Amazon India business strategy

22
Amazon Entering Indian Market Group A4 Biswo Ranjan Bal 12012 Gaurav Kumar 12017 Shashank Shekhar Goswami 12045 Siv Sagar Saha 12048 Robin Kumar Sahu 12097 Ritesh Jaiswal 12153 Sarthak Rohatgi 12182
  • date post

    19-Oct-2014
  • Category

    Education

  • view

    3.678
  • download

    1

description

 

Transcript of Amazon India business strategy

Page 1: Amazon India business strategy

AmazonEntering Indian Market

Group A4

Biswo Ranjan Bal 12012

Gaurav Kumar 12017

Shashank Shekhar Goswami 12045

Siv Sagar Saha 12048

Robin Kumar Sahu 12097

Ritesh Jaiswal 12153

Sarthak Rohatgi 12182

Page 2: Amazon India business strategy

Introduction of Amazon

American multinational company

Incorporated in 1994 by Jeff Bezos

In July 1995, sold its first book on Amazon.com

Presence across three locations in India (Bangalore, Hyderabad,

Chennai)

2

Page 3: Amazon India business strategy

Vision & Mission Statement

Vision

“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.”

Mission

“To leverage technology and the expertise of invaluable employees and to provide customer with the best shopping experience on the internet.”

3

Page 4: Amazon India business strategy

Ethical issues of Amazon.com coming to India

Stakeholders: Justified returns to them has to be ensured

Suppliers: Suppliers forms an integral part for any business operations. Amazon being an online retail chain has to have good relationship with its partners.

Customers: These are the most important category for any organisation. Amazon has to make sure that it provides genuine products to its customers. Since they could not have touch feel or test facility in their type of business

4

Page 5: Amazon India business strategy

Employees: Employees should not exploited. They should be trained properly. Moreover since they are expanding in India, they should focus on giving Indians more employment. As we have seen the recent issue of Infosys in U.S.A. where allegations over racial discrimination has been raised against the company.

Competitors: They should start a healthy competition with their competitors. Price wars will be there but they have to focus more on customer satisfaction. An environment should be created where there is a win-win situation for all.

Society: They should not involve in any unfair means which harms the society or the legal structure.

As in the case of Bharti Walmart where the CFO Pankaj Madan and his entire legal team has been suspended on account of alleged bribery to the government officials for getting various licenses and permissions. (Economic Times, 2013)

5

Page 6: Amazon India business strategy

Strategic Issues

Amazon is basing its strategy on three pillars:

Vast selection

Low price

Fast delivery

Gaining market share

In India, tastes and desires change drastically in every 200kms, which

was unlikely in other countries

Flipkart which is the market leader in India, is the biggest hurdle in their

way to success as it has gained customers’ confidence over the years

6

Page 7: Amazon India business strategy

Strategic Shift

AMAZON.COM (Circa 2001)• Landlord of largest WebSupermall• Universal selection, one-stopShopping, and same day customerFulfilment = competitiveAdvantage• Revenues: $2.7 Billion (est.)• Registered Customers: 19.5 MM• Items Offered: >18 MM

AMAZON.COM (1998)Book E-tailerInvestment in brand buildingCustomer fulfilment largelyoutsourced to Ingram andBaker & TaylorRevenues: $610 MMRegistered Customers: 12 MMBooks Offered: 2.5 MM

Complex

 

 

 

 

 

 

 

Simple

LOW CUSTOMER FULFILLMENT AS CORE-COMPETENCE HIGH

HIGH

 

 

 

 

 

 

 

 

 

 

 

LOW

ONLINE

PRODUCT

ASSORTMENT

E-CUSTOMER

EXPECTATION

HIGH E-Brand as barrier to entry LESS COMPELLING

7

Page 8: Amazon India business strategy

Analysis of Strategic shift

Amazon adopted changes with time

Added new market developments

From just being an online book seller, it became an online shopping

place

Expansion of business created entry barrier for competitors

8

Page 9: Amazon India business strategy

Understanding Indian Market

Middle class in India is booming

India is the third largest publisher of English language books in the

world

E-commerce has a huge potential in India, a country of more than 1.2

billion people

52 million active Internet users, of which 40 percent have shopped

online

Indian online market is expected to grow 55% to 100 billion rupees

this year 9

Page 10: Amazon India business strategy

What Amazon looks to achieve in India

Customer satisfaction in India

Looking for a long term business

Considers new markets where the company could enter or additional

products that could be developed

10

Page 11: Amazon India business strategy

SWOT Analysis of AmazonStrengths

Brand well known along with a strong customer base in many parts of the world.

