Strayer Bus599 Assignment 1: : Building a Competitive Advantage – Yahoo and Amazon
Review Case 21 “How Amazon.com became the leading online retailer by 2011”, and Case 23 “Is Yahoo!’s business model working in 2011?” located in the textbook to complete this assignment.
Write a six to eight (6-8) page paper in which you:
- Describe, in brief, the histories of both of Amazon.com and Yahoo.com, and determine the core business of each.
- Determine the key strategic differences that have impacted the relative success of both Amazon.com and Yahoo.com. Provide two (2) specific examples of such strategic differences to support the response.
- Compare and contrast the approach to strategic planning that each company has pursued in order to achieve a competitive advantage. Focus specifically on both intended and emergent strategies.
- Analyze the manner in which each company’s distinctive competencies help to shape the strategies that each company pursues. Provide a rationale to support the response.
- Recommend one (1) functional level strategy for each company which prescribes the essential ways in which each may achieve superior efficiency, quality, innovation, and customer responsiveness. Provide a rationale to support the response.
- Use at least three (3) quality references. Note: Wikipedia and other Websites do not qualify as academic resources.
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Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Yahoo and Amazon : Building a Competitive Advantage – Sample Paper
Brief Histories and core businesses
Amazon.com was founded in November 1994 by Jeff Bezos. The company has its headquarters in Seattle, Washington, with other retail offices across the United States and the United Kingdom. The core business of Amazon.com during the years of initiation was selling books online. First international expansion occurred in 1998 when the company acquires an online bookstore in Germany and in the United Kingdom. Other stores were also launched in Japan and France in 2000. Currently, Amazon.com operates Web sites that offer various products and services including electronics, music, clothing, shoes, DVDs and many others. The main features dealt in include one-click shopping, customer review and e-mail order verification (Mirow, 2005).
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Amazon.com has a number of objectives that it plans to achieve as it continues to conduct its operations. The company seeks to be the world’s most customer centric company where customers can find and discover all that they may need and purchase online. Amazon.com also endeavors to offer customers the lowest possible prices for its products. The company’s vision is to continue expanding in all countries with Internet access, while maximizing total commitment in becoming the number one company in Internet transactions. Amazon.com has a mission of continuing to offer quality products and services at a reasonable price as it utilizes the available technology. The company plans to maintain the interest of its shareholders and to expand geographically. In addition, Amazon aspires to offer the best working environment for its employees and to increase its responsibility towards the natural environment and the society (Mirow, 2005).
Yahoo.com was founded in 1996, and it has its headquarters in Sunnyvale, California. It is one of the most recognizable names associated with the Internet. The company’s core business is to offer a context-based directory structure for Internet resources, as well as integrated Web-wide search capabilities. Yahoo.com offers a branded network of online shopping, media and communication services to millions of customers globally. This online company has a mission of connecting people to their passions, their communities and to the world of knowledge. The company’s vision is to be the center of people’s online lives by delivering personally relevant and meaningful Internet experience. Its main business objective is to create deeply personal digital experiences that keep millions of people globally connected (Spencer, 2012).
Amazon.com and Yahoo.com use different business strategies to realize competitive advantage in the market, despite the fact that they both carry their businesses on the Web. According to Mirow, (2005), Amazon.com largely uses product development and product differentiation strategy to ensure that its customers always find and buy what they need. For instance, in 2004, Amazon included added onto the Website, varieties of products such as new books, shoes, clothes and many others. This is a strategy that Amazon uses to attract its customers against its competitor like e-bay thereby realizing a competitive advantage.
In addition, Amazon.com offers its products at affordable prices that allows is customers to purchase more than one item. Using this strategy, the company is able to increase sales and earn high revenues that ensure business continuity. Another strategy used by Amazon.com is that of market penetration with the aim of targeting more customers in the market in order to increase sales. For instance, the company has now expanded its operations to Asian markets, Central America and South American, while at the same time introducing new product categories (Mirow, 2005).
On the other hand, Yahoo.com relies much on its corporate leadership strategy to ensure that its objectives are implemented. The company strives to employ leaders who are capable of ushering in new era and that aligned with its objectives, vision and mission. As opposed to Amazon.com, Yahoo.com uses a strategy that promotes employee ownership over its various projects. The employee ownership at Yahoo.com is only approved if they have a potential to scale to 100 million users. This way, the company ensures high quality of its products. This is a large number that helps the company to compete favorably with is competitors offering similar products in the Web market (Kotler et al., 2012).
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Unlike Amazon, Yahoo.com uses a strategy that seeks to increase customer experience about the products it offers. . The company uses advanced technology in delivering digital content and experience to all its customers globally. Yahoo.com provides online properties and services to all its users, including arrange of marketing and advertising services designed to reach and connect with other users on Yahoo. This is best seen in the e-mail services that are offered by Yahoo.com. Even though Amazon.com also tries to increase customer experience through the Internet, it does not apply advanced technology like Yahoo.com, and it does not act as its main driver for success (Spencer, 2012).
