Selecting the Correct Hypothesis Test
Hypothesis testing is a very detailed subject. Understanding how to correctly conduct these tests is beyond the scope of this manual or the Six Sigma methodology itself. However, since the Six Sigma project team is expected to be applying these tests to uncover facts and these facts will then be used to base decisions on, […]
Strategic Finance – Meaning and Important Concepts
Introduction For an organization to succeed in the global and competitive world, it needs to have a robust strategic plan in place. The strategic plan is made of several definite targets it aspires to achieve. Some of the targets are internal (Productivity improvement, sound finance discipline, etc.) as well as external (EPS, Stockholder value, etc.). […]
How Emerging Markets Transformed Themselves Over the Last Few Decades
From Backwaters to Powerhouses At the start of the 1970s a widely held belief in the United States and in Europe was about how there were no markets outside of their regions. The implication was that the Third World countries were not worthy of foreign investment as they were steeped in backwardness, immersed in poverty, […]
Can the Government be Run Like a Business?
During the election campaign in 2016, Donald Trump repeatedly stated that he planned to run the government like a business. He would use this as a unique selling point. All the previous presidents, as well as all of his competitors, were professionals like lawyers, doctors and so on. Donald Trump argues that since he was […]
Situations Warranting Business Process Improvement
Business Process Improvement programs when designed with specific objectives and sponsored and facilitated by the senior management including Business Unit heads yields the desired results. Organizations use BPI as a tool to raise the bar and take their business operations to another level. BPI as a tool for effecting change management is effective especially when […]
Investors just can’t seem to get enough of Amazon. Even though Amazon is already the world’s fifth-largest company, investors believe that it is only just getting started! It already has revenues of $125 billion per annum. It is targeting revenues of more than $500 billion in the next few years. Startups have grown at this astounding pace earlier.
However, Amazon is no longer a startup. It is a fledgling company with a multi-billion dollar business. If Amazon can grow even at half the speed that it aims it, it will be the world’s most valuable company in no time! As students of good business practice, it, therefore, makes sense to study the business model being used by this very innovative company.
The value proposition provided by Amazon is simple. They offer the most convenience, widest range and the lowest prices. Their prices are so low that they have displaced Wal-Mart as being the leader is low price category! The amazing part about Amazon is that it provides goods and services at extremely low cost without compromising on quality by any means.
Amazon makes the lowest prices possible by leveraging technology. Firstly, it has leveraged technology in such a way that it does not have to stock inventory of any kind. While other stores are reeling under the massive cost burdens of stocking inventory, Amazon can afford to undercut the competition on this.
It is a mix of a retail company as well as a technology company. Unlike, retail companies, Amazon seldom hires stock clerks and floor managers. Their employees have high technological skills like data mining etc
Amazon has a diverse revenue model.
The revenue model of Amazon is therefore dynamic. It has been repeatedly venturing into newer areas. Also, technology is the backbone of these newer sources of revenue which many retailers had not thought about earlier.
The business model of Amazon is not very capital or human intensive. This makes it scalable. Amazon can easily enter another country and start selling products. Very little groundwork has to be done. This is the reason that Amazon went from being an American company to being a multinational very soon. This asset light business model is also preferred by investors who have pumped in billions of dollars for Amazon to beat its competition with its deep pockets.
Amazon faces a wide variety of competition from different types of companies. There are brick and mortar stores. Then there are other e-commerce sites and also video streaming sites like Netflix. However, none of these competitors seem to be formidable. Amazon is the aggressor is almost all lines of business and is snatching business away from others rather than defending its own turf.
Amazon has always been at the center of several technological advancements since its inception in 1994. In 2016, they have pioneered a new technology called contactless stores. These stores have been branded as “Amazon Go” stores. The unique selling point of these stores is that there are no humans involved. Amazon has achieved such high levels of automation, that they can run an entire departmental store without having any employees! It is technological advancements like these that will allow Amazon to reach its ambitious revenue targets. Although at first, the revenue targets seem ludicrous, Amazon seems to have a plan!
To sum it up, Amazon has a unique business model. The hybrid tech cum retail model was pioneered by Amazon in 1994. Ever since it has not let go of the first mover advantage. Even today, Jeff Bezos pays no dividends and reinvests all the extra profits back into the operations signaling that Amazon is still not a mature company and that it still preparing to grow rapidly.
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What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
February 12, 2025
