Michel Dayhana Arias Gallego 2024

Managerial Economics and Business Administration

Case Study
Amazon 2021
Michel Dayhana Arias Gallego 2024
Managerial Economics and Business Administration

The document traces Amazon.com, Inc.'s evolution from a humble

online bookstore to a global powerhouse across various sectors such
as e-commerce, cloud computing, consumer electronics, and media
entertainment. It delves into strategic maneuvers, financial trajectory,
market valuation, and organizational ethos. Central to Amazon's
narrative is the leadership of Jeff Bezos, whose "Day One Thinking"
philosophy drives the company's commitment to customer-centricity
and innovation. Key milestones highlighted include the game-changing
launch of Amazon Web Services (AWS) in cloud computing and the
strategic acquisition of Whole Foods Market, marking Amazon's entry
into brick-and-mortar retail. Additionally, the document emphasizes the
exponential growth of Amazon's e-commerce platform, solidifying its
dominance in the digital marketplace.
 STEP 1

▸What business Amazon operates in various sectors including e-

commerce, cloud computing, consumer electronics, and

is Amazon in? Is it media entertainment. According to a study by

Ghazawneh and Henfridsson (2013), Amazon's

spreading itself diversification strategy has allowed it to capitalize on

multiple revenue streams and expand its market

too thin or is it
presence. The company's foray into diverse industries
such as cloud computing with AWS and brick-and-mortar
retail with the acquisition of Whole Foods demonstrates

well positioned its agility and ability to adapt to changing market

dynamics (Porter, 2018). While some critics argue that

for the future? Amazon may be spreading itself too thin, the company's
robust financial performance and continued innovation
suggest that it is well positioned for future growth
(Ghemawat & Altman, 2016).

Michel Dayhana Arias Gallego 2024

Managerial Economics and Business Administration
 Who are
Amazon’s
competitors?
And what is
Amazon’s
competitive
advantage?
Michel Dayhana Arias Gallego
2024
Managerial Economics and Business Administration
Amazon faces competition from a myriad of companies
across different industries. In e-commerce, major
competitors include Walmart, Alibaba, and eBay (Kumar,
2017). In cloud computing, key rivals include Microsoft
Azure and Google Cloud Platform (Yang & Tate, 2017).
Amazon's competitive advantage lies in its customer-
centric approach, extensive product offerings, efficient
logistics network, and technological innovation (Lee, 2019).
The company's relentless focus on enhancing the
customer experience through initiatives like Prime
membership and one-click ordering has solidified its
position as a market leader (Brynjolfsson et al., 2013).
 What should
traditional
retailers like Best
Buy do to
compete with
Amazon?

Michel Dayhana Arias Gallego

2024
Managerial Economics and Business Administration
Traditional retailers like Best Buy can compete with
Amazon by leveraging their physical stores as a
strategic advantage. Research suggests that
omnichannel retailing, which integrates online and
offline channels, can enhance customer experience and
drive sales (Verhoef et al., 2015). Best Buy can invest in
technologies such as in-store pickup, same-day delivery,
and personalized recommendations to differentiate itself
from online-only competitors (Verhoef et al., 2015).
Additionally, focusing on niche product categories,
enhancing customer service, and optimizing inventory
management can help traditional retailers remain
competitive in the digital age (Roggeveen et al., 2015).
 Amazon's decision to enter the cloud
computing market with AWS aligns with its
core competencies in technology
infrastructure and data management.
Why does it Research suggests that cloud computing
offers significant opportunities for revenue
make sense for generation and cost savings (Armbrust et al.,

Amazon, an 2010). By leveraging its existing infrastructure

and expertise in managing vast amounts of
online bookseller, data from its e-commerce operations,
Amazon was able to diversify its revenue
to get into web streams and tap into a rapidly growing

services (AWS)? market (Brynjolfsson et al., 2011). Furthermore,

offering cloud services complemented
Amazon's e-commerce business by providing
scalable and reliable infrastructure to
support its operations (Davenport, 2013).
 Why did
Amazon acquire
Whole Foods?
Amazon's acquisition of Whole Foods was driven by strategic
objectives to expand its presence in the brick-and-mortar retail
segment and strengthen its foothold in the grocery market.
Research suggests that the grocery industry presents significant
opportunities for online retailers due to its large market size and
high frequency of purchases (Dreze & Hoch, 1998). By acquiring
Whole Foods, Amazon gained access to a network of physical stores,
established supplier relationships, and a loyal customer base
(McKinsey & Company, 2019). This acquisition allowed Amazon to
offer a seamless omnichannel shopping experience to customers and
accelerate its efforts to disrupt the traditional grocery retail
industry (McKinsey & Company, 2019).

Michel Dayhana Arias Gallego

2024
Managerial Economics and Business Administration
 In conclusion, the case study on Amazon outlines its
transformation from an online bookstore to a global leader
in e-commerce, cloud computing, consumer electronics,
and media entertainment. Led by Jeff Bezos's visionary
"Day One Thinking," Amazon emphasizes customer-
centricity and innovation, evident in milestones like AWS
and Whole Foods acquisition. Despite challenges like
regulatory scrutiny, Amazon's diversified business model,
workplace culture, and strategic expansions position it as a
formidable force in the global marketplace, shaping the
future of commerce and technology.

Michel Dayhana Arias Gallego

2024
Managerial Economics and Business Administration
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