Amazon Com Technology and Market Share Much of Essay
- Length: 24 pages
- Sources: 5
- Subject: Business
- Type: Essay
- Paper: #87310321
Excerpt from Essay :
Amazon.com: Technology and Market Share
Much of what drives Amazon is technology. As it states in its mission statement, Amazon sees that their "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 (Amazon.com 2011)." This tradition is taking another step into the future with the advent and development of Kindle. This new "pad" or "tablet" will, if Amazon it's way be the launchpad for a new era in E-commerce. The naysayers have been wrong before and this author is making a safe bet that the Kindle Fire will light up E-commerce much as Bezos has in the past. Other technological innovations such as Amazon's cloud servers and even a space project have been more problematic and will be examined here as well.
In order to understand Amazon and where it is going in the next few years, one must understand how it will use the Kindle Fire technology to successfully meet its objectives and gain a competitive advantage. Based upon this author's research, they have found that it is necessary to look at the company's strategy and how they intend to use it. While Jeff Bezos is running the company with much of his original strategy, he is also modifying his approaches radically and now plans to use his company's market position to change the way online retailing is being conducted. This paradigm shift in business is huge and ranks up in business history with the innovation of the Sears and Roebuck Catalog or Steve Job's introduction of the iPod's impact upon the music industry. The shift is massive, long-term and will change the way business is conducted.
To further plumb the depths, we will look at Amazon's mission statement and objective for this product (as close as there is to being one), examine Amazon's historical competitors such as Barnes and Noble and also see how they can compete in different, changing and multi-faceted markets. What one will find is that Bezo's market strategy for his company is changing rather considerably with the Kindle technology and will open up considerably the ability of Amazon to penetrate a widening array of markets.
While the above situation continues to heat up, we will find that Amazon has used this widening market position to compete ever more widely to dominate and control the market. Customers have condoned this due to brand name loyalty. They trust Amazon to sell them just about anything. As long as this faith continues and the company's reputation continues untarnished as an unrivaled technological competitor, this situation can be sustained.
Recently, however, a series of technologically-based law suits charging patent infringement on Amazon's part are generating concern over their effect upon the viability and trust in the Amazon brand name. One can only recall the anti-trust fights that embroiled Microsoft in the late 1990s and consider the present potential for the company's future. Like Microsoft, Amazon would likely remain a major contender in its field, but with much less market velocity.
Further, recurring technical problems with the web site and with the cloud servers has caused considerable customer irritation and some damage to the company's image. While this will not end the company, it may slow down the meteoric rise of the firm bring pause and a rethinking of strategy on the part of Bezos to reconcentrate efforts upon the core of the company.
Also, while the company has not lost its continuing battle with United States state governments to tax its retail operations in those jurisdictions, the current recession has caused these units to redouble their efforts considerably and this may now bear some fruit. In addition, while the company's future is positive, it is facing increasing competition from traditional competitors such as Barnes and Noble as well as other companies. Previously, the company competed in many commercial channels with little or not competition. While the overall E-commerce is booming, this increasingly cut-throat competition can certainly be counted upon to effect the situation heavily.
Kindle Fire and Related Technology Research Questions
So, why has Amazon placed so much emphasis upon the Kindle technology? Why is it being introduced? Is it new to industry or just new to the organisation? The research in the paper will support the opinion of his author that the Kindle technology amounts to more than just an attempt to take an increased market share from the iPad. Rather, to understand the technology, one must comprehend that it is not simply another product but rather a hi-tech vehicle to move more of Amazon's surplus merchandise and therefore strengthen the company's market share. This will in turn allow the company to be proactively become even bigger and more successful.
Additionally, we must analyze the split browser and cloud technology that the company is using to make the user experience more friendly and seamless. This is being done to keep the technological edge that has for so long been the hallmark of the company, won and retained customer loyalty and has allowed Amazon to command such a large part of the market by staying technologically ahead of its competitors.
Part 2-Research Methodology
Porter's Five Forces
Porter's five forces tool are a simple but powerful and effective tool for the understanding of where power lies in any business situation. This is very useful and effective methodology because it helps one in understanding the current strength of the competitive position. It also aids in the understanding of factors that affect the development of strategy.
A model of pure competition implies that the risk-adjusted rates of return should be constant across all firms and industries. However, in numerous economic studies, it has been found that different industries can continue to sustain different levels of profitability. Part of this difference is explained by industry structure. Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates (Hill and Jones 2009 42).
On the one hand, Amazon has many marked advantages over most of their competitors in the areas of books, audio products and technology due to their command of the market. For this reason, other companies do not price their products until Amazon enters the market and sells them. This is a frequent strategy from big companies. Additionally, Amazon pays suppliers for those products 35 days after that the item has been sold. Despite this, companies are still prepared and to provide their services and products to Amazon. For small firms and publishers, Amazon keeps a mere maximum of five items in stock in order to reduce costs. Product suppliers consider Amazon as a prestigious and an important company. For this reason, they pledge their commitment to Amazon. They find that it is essential to their business and that the prestige of association with the Amazon brand name is clearly essential to their business health (Mba-tutorials.com 2011).
Amazon's prices are extremely low. Low prices are a principal attraction that Amazon offers to each buyer individually. Also, the number of clients who defect from Amazon products and services to those of the competition is low (ibid). It is this customer retention that gives it so much buying power that is used to good advantage.
Amazon was one of the first contenders im E-commerce. It gives to Amazon a certain level of advantage and tranquility in their market position. Amazon's innvation has over the years has reached the highest levels of customer satisfaction and can then assure their position in the market for many future years to come (ibid). Competitive rivalry has insured the success of the company in the market.
Threat of Substitution
As mentioned before, Amazon has consistently innovated their services and products over the years and the name of Amazon is well recognised and trusted. Indeed, this good name provides the clout that the preserves the country's relationships of its affiliates. Therefore, Amazon does not face real threats of substitution at least in the short-term (ibid).
Threat of New Entry
The World Wide Web has shown that a simple idea that is well developed can offer extraordinary results. More recent examples such as Facebook.com, Youtube.com and others, offer up evidence that new companies that have developed their web sites well have an advantage. These companies produce incredible final results. Amazon however now has to contend with a constant threat of new entries into the market which may provide cutthroat competition that can knock it out of its command market position (ibid). Recently, this has even included corporations such as Google with its checkout system online shopping and E-books. This will be elaborated more upon in the SWOT threat section of the report.
Much of Amazon's history has been clouded in mystique. After all, the company was one of the few…