Assignment:
Discuss Amazon's business level strategy including identification of the industry, development of the value creation frontier, identification and justification of the company's generic business level strategy, market segment, strategic group, and rivals, and tactics used to manage those rivals.
Business Level Strategy
I. How does a company make a profit?
a. Be customers' "best" option
b. But not all customers value the same features
c. Unique
i. Either monopoly
ii. Or more likely, differentiate on some characteristic / price
II. Market Analysis
a. Generic business-level strategies
i. Cost leadership vs. differentiators
ii. Broad vs. focused strategies
iii. Four generic business-level strategies:
Broad Cost Leadership Broad Differentiation
Focused Cost Leadership Focused Differentiation
b. Value Creation Frontier
i. Curve represents customers trade-offs between low price and features
1. Location of firm represents low price vs. features
2. Size of firm represents broad vs. focused
ii. What can be learned from the curve?
1. Market segments, strategic groups, rivals
2. What customers are unsatisfied
3. Which direction can our firm move to reduce rivalry
III. Tactics for Managing Industries
a. Fragmented industries can be focused using:
i. Chaining
ii. Franchising
iii. Horizontal mergers
iv. eBusiness
b. Tactics for managing rivalries
i. Price signaling / tit-for-tat
ii. Price leadership
iii. Nonprice competition
iv. Market penetration / entrenchment
v. Product proliferation
vi. Capacity control