Identify the Internal and External Environments

uverview Founded by Jeff Bezos, online giant Amazon.com. Ine, Amazon), was incorpora in the state of Washington in July, 1994, and sold its first book in July, 1995.in 1997, Amazon CAMZN) completed its initial public offering and its common to was listed on the NASDAQ Global Select Market. Amazon quickly grew from an on- line bookstore to the world's largest online retailer reatly expanding its product and service offerings through a series of acquisitions, alliances, partnerships, and exclusivity agreements. Amazon's financial objective was to achieve long-term sustainable growth and profitability. To attain this objective, Amazon maintained a lean culture focused on increase ing its operating income through continually increasing revenue and efficiently managing its working capital and capital expenditures, while tightly managing operating costs The name "Amazon" was evocative for founder Jeff Bezos of his vision of Amazon as a huge natural phenomenon, like the longest river in the world. He envisioned the company to be the largest online marketplace on earth someday. By 2008, Amazon had become a global brand with websites in Canada, the United Kingdom. Germany, France, China, and Japan, with order fulfillment in more than 200 countries. Its operu tions were organized into two principal segments: North America and International Operations which grew to include Italy in 2010 and Spain in 2011. By 2012. Amazon employed more than 56,200 people around the world working in the corporate office in Seattle, and in software devel opment, order tuinment, and customer service centers in North America Latin America, Europe, and Asia. CASE 9 Developmen nestar miedo part of delically! ment and of calma Amazon Corporate Governance Jeff Bezos is the Chairman of the Board and CEO of Amazon and owns 19.4% of Amazon has three board committees of which two are standard: the audi tee and the governance committee. The third committee, the Leadership D und Compensation Committee, is uncommon. Most publicly traded coman compensation committee; however, it is unusual for the compensation commit leadership development as part of its mandate. The Leadership Development pensation Committee monitors and periodically assesses the continuity of agement, including succession plans for executive officers Amazon's board is not populated by CEOs or retired CEOs. It includes capitalists, a number of senior-level executives from varied industries, an eminen and a representative from the non-profit sector Amazon's board has served together for a long time. This implies a deeper und of the company and increasing familiarity and even friendship amongst the group to discourage independent thinking and objectivity All of it is further proof that Jeff Bezos is a strong CEO and runs the company d its website to take Retail Operations/Amazon's Superior Website As people became more comfortable shopping on line, Amazon developed its website advantage of increased Intemet traffic and to serve its customers most effectively marks of Amazon's appeal were ease of use: speedy, accurate search results: Selection and convenience: a trustworthy transaction environment; timely customer services an reliable fulfillment- all of it enabled by the sophisticated technology the company en its employees to develop to better serve its customers. The site, which offered a huge products sold both by itself and by third parties, was particularly designed to create a person alized shopping experience that helped customers discover new products and make effici informed buying decisions. Key to Amazon's success was continual website improvement. A huge part of the technological work done for Amazon was dedicated to identifying problems, develoni solutions, and enhancing customers' online experience. Jacob Lepley, in his "Aman Marketing Strategy: Report One," notes that, "when you visit Amazon... you can use it to find just about any item on the market at an extremely low price. Amazon has made very simple for customers to purchase items with a simple click of the mouse. When you have everything you need, you make just one payment and your orders are processed. This simple system is the same whether a customer purchases directly from Amazon from one of its associates. Pursuing perfection, Amazon was aggressive in analyzing its website's traffic and mod fying the website accordingly. Amazon particularly excelled at customer tracking collectie data from every visit to its website. Utilizing the information, Amazon then directed users products that it surmised they might be interested in because the item was either related a product that they had previously searched for or purchased by another Amazon custom looking for a similar product. Recommendations were also customized based on the information customers provide about themselves and their interests, and their ratings prior purchased. Amazon also collected data on those who had never visited any of its websites, but who had received gifts from who had used the site. more likely to be read than a blanket CASE Amazon.com, Inc. 9-3 One of Amazon's most distinctive feature was the comments ratings/reviews provided by private individuals to help others ma AUTON was the community created based on the chasing decisions. Anyone could provide a narrative review vate individuals to help others make more informed pur- of Stars and/or comment on provide a narrative review and rate a product on a scale "So You'd Like.." guides and Listmania" lists based on Ama individuals could ews Individuals could also create their own ings and post them or send them to friends and family. To streamline cu des and "Listmania" lists based on Amazon's products offer Amazon also consolidated different versions of product a tanily. To streamline customer research into a single product available for commentary that simplified comme rent versions of a productie, DVD, VHS, Blu-ray disk) accessibility mary that simplified commentary and user To further target potential customers, Amazon engaged in permission ing permission to e-mail customers regarding specific production pr Amazon engaged in permission marketing, elicit is regarding specific production promotions based on prior purchases on the assumption that are mail was more likely to be read the e-mail. This strategy was hugely appreciated by Amazon customers Amazon's success. s hugely appreciated by Amazon customers, further contributing to tion, Amazon purchased paym e n tisements on search engines such as Google to direct browsing customers to its websites. The ads appe Towing customers to its websites. The ads appeared on the left-hand Side of the search list results and Ama n ida fee for each visitor who clicked on its sponsored link Al the same time, as "TV and billboard ads were roughly ten times less effective when compared to direct or online marketing when concerning customer acquisition COSTS Amazon reduced its offline marketine. The strateey was simple: as customer shopped online, online marketing was key. However, in 2010. Amazon initiated a small Television advertising campaign to increase brand awareness Finally, to round out its customer care, Amazon expedited shipping by strategically