Question

Write a minimum of 1,250 words on the following question. no copy and paste

Select a company with a significant e-commerce strategy. (Alternatively, if you have entrepreneurial aspirations, use your own entrepreneurial business model as the context for analysis). This company could either be your own home work organization or it could be another organization of your choice or choose the entrepreneurial context as noted above. Using the Porter five forces model, describe some of the current dynamics in the firm's industry which are creating either strategic opportunities or strategic threats to existing business models. Pay particular attention to the dynamics of of the industry, i.e., how is the industry changing in terms of the five forces. Use web research to provide specific examples and support your argumentation. Your essay should give greater emphasis to those factors that are most relevant strategically.

Answer 1

E-commerce market and e-commerce industry are the modern giants of business industry and market integration. E-commerce has lately evolved as the biggest market throughout the world. With the increasing popularity and structured diversified e-commerce facilities, this market structure is here to stay for long. One of the giants of the e-commerce industry is Amazon. Amazon has been infiltrating various sectors of the business lately and have been very successful in many of its business ventures. We will here look in to the e-commerce sphere of Amazon and how it works on the Porter’s five forces model.

                       The Porter’s five forces model explains how an industry competes in its market and evolves in the dynamics of market specialization to sustain and evolve, thus making the market more competitive. The basic five forces of Porter’s model or theory were: Rivalry of Competition, Power of the Suppliers, Power of the buyers, Threat of Substitution and the threat of new entry. Let us discus below, how Amazon has conquered the market with the help of these five forces of Porter.

                        Rivalry of Competition: When Amazon had entered the e-commerce industry, it already had a number of tough competitors in the market. The competitor were giants in their own capacity and had started to put in their foot prints in the e-commerce industry. When Amazon started to deal in e-commerce, it first took a lot of time to study the market structure, nature of demand in this market, how the suppliers work and the mode of operation of the business. In the initial phases, Amazon had started its operation very aggressively by providing all the options to the customers, such that they did not require to waste their time gong to the market or malls. It brought the market to the finger tips of the consumers by becoming live 24x7. Moreover, Amazon started to attract more customers by providing attractive discounts to the consumers over the already existing special prices on all products. It carried out rigorous campaign to promote itself before the consumers, which had far reaching effects on its initial foot print days. The Amazon effect was more seen when it started to induce the customers aggressively with product quality and timely delivery of the products with very less or no delivery charge. This type of steps made the customers more attracted towards this E-commerce giant.

                      Power of Suppliers: When Amazon started its operation in the E-commerce industry, the basic question it had to face was, how and where from to get the suppliers for the products. The market of suppliers is very critical to the e-commerce industry, as they are the base on which this industry survives. The suppliers must provide the [products before time and at a rate which is affordable to the company. Amazon therefore started to contact the farmers for their raw products, those manufacturers who were directly involved in the production of the goods. This sort of steps helped bypass the middle men, thereby reducing the cost of commission given to the middle men. Amazon currently has a huge base of suppliers.

                       Power of Buyers: Another critical question arising before Amazon was the buyer base. It had to decide who would be its customers and how to influence them. The Buyer is the ultimate person for whom this industry survives, and it is critical to have a big buyer base. Amazon therefore started to keep all the product of daily need in its online store. This made its buyer base larger. Moreover, the buyers were lured in to its market, by providing them attractive discounts and freebies. Also, quality service to its customers has been the root of its successful business venture up till date. Amazon enjoys a very big buyer base across the globe in many countries.

             The threat of substitution: Amazon has had to deal with the substitution fear in the market. This means, that of the customers could find alternate ways or locations from which it could get the same products as being sold by Amazon in its stores online. Amazon thereby located all the hubs where the best products could be found at cheapest rates and then put it in its online store. This ensured that the best of the products at the cheapest prices were available at its site.

           The Threat of New Entry: Amazon has had to deal with many new firms and startups as its competition. However, what Amazon did far better than many of the old giants and new startups was that it focused on super-fast delivery of its products to the customers, and more critically it ensured a very good after sales service. It is the after sales service that matters a lot for the customers. Customers want the service provider to be available to listen to it complaints if there are any. Amazon has ensured that it is liked by its customers as a good service provider thus ensuring its ever increasing market base in many countries of the world.