Submission by Group 5:

Aman Kaushal (Roll-06) Anuj Jain (Roll-17) Arun Samal (Roll-18) Ikjot Singh (Roll-32) Santosh Kumar (Roll-62)

DISSECTING AMAZON AND JEFF BEZOS : THE STRATEGY FORMULATION ANALYTICAL FRAMEWORK
EPGDIB 2013 STRATEGIC MANAGEMENT ASSIGNMENT NO.04 01 JUL 2012

EPGDIB 2013 GROUP 05

Corporate Culture Deeply Influenced by Jeff Bezoss Experiencies Jeff Bezos, himself, A Very Passionate Inventor Since A Young Age Retail Operations The Most Visible Facet Of Its Business Expansion Through Both - Innovation And Trend Matching Innate Understanding of Customers View of High-Tech Products Lack of Brick & Mortar Stores - A Big Strategic Differentiator

4 5

Future Focus On Digital Convergence With Simplicity

AMAZON.COM

LEGACY OF JEFF BEZOS

EPGDIB 2013 GROUP 05

THE STRATEGY FORMULATION ANALYTICAL FRAMEWORK (S-F-A-F)

EXTERNAL FACTORS

COMPETITIVE CONDITITIONS

INTERNAL FACTORS

THE FRAMEWORK AIMS TO MAP COMPETITORS WITH EXTERNAL FACTORS AND INTERNAL FACTORS ANALYSIS TO ARRIVE AT THE MOST ATTRACTIVE STRATEGY THAT IS LOADED WITH COMPETITIVE INSIGHT

EPGDIB 2013 GROUP 05

THE S-F-A-F PROCESS

1. INPUT STAGE : FACTOR ANALYSIS (EFE/ IFE/ CPM)

2. MATCHING STAGE : ALTERNATIVE APPROACHES TO STRATEGY (SWOT / IE MATRIX / SPACE MATRIX)

3. DECISION STAGE : OBJECTIVE EVALUATION OF ALTERNATE STRATEGIES THROUGH QSPM

CHOICE OF MOST ATTRACTIVE STRATEGY

EPGDIB 2013 GROUP 05

S-F-A-F PROCESS STEP 1:

INPUT STAGE - ENVIRONMENTAL FACTOR ANALYSIS
External Factor Analysis Summary

Competitive Profiling Matrix

2
CPM attempts the Identification of broad critical success factors specific to the Industry. Not all industries will have same/identical critical success factors. The degree of importance of critical success factors may vary from industry to industry

Internal Factor Analysis Summary 3

The IFAS Table Provides Us With A Set of Internal Factors Which Pose As A Strength or Weakness Each Factor Is Weights Such That :Assigned

The EFAS Table Provides Us With A Set of External Factors Which Pose As Opportunities And Threats The Firms Responses To These Factors are Rated Such That :4= Superior Response 3= Above Average Response 2= Average Response 1= Poor Response

1 = Major Weakness 2 = Minor Weakness 3 = Minor strength 4 = Major Strength

000000
IT IS ESSENTIAL THAT THE FACTORS UNDER EACH TOOL ARE CONCEPTUALISED NOT INTUITIVELY, BUT RATHER BASED ON RESEARCH TOOLS SUCH AS THE 5-QUESTION FRAMEWORK OR THE LIKERT SCALE QUESTIONNAIRE

NOTE : THE COMPETITIVE PROFILING MATRIX HAS BEEN KEPT OUT OF THE PURVIEW OF PRESENT ENDEAVOUR OF THE S-F-A-F PROCESS

EPGDIB 2013 GROUP 05

S-F-A-F PROCESS STEP 1:

INPUT STAGE EFAS AND IFAS MATRIX FOR AMAZON
SL.
1 2

EXTERNAL FACTORS
Customers Preference to Physically Evaluate Products High Brand Loyalty And Switch Over Threshold

WEIGHTAGE
0.15 0.20

RATING
2 1

SCORE
0.30 0.20

3
4 5

Existing Customer Base As A Captive Market Source

Product Offerings In Popular Product/Service Categories Customers Demand For Differentiation Integrated Content, Simple Design, Differentiation, Pricing TOTAL INTERNAL FACTORS Focus on Invention With Innate Understanding Of Customers Point of View Possible Dilution of Corporate Culture

0.15
0.10 0.40 1.0 WEIGHTAGE 0.15 0.05 0.25

1
2 4

0.15
0.20 1.60 2.45

NOTE :- LIMITED FACTORS HAVE BEEN INCLUDED FOR PRACTICE AFTER CONSIDERING THEIR SENSITIVITY, INTENSITY AND PROBABILITY OF OCCURRENCE.

