Amazon.com: To Infinity and Beyond

Research Discussion #5

TOPIC: Amazon.com: To Infinity and Beyond

The opening Chapter 8 Case

discusses  the story of the founding of Amazon.com which is now more than 25 years  old. Building from its online book selling to an overall marketplace  welcoming third party sellers moved the firm into a global environment.  Building on its slogan of “the everything store,” Amazon continues to  cover a wide variety of consumer needs including country specific sites  to enhance their global footprint. The firm has also moved vertically  with cloud-based computing services and developing its own content for  Prime video streaming. Also recently Amazon has bought Whole Foods and  started AmazonCampus to further broaden its product and market reach.

 There are four sets of questions that you need to discuss in a substantial and critical manner:

1. Describe Amazon's diversification strategy using Exhibit 8.8. What type of diversification strategy is Amazon pursuing? Explain.
2. What  is Amazon’s core business? Is AWS related to Amazon’s core business?  Why or why not? Some investors are pressuring Jeff Bezos to spin out AWS  as a standalone company. Do you agree with this corporate strategy  recommendation? Why or why not? Hint: Do you believe AWS would be more  valuable within Amazon or as a standalone company? 
3. Amazon.com  is now 25 years old and makes $140 billion in annual revenues. As an  investor, would it concern you that Amazon.com has yet to deliver any  consistent profits? Why or why not? How much longer do you think  investors will be patient with Jeff Bezos as he continues to pursue  billion-dollar diversification initiatives?
4. Amazon.com  continues to spend billions on seemingly unrelated diversification  efforts. Do you believe these efforts contribute to Amazon gaining and  sustaining a competitive advantage? Why or why not?

PROFESSOR'S GUIDANCE FOR THIS WEEK'S RD:

You  have to consider the content of Chapter 8, paying attention to many  news reports articles and videos about the purchase of Whole Foods. Look  into concepts and products such as kindles, aws, expansion into college  campuses, the fleet of delivery vans, etc. Consider "pure play" and  margins, growth rates, and growth prospects. Look into the fact  that Amazon started turning profits ONLY in mid-2015! Look into Amazon's  mission and Corporate Strategy.

For  instance, diversification can also allow a company to minimize the risk  of an industry downturn, it can boost brand image, and it can also be  used as a defense mechanism to protect a company from strong  competition.