Aubeyzon, Paco
Brown, Kenny
Mui, William
Perez, Jasmine
Rubalcava, Miguel
Amazon is one of the world’s leading companies of the online retail industry.
Amazon provides products and services that present value to their customers while
maintaining a prestigious image surrounded by innovation. Information in today’s world
is seen, as being very valuable, from a common conversation with a friend to an
interview with a potential employer, as the saying goes knowledge is power. Amazon
has made it much easier for customers to increase their knowledge and power through
the new innovative device we know as the Kindle. The Kindle is a small revolutionary
device that allows readers to store up to 1500 e-books for their reading pleasure. This
allows its customers to go online and buy books at a much lower price ($9.99) and be
able to take their purchases everywhere in this lightweight portable e-book reader.
Amazon will back up anything over the 1500 in their digital library for easy re-access to
books one has purchased in the past. This huge availability of information is an ongoing
trend and Amazon is most certainly running with this idea and exploiting it to the
highest potential possible with this device.
Great part of Amazons success in the e-book industry is their solid positioning
and strategies being implemented. One-way Amazon has learned how to position itself
to hold a competitive advantage towards their competitors is using Porter’s generic
strategies. These strategies help visualize where a company stands in the industry.
These strategies include cost leadership, product differentiation, and focus strategy.
These three components are matched to either a narrow or broad market, to better
calculate the risk and advantages depending on the size of the market.
A charting/value curve is also important to compare old strategies to new ones.
It also serves to compare the strategies taken from a competitor in order to see where
the competitive advantage is at; whether its price, technology, customer service or
innovation
Mission:
We seek to be Earth’s most customer-centric company. We seek to provide a
variety of unique, low cost, and innovative products. Our products are developed to
empower the consumers, with the most dominant product in the industry.
Vision:
We seek to be earth's most customer centric company; to build a place where
people can come to find and discover anything they might want to buy online.
Generic Strategy
The generic Strategy for Amazon and the Kindle consists of three main parts.
First of all and most importantly, we are focusing almost 100% on innovation. However
we are focusing both in product and company innovation. The reason we are focusing so
much on innovation is because we want to continue to constantly improve both our
product and company therefore making our products and services more appealing to
our customers.
The second part of our generic strategy is that we want to make sure we lower
our price for the kindle. We think it would be appropriate to lower the price down to 99
dollars so that it can compete with brands such as the Ipad.
Finally the last part of our generic strategy focuses on customer service. We are
not giving much importance to customer service, because we feel as if it is not necessary
to have a good customer service in order to have a successful product.
The Diagram below indicates the strategy we feel best represents Amazon and
the kindle’s strategy to be the leader in the e-book industry as well as to achieve its
mission and vision.
Low Cost
Innovation
Customer Service
The diagram below indicates the strategy we feel that does not represent Amazon and
the kindle’s strategy, however it doesn’t mean it could work for another company such
as Sony.
Low Cost
Innovation
Customer Service
Charting/Value Curve
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Kindle
The above diagram shows the first chart/value curve that we had done based on
the current kindle. After strategizing and re-evaluating the aspects that we could
improve on to stay ahead of our competitors, we came up with a new chart/value curve
(Diagram below).
6
5
4
3
2
Kindle
1
Sony e-reader
0
Being the first e-reader to be put out and having that brand identity and with the
improvements we look forward to a greater demand for the Kindle allowing our prices
to be dropped due the mass production needed of the device. We also want to improve
our web access by making it more efficient and effective by improving the speed of
wireless on the Kindle. Not only would customers appreciate faster Internet but e-book
availability as well. We hope to build relationships with more publishers to gain access
to a wider variety of e-books. With the vast amount of e-books we hope to acquire, we
plan on improving our storage space to be able to withstand the capacity that we soon
will have.
A major setback for the Kindle is that Sony our competitor has a great amount of
features that consumers take interest in. Our strategy is to improve our features by
adding color so that consumers can have a differentiation to choose from. Also add a
light so that it’s easier to read for those who enjoy doing so by the bedside or even in
places that there is a lack of brightness. An important feature that we also will improve
on is the text-to-speech by making it sound more human like and less robotic like, also
having the option to be read in a female or male’s voice. We also plan on expanding on
language barriers where one could read in their preferred language. This will definitely
bring in a wider target market all over the world. Last is the ease of use. We feel that
adding a touch screen will definitely simplify the device where it could be easier to
highlight, get from one chapter to another, or even hide the keyboard when not in use.
Balanced Scorecard
The balanced scorecard is a tool that enables managers to measure vision and
strategy against business and operating unit level performance. The balanced scorecard
gives us a clear understanding of the strategies presented and the steps needed in order to
achieve that goal. We will be analyzing the Financial, Internal Business Process,
External, and Learning and Growth perspectives for the Amazon Kindle e-reader.
“To succeed
financially,
how should
we appear to
our shareholders?”
Financial
Objectives
Lower Cost
Measures
Targets
-10%
of Ranked #1
Market
Increase Market
Retail Actual
Share
Competitive Device Improve
device
60%
Color Touch
screen
Better
Technology
Initiatives
Eliminate
Wastes,
partnership with
manufacturers
Market
Awareness
Hire More
People, add new
product features
“To satisfy
our
shareholders
and
customers, at
what
business
processes
must we
excel?”
External Business Process
“To satisfy
our
shareholders
and
customers, at
what
business
processes
must we
excel?”
Internal Business Process
“To achieve
our vision,
how will we
sustain our
ability
change and
improve?”
