Case study:
Amazon is one of the world's largest and most well-known companies. They generated a mouth-watering $386 billion in 2020.
Amazon was originally an online bookseller, and it was a very successful one after its launch in 1995. Books were easy to source and distribute but Jeff Bezos planned to diversify.
Amazon began selling video games and other multimedia in 1998. Before long, the company sold consumer electronics, software, homeware, toys and more.
The goal of Amazon was always to diversify from an ecommerce website to a fully loaded tech giant.
Amazon later launched AWS (Amazon Web Services). AWS delivers on-demand cloud computing platforms and APIs. They were now a long way away from just selling books.
Amazon diversified further as they launched the Kindle e-reader and later the Amazon Echo smart speaker system. This is a very similar trajectory to what Apple had followed before. They also entered the digital music industry with Amazon Music.
Skip ahead to the present day, and Amazon has its own airline (Amazon Air), cloud storage platform, movie studio, and much more.
The diversification of Amazon is as impressive as it is worrying for competitors. It is the highest profile example of strategic relatedness in business diversification.
1. Provide a background of the Company by reading the case and visiting the website of the Company.
2. Explain the reasons for and nature of diversification.
3. Analyze the current situation and the results of diversification effort.
4. Briefly summarize your learning.