SL. 1 2 3

RATING 4 3 3

SCORE 0.60 0.15 0.75

000000

Resources - Cloud Computing & Digital Content

4
5 6

Distribution Network Supporting Retail Operations

Appetite For Risk Taking And Risk-Reward History Availability of Brick-and-Mortar Stores

0.25
0.10 0.20

4
4 1

1.00
0.40 0.20

TOTAL

1.0

3.10

THE ABOVE MATRIX COMPLETES STEP 1 OF THE S-F-A-F PROCESS

EPGDIB 2013 GROUP 05

S-F-A-F PROCESS STEP 2 : MATCHING STAGE ALTERNATIVE STRATEGY FORMULATION

SWOT MATRIX 1
This Tool Maps The Internal Factors (Strength/Weakness) And External Factors(Opportunities/Threats) To Create A Qualitative Matrix With Following Four Alternative Strategies: SO Strategy Map Internal Strengths With External Opportunities WO Strategy - Overcoming Internal Weakness To Exploit External Opportunities ST Strategy - Use Internal Strength To Counter External Threats WT Strategy - Re-align To Overcome Internal Weakness To Counter External Threats

SPACE MATRIX

INTERNAL EXTERNAL MATRIX 3

The IE Matrix Utilises The Quantitative Bias Of The EFE And IFE Matrices To Determine The Overall Business Strategy. This Is Essential To Convert The Functional Strategies Formulated Through SWOT Matrix Into Corporate And Business Strategies.

The Strategic Positioning And Action Evaluation(SPACE) Matrix Consider Two Internal Dimensions (Financial Strength and Competitive Advantage) And Two External Dimensions(Environmental Stability and Industry Strength) To Provide Alternatives Positioning Strategies on Four Dimensions:-

FS Conservative Aggressive

CA
Defensive ES

IS
Competitive

NOTE : THE SUBSEQEUNT S-F-A-F PROCESS WOULD BE CARRIED OUT ONLY BY USING SWOT MATRIX AND I-E MATRIX.

EPGDIB 2013 GROUP 05

S-F-A-F PROCESS STEP 2:SWOT MATRIX IDENTIFYING SWOT FACTORS FROM EFAS AND IFAS

EXTERNAL FACTORS OPPORTUNITIES INTERNAL FACTORS STRENGTHS

S1 - Focus on Invention With Innate Understanding Of Customers Point of View S2 - Resources - Cloud Computing & Digital Content S3 - Distribution Network Supporting Retail Operations

THREATS
T1 - Customers Preference to Physically Evaluate Products T2 - High Brand Loyalty And Switch Over Threshold

WEAKNESS
W1 - Possible Dilution of Corporate Culture

O1 - Existing Customer Base As A Captive Market Source O2 - Product Offerings In Popular Product/Service Categories O3 - Customers Demand For Differentiation Integrated Content, Simple Design, Differentiation, Pricing

W2 - Appetite For Risk Taking And Risk-Reward History W3 - Availability of Brickand-Mortar Stores

EPGDIB 2013 GROUP 05

S-F-A-F PROCESS STEP 2:SWOT MATRIX DERIVING SWOT BASED FUNCTIONAL STRATEGIES

STRENGTHS OPPORTUNITIES (APPLY OR EXTEND ADVANTAGE)

WEAKNESS OPPORTUNITIES (BUILD ADVANTAGE)

S1 - Focus on Invention With Innate Understanding

Of Customers Point of View AND O3 - Customers Demand For Differentiation Integrated Content, Simple Design, Differentiation, Pricing
SO1 CREATE INNOVATIVE PRODUCTS WITH DIFFERENTIATED POSITIONING

W1 - Possible Dilution of Corporate Culture / W2 Appetite For Risk Taking And Risk-Reward History AND O2 - Product Offerings In Popular Product/Service Categories WO1 DIVERSIFICATION INTO POPULAR PRODUCTS WITH KNOWN DEMAND ESTIMATES

