1- Explain what determines price elasticity of demand. Discuss how it impacts a firm’s strategy.
2- Explain Comparative advantages and apply it on the real world.
3- Explain Porters five forces theory.
4- Explain value Creation theory.
5- Explain how barriers to entry are created. Give at least three real world examples of entry barriers.
Also in one page compere theses 2 papers:
* Please compare these 2 papers, the first one talks about Amazon, and the other one is about Dunkin Donuts .
Both papers talks about the competitive advantage, I want you to compare them in terms of the analysts and in terms of applying the Competitive advantages theory on the two companies.
All the answers must related to economic filed.
This paper aims to analyze the Amazon business model and the development of Amazon as an online bookstore to its current e-commerce across different market segments. Moreover, this paper will go in detail over the early stage of the Amazon market place and explain when and why Amazon has decided to penetrate specific markets. Finally, this paper will examine Amazon’s rapid growth and its current market capitalization to conclude its market structure.
Amazon Online Bookstore
In 1994, Jeff Bezos started his business (Amazon) with $10,000 out of his pocket to finance the company operations from a garage. Amazon started as an online book store that sells books in Seattle, Washington. Bezos decided to make this move because of the city growing reputation as a tech hub. Jeff Bezos and his small team were successful in selling online books to their small client base for competitive prices avoiding sales tax by selling online.
E-commerce Expansion
The e-commerce business expanded to sell other products besides books. Amazon expands to music, selling CDs, and DVDs. At the same time, Amazon has heavily invested in technology and marketing, and in 1997, the company went public, selling its share for $18 and raise company valuation to $300 million.
In 1999, Amazon secured the 1-click patent that helps the company expand its sales with the 1-click technology that allows customers to make purchases with one click. The innovation of 1-click shopping enabled customers to buy more and more at the same time; Amazon was able to collect customers’ data. Therefore, expand customers’ product lines offering customers more items to purchase online. In the same year, Amazon launch it’s third party seller market place. This feature started as a way to find an old and rare collection of books and then expanded to include other products listed from the third-party seller. This feature helped Amazon to expand its product line by shipping directly from its third seller.
Selling Clothing
In 2002, Amazon started selling clothing on its online platform. Amazon has announced its partnership with more than 400 apparel brands to sell clothing on Amazon.com. Amazon has also expanded its online platform licensing its online platform to other e-commerce sites. For example, Borders.com and Target.com. This partnership allows Amazon to offer it’s web services to other companies for more profit. In 2004, Amazon entered the Chinese market buying Joyo, the largest online seller of books and electronics.
Prime membership
In 2005, Amazon launched its Amazon Prime membership. This membership allows customers for two-days free shipping on any order with an annual group of $79. As of 2019, more than 100 million members are benefiting from Amazon prime membership. In 2007, Amazon launched its first Kindle fire tablet that allows customers to download books and other products online. This move aims at competing with Apple tablets with competitively low prices and more free services like music and movie streaming membership. In 2008, Amazon acquired the audiobook company Audible. The Prime move comes right after Amazon launches its Kindle tablets. Therefore, the audible was among the services offered on its devices.
Selling Shoes (Zappos)
In 2009, Amazon entered the shoe market acquiring Zappos retailer. Amazon could not compete with the Zappos site that offers overnight shipments and free returns. In 2012, Amazon enhanced its fulfillment centers acquiring a robotics company, Kiva Systems; this acquisition allows Amazon to cut costs with autonomation improving its product delivery with minimal human staff.
Newspaper (Washington Post)
2013, Bezos announced his intention to buy the Washington Post. Jeff Bezos paid $250 million to buy the struggling newspaper. He intended to take it private and enhance its online content. The same year, Amazon announces its Sunday packages delivery service. Therefore, Amazon was delivering packages seven days a week nationwide. This move has also made a profit to the carriers Amazon uses like USPS.
SmartPhone (Fire Phone)
In 2014, Amazon launched its first and last smartphone, a Fire phone, that has all of the Amazon media streaming options. However, this launch was not successful, and Amazon had to bear $170 million of losses and cease production. In the same year, Amazon has also acquired a video game streaming site, Twitch.
Amazon Physical Store
In 2015, Amazon opened its first physical bookstore in Seattle, Washington. Amazon was blamed for the decline in bookstores across the country. Now Amazon has 15 bookstores in cities across the country. In the same year, Amazon has put its echo platform Alexa, the virtual personal assistant in 3,000 stores nationwide. Alexa helps Amazon track consumers’ online data through purchasing decisions.
Selling Groceries (Whole Food)
In the summer of 2017, Amazon has announced acquiring the Whole Food grocery stores for $13.7 billion. This move allows Amazon to penetrate the grocery shopping market and integrate its Prime membership with grocery deliveries. The same year, Amazon announces its search for a second headquarters other than the one in Seattle. This move for a second headquarter increased the competition between cities to host Amazon’s second headquarter, which will increase traffic to the city and create thousands of new jobs. In 2018, Amazon announced that Virginia’s Arlington is the city for its second headquarter and Nashville, Tennessee, as a new hub.
Today’s Amazon
As of 2019, Amazon has been in business for 25 years. The company’s current market cap is 869.02 billion, compared to its $300 million market cap in 1997. That is a 2900% increase in its value in 1997. Amazon has used a business model based on diversification. As we can see from the above analysis, Amazon has penetrated new markets utilizing its technology and innovation. Amazon did not recognize profit until its ten years old. Now, Amazon is a leading online retailer and a business model that proves itself in the twenty-first century. Amazon is big, but it is not a monopoly; instead, it is an example of free-market competition that allows for innovation and technology to thrive in the changing dotcom boom in the late 1990s. Amazon’s growth is prominent. However, it is still a fraction of the US market and controls only 5% of all retail sales in the US and 1% globally (Ladd, 2018).
References
Sherman, Ivory, and Lydia DePillis. AMAZON’S EXTRAORDINARY 25-YEAR EVOLUTION. CNN, 2019,
www.cnn.com/interactive/2018/10/business/amazon-history-timeline/index.html.
Ladd, Brittain. Is Amazon A Monopoly? Donald Trump Thinks So. Forbes, 2018,
www.forbes.com/sites/brittainladd/2018/07/29/amazon-is-not-a-monopoly-president-trump-yet/#691360424735.