement, above all, the company values the customers satisfaction by providing convenience, innovations, and low prices.