STRENGTHS THREATS (SUSTAIN ADVANTAGE) S2 - Resources - Cloud Computing & Digital

Content AND

WEAKNESS THREATS (RE-ALIGN CULTURE/RESOURCES) W3 - Availability of Brick-and-Mortar Stores

AND

T1 - Customers Preference to Physically Evaluate

Products WT1 MOVE INTO PHYSICAL RETAIL FORMAT (Would Also Leverage S3 - Distribution Network Supporting Retail Operations)

T2 - High Brand Loyalty And Switch Over Threshold

ST1 PROMOTION STRATEGY TO LEVERAGE EXISTING BRAND VALUE BY SHOWCASING TANGIBLE RESOURCES

EPGDIB 2013 GROUP 05

10

S-F-A-F PROCESS STEP 2 :

DERIVING I-E MATRIX BASED BUSINESS/CORPORATE STRATEGIES
GROW AND BUILD
Backward, Forward, or Horizontal Integration Product Development Market Penetration Market Development

IFE WEIGHTED SCORES STRONG (3.0-4.0) I IV VII

4.0 3.0

AVERAGE (2.99-2.0) II V VIII

WEAK (1.99-1.00) III

4.0

HIGH (3.0-4.0)

3.0

EFE MEDIUM WEIGHTED (2.99-2.0) SCORES WEAK (1.99-1.0)

HOLD AND MAINTAIN
Market Penetration Market Development

VI IX
2.0

2.0

WITH EFE SCORE OF 2.45 AND IFE SCORE OF 3.10, IT IS APPROPRIATE THAT AMAZON BE PLACED IN THE GROW AND BUILD BUSINESS STRATEGY OF THE I-E MATRIX. ACCORDINGLY, IT SHOULD PURSUE ONE OF THE CORPORATE STRATEGIES RECOMMENDED UNDER GROW AND BUILD.

1.0

HARVEST OR DIVEST
Retrenchment Divestiture

EPGDIB 2013 GROUP 05

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S-F-A-F PROCESS STEP 2:

CORRELATING FUNCTIONAL STRATEGIES WITH BUSINESS/CORPORATE STRATEGIES
SWOT MATRIX : FUNCTIONAL STRATEGIES
SO1 CREATE INNOVATIVE PRODUCTS WITH DIFFERENTIATED POSITIONING

I-E MATRIX : BUSINESS/CORPORATE STRATEGY

PRODUCT DEVELOPMENT

GROW AND BUILD

ST1 PROMOTION STRATEGY TO LEVERAGE EXISTING BRAND VALUE BY SHOWCASING TANGIBLE RESOURCES
WO1 DIVERSIFICATION INTO POPULAR PRODUCTS WITH KNOWN DEMAND ESTIMATES WT1 MOVE INTO PHYSICAL RETAIL FORMAT

MARKET DEVELOPMENT

MARKET PENETRATION

FORWARD INTEGRATION

THE LISTING OF FUNCTIONAL AND BUSINESS STRATEGIES AS ABOVE COMPLETES STEP 2 OF THE S-F-A-F PROCESS

EPGDIB 2013 GROUP 05

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S-F-A-F PROCESS STEP 3: THE QUANTITATIVE STRATEGIC PLANNING MATRIX

QSPM
A Tool To Evaluate Alternative Strategies Objectively, Based On Previously Identified Factors , The Weights And Attractiveness Scores(AS) Of Each Key External/Internal Factor. The Aim Is To Identify Alternative Strategies That The Organization Should Consider Implementing. Total Attractiveness Scores (TAS) are arrived by multiplying the weights by the AS. The higher the TAS, the more attractive the strategic alternative.

STRATEGY
QUALITATIVE FACTORS

TOTAL

SCORE

QSPM

QUANTITATIVE SCORES

ATTRACTIVENESS

EPGDIB 2013 GROUP 05

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S-F-A-F PROCESS STEP 3:

QSPM COMPONENTS
Comparison
Tabular Evaluation of 04 Strategies Arrived Through At End Of Step 2 of S-FA-F Process

Attractiveness Scores(AS)
AS are determined by examining one factor at a time, and asking the question Does this factor affect the choice of strategies being made?

