Bus 508 - the Business Enterprise

Amazon.com

Lydia Rosebush

BUS 508 The Business Enterprise

Professor Mary Robinson

May 1, 2011

Discuss the pros and cons of Amazon's growth and diversification of business and specialization, and make recommendations about what Amazon could have done differently.

Amazon has been enormously successful in their growth and diversification. They are one of the world's largest retailers and have not been shy about breaking into new markets; books, movies, music, electronics, apparel, and most recently internet computing services. Amazon has grown and evolved with the growth of the internet. They market their website to an audience that is typically tech savvy and educated which typically means that their clientele have the money to spend on their products. One of the biggest pros to Amazon's diversifications strategy is that they have created a one stop shop that offers almost anything that a person is looking for and have been widely successful. One of the cons associated with such diversification is that Amazon may create more competition in the market or end up competing within their own company. Another pro to the strategy that Amazon has implemented is that it is built on a strong infrastructure. That infrastructure is one of the reasons that Amazon is able to diversify quickly and seemingly easily. One of the cons is that as they diversify it may strain the very infrastructure that has made Amazon so successful. For instance Amazon's entrance in the world of computing services is may require new processes and management attention that may complicate their business (Knowledge@Wharton, 2006).

One recommendation I would have would be to research and better develop their target market. Amazon initially started out with very little marketing and has only recently started their marketing efforts. Amazon will need to increase their target market if they want to keep up with growing competition.

Determine the impact if Amazon.com had split up and become a family of brands (for example, "Amazon" for books, "Supertoys" for toys, etc.), each with a different public face but all run by the same parent company.

If Amazon.com had split up and become a family of brands its success would not have been as great. The name "Amazon.com" itself is extremely popular and a name that is easily recognizable. According to a case study by Vadim Kotelnikov, "Amazon.com has steadily increased its spending on advertising and promotion to make its brand stronger and build brand equity." When a company presents a brand it is a vital part of the company's success, almost becoming the decision factor of the company's profit and victory. A brand for a company is what presents the company and how the public views and recognizes them. Kotelnikov describes it as "A brand for a company is like a reputation for a person." Amazon as a company has a main focus of building information services that are created in detail for the customer and the customers focus. One of the greatest things Amazon offers is automated customization for its customers/users. In today's society customization is in high demand from everyday consumers. Most all people look for the services or products that are specifically customized for them. Customization has become a very popular and a sought after detail in today's products or services. This has become a vital part of Amazon's success and popularity among consumers. When one hears Amazon they can think of countless things offered by the company in one place. Amazon offers everything from books, toys, to utility computing services. If Amazon had split up and become a family of brands and each had a different public face I do not believe they would have the same amount of success. The name Amazon speaks volumes to the consumers seeking their products because it is well known and Amazon stands behind their customer service. They achieve high levels of customer satisfaction and repeat customers. This is because the company is committed to customer service. So when a consumer has a wonderful and great experience with a purchase they tend to stick with that company that produced such favorable results. The consumer locks into the company's name and feels safer and secure with purchasing their products and services. As the company grows and offers more services, those same consumers want to come back and deal with the same company because of the positive experiences. If Amazon had split up into a family of brands and each had a different face many would not be able to recognize that it was all