Amazon Case Analysis

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Amazon.com Case Analysis

Internal & External Matrix, Matrix Analysis and TOWS Summary, and Quantitative Strategic Planning Matrix

Executive Summary

This case analysis serves the purpose to provide an analytical framework to evaluate Amazon.com from an internal and external perspective, and to provide strategic direction based upon the internal and external evaluation. The case will begin with an introduction to Amazon.com.

Introduction/Background

Jeffrey Bezos, formerly a senior vice president for D. E. Shaw & Company, founded Amazon.com in 1994. D. E. Shaw is a Wall Street-based investment bank, and Mr. Bezos was assigned to find good Internet companies in which to invest. During the summer of 1994, he stumbled across a Web site that showed the number of Internet users was growing by 2,300 percent per month. He quickly realized the vast potential of the Internet, and began putting together a list of possible products that he could sell on the World Wide Web. He eventually narrowed his list to music products and books. Although music products and books both had enormous potential, he eventually selected books because he believed that he could compete more evenly in the book segment due to the lack of a very dominant player. "In contrast, the music industry had only six major record companies. These companies controlled the distribution of records and CDs and, therefore, had the potential to lock out a new business threatening the traditional record-store format" (Kotha, p.11).

To begin his new venture, Mr. Bezos left New York and moved to Seattle. He decided to move to Seattle for two reasons: 1) Ingram Book Group's warehouse is located near Seattle; and 2) Because of the Seattle area's reputation for computer expertise. In 1995, Amazon began selling books entirely online, operating out of a rented facility and using doors laid across sawhorses for desks. He soon was able to generate several million dollars from venture capitalists, and sales were astounding. Sales for 1995, 1996, 1997, 1998 and 1999 were $0.5, $16, $147, $610 and $1,640 million respectively.

Amazon's customer base has increased dramatically from 180,000 in 100 countries in 1996 to 12 million in 160 countries by mid-1999. In 1998, Amazon began to expand into other product categories. The Company began to sell music products and videos, and within two months o...

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...fries & Company, Inc. April 12, 2001; pages 1-16.

"Market Guide - Comparisons for amazon.com, Inc. (AMZN)." http://yahoo.marketguide.com/mgi/ratio/A13EF.html ; pages 1-5. Author unknown.

Lund, Brian. "eBay vs. Amazon" The Motley Fool. April 3, 2001. http://www.fool.com/portfolios/rulebreaker/2001/rulebreaker010403.htm ; pages 1-4.

Becker, Holly, Gross, Michael and Leichter, Stephanie. "Amazon.com Inc.: Amazon's International Challenges." Lehman Brothers Global Equity Research. May 3, 2001; pages 1-16.

The Economist (1997a). "A Survey of Electronic Commerce." May 10; pages 1-18. Author unknown. Taken from above Kotha essay.

The Wall Street Journal (1996). "Reading the Market: How a Wall-Street Whiz Found a Niche Selling Books on the Internet." May 16; page 1. Author unknown. Taken from above Kotha essay.

Eads, Stefani. "Why Amazon's Board is Part of the Problem." BusinessWeek online. http://www.businessweek.com/bwdaily/dnflash/apr2001/nf2001044_127.htm ; April 4, 2001, pages 1-5.

Junnarkar, Sandeep. "Shares of Amazon Hit on "Underperform" Rating." c|net News.com. http://news.cnet.com/news/0-1007-200-2478430.html ; August 9, 2000, pages 1-3.

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