Learning and Growth
Objectives
Brand Awareness
-Retain old
customers
-Attract New
-Product Expansion
-Complementors
Measures
Market
Share
# of
customers
Targets
60%
- Larger
Library
- Language
expansion
- 2 languages
- 10% more
eBooks
5%
Objectives
Lower Production
Cost
Measures
Amount
saved
Targets
4%
Lower Distribution
Cost
Increase IT for
better site
navigation
Profit Pool
4%
# of site hits,
customer
feedback
Faster site,
improved site
security
Objectives
Improve Customer
Service
Measures
Employees
train
Targets
100%
satisfaction
Adopt new
Technology
Amount of
technology
implemented
Per year
Initiatives
Advertise in
different media
-Customer
benefits
- Loyalty prices
-Partnerships
-Customer
feedback
Initiatives
Cheap contract
with
manufacturers
Reduce Value
Chain
IT Seminars,
employee training
Initiatives
- Teach
employees
manners
- Staff training
Improve
hardware and
software
Financial
The financial perspective of the balanced scorecard involves strategies for
growth, profitability, and risk when viewed from the shareholder or owner’s
perspective. In this case for the Amazon Kindle, our financial objectives are to lower the
cost of the Amazon Kindle from the current price of $259.00 6” Kindle, and $489.00 9.7”
Kindle DX. We will measure this by setting the price of the Kindle according to the
market price of similar eReader devices such as the Sony eReader. We plan on marking
down the Kindle by no more than 10% of its current price. Our target is to be the
number 1 product, where consumers will be able to afford and purchase the Kindle
instead of the other devices in the market. With the Apple iPad available on the market,
key pricing would be the best way to counter attack our competitors. Our initiative in
offering a lower cost is to eliminate possible wastes of materials, and possible
partnerships with manufacturers.
Another financial objective is to increase/retain our market share of 60% in the
eReader industry. It is important that we retain our market share since we have new
products emerging such as the Apple iPad, which will strongly influence the eReader
industry. We will measure our market share by the actual numbers in the eReader
industry. Our initiative in increasing/retaining our market share is by market awareness
such as marketing. We will advertise more through media advertisements. Television
ads are very powerful especially to grab the consumer’s attention and focus them away
from their competitors.
Our last financial objective is to have a competitive device. We would like to
improve the Kindle by adding new features such as color, touch screen, and etc. In order
for us to compete in the changing eReader market place, we have to incorporate new
technology. How will we do this? Well we will need invest in the new technology, and
hire engineers to improve the Kindle device.
External
The external scorecard is all about the customers. In order to fulfill this card the
strategies need to be geared toward customer satisfaction, and that is given them more
choices to pick from. There are three main strategies that will ensure customer
satisfaction, which will contribute greatly in all four aspects of our strategies.
The first is brand awareness. We want to keep increasing brand awareness on
the kindle and the coming new version to continue the hype and talk that has been
created with the ipad and other new entrants. To measure this we will see if our
percentage of market share has increased. As of now we have 60% of the market share
on e-reader sales, and we want to keep dominating if not increase that percentage. In
order to do this we will spend more on advertising costs in different media, like in
technology websites and magazines, newspaper and even TV ads.
The second strategy is to attract new customers and retain the old. To see if our
team has accomplished this difficult task, we will see if the numbers of users online have
increased. Our specific target for the end of the year would be an increase of 5%. In
order to accomplish this strategy we will give customer benefits and loyalty prices.
These include discounts for purchasing various e-books, discounts for being a member,
free e-books for doing filling out surveys, and free e-books of gift cards for
recommending a friend. These benefits increase customer satisfaction and make them
happy which allows us to sell more products. For loyalty prices, we will be giving plenty
of discounts to returning customers, or customers that have been with us since the
beginning. This will help us retain the old, while attracting new ones with out new
benefit programs.
The last task is to bring up a larger selection of products for our users. This
means expanding our online library, not only by presenting more e-books to people, but
also expand the language barrier into Spanish, French and German. This will not only
extend our kindles and library to other continents but also expand on our customer
base. To present more variety to our American based customers, we want to offer
different kindles with different options. The bad side of this is the increase in
production costs. Some of the changes that could happen are an availability of different
colors; touch screen, and adding color to the screen. To accomplish this we will need
several partnerships with our manufacturers and publishers. Forming reliable
partnerships with these will allow us to increase the number of e-books in our library,
and expand to different languages.
Internal Business Process
The internal business process perspective reflects strategic priorities among
processes according to their contributions to customer and shareholder satisfaction. In
order to satisfy our customers and shareholder’s, we must lower our production costs.
This means we will have to form partnerships or get cheaper contracts with the
manufacturers and suppliers. We will measure this by our quarter end/year end
financial overview. Realistically speaking, we hope to lower production cost by at least
5%.
With lower production cost, we can also try to lower distribution cost. We will
measure lower distribution costs through the profit pool, and we aim to lower
distribution costs at least 5%. According to the profit pool diagram we constructed,
distribution costs are the second highest after retail. We aim to increase profitability in
retailing the Kindle.
Our last internal business process objective is to increase IT for better site
navigation. Our target is to improve site security, prevent web attacks, security flaws
and to provide our users a faster site. We will host online seminars to empower and
educate our employees, as well as live customer support. This is similar to the “genius
bar” we will find at the Apple store, but only you’re in a virtual environment. Our
measures will be based upon the number of website visits, and customer feedback.
Learning and Growth
Learning and growth is all about strategizing and implementing objectives to
better our management and employees. Teaching, training and enabling our employees
to be aware of how the company operates and generates revenue and value will better
the overall company. To do this we had two main objectives. Improving customer
service by training our employees on manners and customer relationship will let the
company have a better image. We are looking for 100% customer satisfaction, which is
not an easy target, but a possible one.
Secondly we will adopt new technology. Adopting new technology is looking for
better and faster ways to work our website engine and improve customer experience in
the site. To do this better hardware is needed in order to perform at an optimum pace.