Approaches to strategic planning
Strategic planning is a tool that defines the roots taken by businesses to take the businesses to where the stakeholders want it to go. Businesses trying to make strategic plans must learn to adapt and adjust to different conditions as the plan is being implemented. Businesses use different approaches to strategic planning and to achieve competitive advantage. Amazon.com and Yahoo.com both use intended and emergent strategies to take their businesses to where they want to go and to achieve competitive advantage. The nature of approaches used are however different in these two types of companies (Sarsar, 2008).
Read also strategic planning process
According to Mirow (2005), Amazon.com aims at increasing its net income by 5% in the first year and by 15% in the overall period of three years to come. The company has realized that this is achievable if it increases it total revenue in Asian market by 30% and by keeping the operating cost low. The approach to strategic planning that the company uses to ensure that this is realized is creating different website versions based on the five most common languages in Asia region. Additionally, Amazon.com focuses its marketing strategies on customer feedback to find out what Asian customers tend to buy. This approach to strategic planning is different from the one used by Yahoo.com
As opposed to Amazon, Yahoo.com plans to be an online company that acts as an incubation ground for a wide range of technologies which can enable users to give feedback that can assist in future developments. In order to achieve this, the company uses two main approaches to strategic planning namely; innovation and Research and Development. Through innovation and Research and Development, Yahoo.com is able to apply modern technologies in improving customer experience. As Amazon.com pays more attention to market penetration in order to increase its income in the next three years, Yahoo.com approaches its strategic planning through technological advancement to increase customer experience (Spencer, 2012).
Based on their competencies, Yahoo.com and Amazon.com manage to pursue their strategies and compete favorably in the Web market. These competencies are identified from analysis of the strengths, weaknesses, opportunities and opportunities of the companies (Ciula, 2007). One of Amazon’s strengths is a strong brand name that provides its customers with a large product selection. This helps the company to effectively pursue the strategy of product development in order to attract more customers. The strong brand name also offers a promising pricing policy that incorporates offering discounts to customers. By offering discounts to prices, the prices of prices of products are lowered which allows customers to purchase more than one product as it is defined by the company’s strategy. With the new technological advancements of e-commerce, Amazon.com has the opportunity of constructing an extensive community of buyers in the global market. This will help the company to pursue its strategy of market penetration as it targets more customers (Mirow, 2005).
The strategies pursued by Yahoo.com are shaped by the company’s strengths, weaknesses, opportunities and threats, all of which define its competencies. One of the major strengths of Yahoo.com that tends to shape its corporate leadership strategy is sudden reversal of investor and employee sentiment. Yahoo realized a rapid rise in its shares in a period of one and a half years following Marissa Mayer’s arrival into the company. This leader came up with new moves that have enabled Yahoo.com to stand out among other companies in the Web market. These new strategies resulted into improvement in stock performance that has encouraged the company to pursue its other strategy of increasing employee ownership of the company’s projects to enhance quality. Recently, the company’s shares rose to $ 9 for the first time since 2010. Much credit is extended to the good leadership and improved employee ownership of projects.
Like the above described strengths, Yahoo’s threats also play a role in shaping the strategies pursued by the company. For instance, Yahoo.com is faced with the threat of stiff competition from companies such as Facebook, Google and Disney. The company must therefore try its best to keep its existing customers and attract new ones. In the course of battling with its competitors, Yahoo.com, through the threat of competitors manages to employ advanced technology in order to increase customer experience. Additionally, the company must struggle to defend it PC internet based audience and advertising network by the use modern technology (Spencer, 2012).
Functional Level Strategies
Functional level strategies mainly focus on how a business organization can enjoy low-price advantage and product differentiation advantage in order to improve on its competencies (Chandon, 2009). Amazon.com and Yahoo.com can both employ functional level strategies to achieve superior efficiency, quality, innovation, and customer responsiveness. By using discount advertising to lower prices of operation, Amazon.com can greatly increase customer responsiveness (Mirow, 2005).
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On the other hand, Yahoo.com can achieve high customer responsiveness by using technology in production to produce differentiated products. To both Yahoo.com and Amazon.com, extensive research and development can help bring about new ideas for product differentiation thereby improving efficiency for both companies. Amazon.com can achieve quality by involving employees in decision making process, which motivates them to give their best in producing differentiated products. On the other hand, Yahoo.com can achieve quality by outsourcing instead of producing in order to enjoy low-price advantage (Spencer, 2012). Consequently, both Amazon and Yahoo should strive to develop new products everyday in order to achieve high innovation.
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