Diverse product offerings Free home delivery above a minimum purchase Working with minimum profit and gaining from

economies of scale Strong business relationships with publishing houses,

major electronic companies etc. Experience of almost a decade in online shopping

industry

Weakness

Operates at very low margin Criticism for its working conditions ‘KINDLE’ is not up to the mark of its competitors

Opportunity Acquiring more small business enterprises, enabling them

to expand Opening physical stores so as to give the customers a feel

of touch and experience Indian retail industry is estimated to be $450 Billion Expand into more product segments Tie ups with major players of untapped market

Threats

Online security threats Regional low-cost retailers Strong online presence of Indian competitors like

Flipkart and Myntra Flexible rules against FDI enabling other major

players like Wal-Mart etc. to enter

11

Page 12: Amazon India business strategy

Competitive Profile Matrix• CPM identifies the firm’s major strength and weakness in relation to another firm’s strategic position• Critical success factors (CSF) ensure success for an organization

12

Page 13: Amazon India business strategy

Competitor Analysis

The largest competitor as of now in India is Flipkart with highest score

(3.25)

Currently, product options on Amazon are limited while competitors

has expanded

(Flipkart and eBay offer a wider range of products)

Flipkart has 80 per cent share of the online book market in India

Flipkart now has a wide reach in the Indian market and the delivery

time is just four business days

13

Page 14: Amazon India business strategy

SPACE MATRIX• Analyse capabilities in various fields and then select a strategy move with which to adapt to the changing market conditions

• Factors considered in SPACE Matrix are financial strength (FS), industry strength (IS), environment strength (ES) and competitive advantage (CA)

14

Page 15: Amazon India business strategy

Analysis of SPACE matrix

Amazon has good Financial and Industry strength

It should aggressively enter the market

15

Page 16: Amazon India business strategy

Quantitative Strategic Planning MatrixKey Internal Factors

Weights Strategic AlternativesEntering into emerging market Strengthening existing market

Strength AS TAS AS TAS

Brand Awareness 0.25 4 1 3 0.75

Experience in business

0.10 3 0.3 3 0.3

Diverse Offering 0.15 3 0.45 3 0.45

Free Home Deliveries

0.10 2 0.2 4 0.4

Weakness          

New to Asian market

0.20 4 0.8 4 0.8

Low margin business

0.20 3 0.6 3 0.6

Subtotal 1.00   3.35   3.3 16

Page 17: Amazon India business strategy

Key Internal Factors Weights Strategic AlternativesEntering into emerging market Strengthening existing market

Opportunities AS TAS AS TASOnline Payment system

0.25 2 0.5 3 0.75

Integrating private level

0.10 3 0.3 3 0.3

Growing Asian market 0.20 4 0.8 -  

Expand into more product segments

0.05 3 0.15 4 0.2

Threats          Online security threats 0.20 4 0.8 4 0.8

FDI rules 0.10 3 0.3 -  Regional online competitors

0.10 3 0.3 3 0.3

Subtotal 1.00   3.15   2.35Total Attractiveness Score

    6.5   5.6517

Page 18: Amazon India business strategy

Analysis of Quantitative Strategic Planning Matrix

Depending on various key internal factors:

Amazon should enter emerging market (India) rather than

expanding its existing market

18

Page 19: Amazon India business strategy

Recommendations:-

Strategy Diamond

Arena- where will we be active?

Vehicle- how will be get there?

Differentiators- image,customisation,price

Staging and pacing- speed and sequence of moves

Economic logic- how are the returns obtained? Cost of revenue?

Arena

VehicleStaging &

Pacing

Differentiators

Economic Logic

19

Page 20: Amazon India business strategy

Logistic management

About 60% of online sales come from tier two cities. To reach the customers quickly company needs to have an effective logistic management. Flipkart seems to be Amazon’s only real competition. Flipkart’s quick delivery system, along with the option of cash-on-delivery has led to large Flipkart loyalists

Diversification

Diversifying into other products will help the company to check the entry of competitors which e.g. going into food, clothes etc. so that expenses are also distributed and adverse conditions in one sector can be borne by other one.

20

Page 21: Amazon India business strategy

Innovation

Only pricing cannot be taken as a differentiating factor, innovation is also needed. The company should create a total buying experience that has been missing in the Indian context. Promotion should be done through Push and Pull strategies which will include offers and advertising.

21

Page 22: Amazon India business strategy

Thank You