The range for Attractiveness Scores is 1 = Not Attractive 2 = Somewhat Attractive 3 = Reasonably Attractive 4 = Highly Attractive - = No Impact On Choice

Total Attractiveness Score(TAS)

The TAS indicates the relative attractiveness of each alternative strategy, considering only the impact of the adjacent external or internal critical success factor.

Note: If a factor receives a - in one strategy, then all other strategies must receive a dash in the given row for that factor

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S-F-A-F PROCESS STEP 3:

QSPM COMPONENTS
1 2 3 4 - = = = = = Not Attractive Somewhat Attractive Reasonably Attractive Highly Attractive No Impact On Choice ATTRACTTIVENESS SCORE RANGE

STRATEGIES

SO1
WGHT AS TAS

ST1
AS TAS

WO1
AS TAS

WT1
AS TAS

OPPORTUNITIES
O1 - Existing Customer Base As A Captive Market Source
O2 - Product Offerings In Popular Product/Service Categories O3 - Customers Demand For Differentiation Integrated Content, Simple Design, Differentiation, Pricing

0.15
0.10 0.40 SUB TOTAL 0.15 0.20 SUB TOTAL 0.20 0.25 0.20

2
1 4

0.30
0.10 1.60

4
2 1

0.60
0.20 0.40

3
4 3

0.45
0.40 1.20

1
3 2

0.15
0.30 0.80

SO1 PRODUCT DEVELOPMENT Create Innovative Products With Differentiated Positioning ST1 MARKET DEVELOPMENT Promotion Strategy To Leverage Existing Brand Value By Showcasing Tangible Resources

THREATS
T1 - Customers Preference to Physically Evaluate Products T2 - High Brand Loyalty And Switch Over Threshold

2.00
1 3 4 4 3 0.15 0.60 2 4 3 2 1

1.20
0.30 0.80 3 2 2 3 2

2.05
0.45 0.40 4 1 1 1 4

1.25
0.60 0.20

STRENGTHS
S1 - Focus on Invention With Innate Understanding Of Customers Point of View
S2 - Resources - Cloud Computing & Digital Content S3 - Distribution Network Supporting Retail Operations

0.75
0.80 1.00 0.60

1.10
0.60 0.50 0.20

0.85
0.40 0.75 0.40

0.80
0.20 0.25 0.80

WO1 MARKET PENETRATION Diversification Into Popular Products With Known Demand Estimates WT1 FORWARD INTEGRATION Move Into Physical Retail Format

WEAKNESS
W1 - Possible Dilution of Corporate Culture W2 - Appetite For Risk Taking And Risk-Reward History W3 - Availability of Brick-and-Mortar Stores

SUB TOTAL
0.10 0.10 0.15 TOTAL
1

2.40
-

1.30
-

1.55
-

1.25
-

0.15

0.30

0.45

0.60

5.30

3.90

4.90

3.90

EPGDIB 2013 GROUP 05

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THE S-F-A-F PROCESS STRATEGIC SOLUTION :

BUSINESS CORPORATE FUNCTIONAL STRATEGIES

EXTERNAL FACTORS

GROW AND BUILD

COMPETITIVE CONDITITIONS

INTERNAL FACTORS

PRODUCT DEVELOPMENT : Create Innovative Products With Differentiated Positioning AND MARKET PENETRATION: Diversification Into Popular Products With Known Demand Estimates

THE MOST ATTRACTIVE STRATEGY, LOADED WITH COMPETITIVE INSIGHT

EPGDIB 2013 GROUP 05

16

DISSECTING AMAZON AND JEFF BEZOS : THE STRATEGY FORMULATION ANALYTICAL FRAMEWORK (S-F-A-F METHOD)

Jeff Bezos Is An Irreproachable Visionary And A Lot of Trust Is Placed On His Understanding Of Customers Need. However, He Will Have To Marshall His And Amazons Competitive Advantages With Far Greater Physical example text. Go Than and replacePast To This is an Innovation ahead In The it with your On Dominant Players text. Go ahead Take own text. tThis is an example In Established and replace it with your Market Segments. own text. This is an example
text. Go ahead and replace it with your own text.

An Unparalleled Distribution Network , Accumulated Digital Content and High Credibility Among Existing Customers Could Prove To Be The Requisite Fulcrum Behind The Next Revolution.