locate ing its fulltiment centers near airports where rents were also cheaper, giving Amazone TWO-pronged advantage of speed and low cost over its competitors. Furthermore, in the United States, the United Kingdom, Germany, and Japan, Amazon offered subscribers to Amazon Prime the added convenience of free express shippine Amazon Prime's free next day de livery endeared it to Amazon customers, again contributing to the customer loyalty that was key to Amazon's success. Amazon Prime cost $79 annually to join and included free access to Amazon Instant Video. The overarching obiective of the company was to offer low prices convenience, and a wide selection of merchandise, a pared down, yet wide-reaching strategy that made Amazon such a huge success. Diversified Product Offerings Amazon diversified its product portfolio well beyond simply offering books, which in turn allowed it to diversity its customer mix. In 2007. Amazon successfully launched the Kindle. its $79 e-book reader, which offered users more than one million reasonably priced books and newspapers easily accessed on its handheld device. Competitor Apple, Inc., then intro duced the iPad, the first tablet computer, in January 2010. sparking further development of mobile e-renders. E-book sales took off immediately, increasing by more than 100 accord ing to the Association of American Publishers. Eager to compete in a market for which it was uniquely positioned, Amazon quickly developed its own low-cost tablet, the Kindle Fire, an Android-based tablet with a color touchscreen priced at $199, more than $300 lower than the iPad. sacrificing profit margins in search of sales volume and market share gains. Other tech giants such as RIMM and HP were unable to compete with the iPad. Only the Sony Nook the Amazon Kindle and Kindle Fire, and the Samsung Galaxy and Series 7 tablet challenged Apple's consistent 60% of market share. Ultimately, however, Amazon's huge growth derived not simply from the sale of Kindle hardware and the growth of e-book sales me books, music, Dr a video games. More the ices including the kindle, ification and the continual expansion of the casy w by mobile devices R 0 .419 of Annan net sales were from media, including video products, magazine subscriptions, digital downloads, and vide Amuros cales came from computers, mobile devices including the Kindle Touch and other electronics, a well as general merchandise supplies to groceries, apparel, jewelry, health and beauty product equipment tools and auto and industrial supplies Amran also offered its own credit card, a form of co-branding that Amaron, the credit card company (Chase Bank), and the consumer. cause it received money from the credit card company both directly from and indirectly from fees generated from non-Amazon purchases. In addi efited from the company loyalty generated by having its own credit card and uses every day. The credit card company gained from Amazon's high visit its potential customer base and transactions. And the consumer earned to tificates with each use of the card. atbocited all Amazon bende is the consumer credit towards ment and de naged, including un and Mario comers on its chnological Partnerships Amazon leveraged its expertise in online order taking and order fulfillment a partnerships with many retailers whose websites it hosted and managed in rently or in the past) Target. Sears Canada, Bebe Stores, Timex Corporation, and Spencer, Amazon offered services comparable to those it offered customers websites, thus freeing those retailers to focus on the non-website, non-technological of their operations In addition, Amazon Marketplace allowed independent retailers and third-party to sell their products on Amazon by placing links on their websites to Amazon.com specific Amazon products. Amazon was not the seller of record in these transaction instead earn[ed) fixed fees, revenue share fees, per-unit activity fees, or some combine thereof." Linking to Amazon created visibility for these retailers and individual selle adding value to their websites, increasing their sales, and enabling them to take adva of Amazon's convenience and fast delivery. Sellers shipped their products to an Ama warehouse or fulfillment center, where the company stored it for a fee, and when an was placed, shipped out the product on the seller's behalf. This form of affiliate marke ing came at nearly no cost to Amazon Affiliates used straight text links leading direct to a product page and they also offered a range of dynamic banners that featured differ content. Veb Services As a major tech player, Amazon developed a number of web services, including ecommerce database, payment and billing, web traffic, and computing. These web services pro access to technology infrastructure that developers were able to utilize to enable vanou of virtual businesses. The web services (many of which were free) created a reliable, scala and inexpensive computing platform that revolutionized the online presence of small nesses. For instance, Amazon's e-commerce Fulfillment By Amazon (FBA) program allo merchants to direct inventory to Amazon's fulfillment centers after products were purch Amazon packed and shipped. This freed merchants from a complex ordering process program allowed allowing them control over their inventory Amazon's Pulfillment We to FBA's program. FWS let retailers embed FBA capabilities straight wentory, Amazon's Pulfillment Web Service (PWS) added vastly enhancing their business capabilities Tallers embed PBA capabilities straight into their own sites, In 2012, Amazon announced a cloud store solution (Amazon Glacier Web Services (AWS), a low-cost solution for dati archiving backup Storage solution (Amazon Glacier) from Amazon storage projects where data not accessed o Solution for data archiving, backups, and other long-term n could be retained Companies often incurred significant costs for data archiving in antic backup demand, which led to under utilized capacity and wasted mo nilicant costs for data archiving in anticipation of growing led to under utilized capacity and wasted money. With Amazon Glacier, companies were able to keep costs in line with actual usare, ma know the exact cost of their store sistems alles With Amazon Glacier, Am continued to dominate the space of cold storage which had first come into prominence 2009, amidst competitors such as Rackspace (RAX) and Microsoft (MSFT) offering their own solutions. By 2012, Amazon Web Services were a crucial facet of Amazon's profit base, and Amazon was one of the lead players in the fasterowing retail ecommerce market. Seine huge growth potential, Amazon made the decision to expand Amazon Web Services (AWS) internationally and invested heavily in technolov infrastructure to support the rapid growth in AWS. Though its investments in ecommerce threatened to suppress its near term man growth, Amazon expected to benefit in the long term, miven the significant growth potential in domestic and, even more so. in international ecommerce mazon's Acquisition of Zappos, Quidsi, wing Social, and Lovefilm On July 22, 2009, Amazon acquired Zappos, the online shoe and clothing retailer, for $1.2 billion. At that time, Zappos was reporting over $1 billion in annual sales without any