Amazon Empire: The Rise and Reign of Jeff Bezos

Q. Please view and analyze the PBS documentary. Using a blend of the Porter “Five Forces, analyze the realities of Amazon’s strategy.

Documentary Link – https://www.youtube.com/watch?v=RVVfJVj5z8s

Pull back into your thinking last week’s articles:

The Future and How to Survive It (HBR October 2015)

How Smart, Connected Products are Transforming Companies (HBR 2015) 

– I have attached last weeks articles (Assignment) work below 

– I have attached Porters framework below in which the assignment needs to be done

The Five forces that shape Strategy

Rivalry among existing competitors

Threat of new entrants

Bargaining power of supplies

Bargaining power of buyers

Threat of substitute products or services

Business Strategy 751

Lasell University

Shiv Kapur

03/08/20

How Smart Connected Products Are Transforming Companies

The Five forces that shape Strategy

Rivalry among

existing

competitors

With the increasing use of smart, connected products, companies have been forced to

redefine their industries hence coming up with new strategies for competition. The

number of competitors is increasing and the rivalry is become intense in various

industries. There are many competitors that are offering various products for sale.

Smart, connected products has improved the features of products that are being sold to

consumers. Each company is now trying as much as possible to produce products that

will appeal to many customers. Competitors in various industries are now employing

various strategies such as pursuing new set of smart, connected product features and

capabilities, and changing their business model. All these and many other strategies

are now forming a base for intense competition among companies in various

industries.

Threat of new

entrants

With the continued use of smart, connected products, the markets are becoming

profitable. This attracting new entrants who also wants to utilize smart, connected

products in its entire supply chain. If many firms continue entering the industry,

profitability would be eroded. There are no barriers that are going to prevent new

companies from entering the industry and utilizing the smart, connected products in

all daily operations. The start-up costs for new companies that wants to take

advantage of the unprecedented data and capabilities that is provided by smart,

connected products are low. The threat of new entrants is therefore high as this makes

entry easy. The new entrants continue to join the industry to improve the customer

experience.

Bargaining power

of suppliers

It is now easy for various suppliers in the industry to drive up prices. The number of

suppliers who are supplying smart, connected products to companies are very few.

The suppliers are tasked with continuously supplying smart, connected products to

various companies. This particular input is essential in all stages of production. There

is high demand for smart, connected products because their capabilities, infrastructure

and the data they generate are now reshaping the work of virtually every function in

the value chain. Many companies have continued to outsource their products from

specific suppliers. Following the heavy reliance on suppliers to supply smart,

connected products that are on high demand, their bargaining power is on the rise.

Bargaining power

of buyers

It is not easy for buyers to drive prices down. This is because the number of buyers in

the market are many. Their bargaining power is moderate. Smart, connected are

improving the customer experience. Many consumers require quality products. The

companies using smart, connected products in its value chain know what the customer

wants. The customers therefore have a considerable bargain when it comes to the

quality of products. It is however, important to note that the products being produced

are of high quality since smart, connected products is used in the value chain.

Threat of

substitute

products or

There are a lot of close substitute products that exist in the market. This increases the

likelihood of consumers switching to alternatives in response to price increase. It is

due to this reason that companies are torn in between to fully or partially

disintermediate service networks or distribution channels. The companies however,

services would choose a strategy that would reduce the threat of substitute services or

products.

Reference

– Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are

transforming companies. Harvard business review

Business Strategy 751

Lasell University

Shiv Kapur

03/01/20

The Future And How To Survive It

The Five Forces That Shape Strategy

Rivalry among

existing

competitors

According to the article, multinational companies in both Europe and North America

are being faced by threats from surprisingly familiar competitors, especially those

they have always been aware of. However, these existing competitors have their foot

in some form of technology, and can even be relatively smaller enterprises which

have begun venturing into technology. The advantages that these multinational

companies used to enjoy, including scale, a global presence as well as falling costs,

are no longer sufficient to match the combined competitive efforts from both existing

firms as well as upcoming ones.

Threat of new

entrants

While the existing competitors already have their foot in technology, the even greater

threat to existing multinationals lies in the technology sector. The revenue generated

from this sector has increased by as much as 10 times in thirty years and this is a trend

that is proving severely difficult for existing multinational companies to keep up with

or even hope to match. While they are being faced by problems attributed to an aging

workforce or even increasing tax rates, they are being phased out by incoming

companies which are playing the longer game, even if it means not generating as

much profit. This comes from such companies prioritizing market share and scale

even if money is lost over a significant period. This way, they are able to focus most

of their attention on creating a strong foothold for themselves.

Bargaining power

of supplies

The tech industry is able to leverage some facilities that are unavailable to

multinational companies. The rapid expansion of tech companies is accompanied by a

relatively low price of storing, transporting and replicating data obtained from its

operations. This allows these companies to ‘add interactions and business lines.’ In

other words, they do not have to waste time battling with problems that are faced by

other companies when it comes to making new connections because they have more

than enough time for that.

Bargaining power

of buyers

Consumers are usually attracted to those companies that offer quality services for less

money. The demand for low prices, increased variety and general convenience is

always increasing since customers are insatiable, i.e. they will always demand better

even if the best is provided to them at their fingertips. Tech companies usually

provided existing services at a cheaper price, since technology has made it easier for

them to avail these commodities to their customers. The intermediaries that are being

replaced end up losing money or even shutting down when customers no longer want

to engage in business with them. Multinational companies require large capital

investments which is mainly obtained from profits made and if there are no profits,

then the entire enterprise faces bankruptcy.

Threat of

substitute

products or

services

According to the article, ‘incumbents are often caught flat-footed when tech firms

move into markets where nobody expects them’. Various companies around the world

have begun being struck by cheaper and more available alternatives to the products or

services that they offer. Consumers will always be drawn to what is affordable for

them and they end up being the big winners while the companies suffer replacement

and even bankruptcy. The communication industry, for example, is overrun with ideas

brought forth by technological development. Even the existing forms still face the

threat of being replaced by superior versions of themselves and those companies

unable to keep up with the trend have been observed to register declining profit

margins and even being driven out of business.

References

– Dobbs R., Koller T., & Ramaswamy S. (2015). The future and how to survive

it. Harvard Business Review

– Porter, M. E. The five competitive forces that shape strategy. Harvard business

review