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Yahoo and Amazon: Building a Competitive Advantage Essay

Abstract:

In this assignment, Amazon.com and Yahoo.com’s history will be described along with determining the core of both businesses. Next, the key strategic differences that have impacted the relative success of both Amazon.com and Yahoo.com will be determined. After determining the differences, I will compare and contrast the approach to strategic planning that each company has pursued in order to achieve a competitive advantage. Next, I will analyze the manner in which each company’s distinctive competencies help to shape the strategies that each company pursues. Last but not least, there will be a recommendation of one functional level strategy for each company which will prescribe the essential ways in which each company may achieve superior efficiency, quality, innovation, and customer responsiveness.

Another way to look at it would be that a user reads about the newest, coolest widget on Yahoo, researches about it on Google, while clicking on a few ads there, buys the product on Amazon,

Amazon

Amazon.com is one of the largest e-commerce stores.

Yahoo

Yahoo is a search engine, subject directory and web portal. Yahoo.com is a website that inspires and entertain users. Yahoo provides good search results powered by their own search engine database, along with many other Yahoo search options (Yahoo Reference Search and Ultimate Yahoo Search List). Users can search the web, send & receive email, share photo, catch up on worldly news, and check the weather, stock quote & sports scores, etc. Yahoo is known for it excessive amount of content. Yahoo also provides a directory of World Wide Web sites organized in a hierarchy of topic categories. Yahoo is one of the oldest and largest directories on the Web. Yahoo as a company is headquartered in Sunnyvale, California. The company has offices in 25 countries, provinces and territories.

Strategic Differences

Jeff Bezos (the founder of Amazon) original plan, in the 1990s, was to become “Earth’s biggest river” of merchandise, from books and toys to electronics and almost anything else that can be shipped (“The three survivors”, 2008). He tried and failed to become a rival to eBay in auctions. But then Mr Bezos realized that the same online store-front and logistics system that worked for Amazon itself could also work for others. So he added an entirely new category of customers: third-party sellers, who account for 30% of all items sold through Amazon’s site today. They range from one-man-bands to huge retailers, such as Target. By Bezos doing this, Amazon has became even more successful than before.

Another innovation of Bezos was to build an infrastructure internally. The infrastructure consists of Amazon’s prodigious numbers of server computers and storage discs, rivaled in scale by only a few other firms in the world, including Google (“The three survivors”, 2008). Bezos added an entire category of customers: firms that wanted to rent computing capacity (from processing to storage to database functionality) from Amazon over the internet, rather than build their own data centers in a warehouse (“The three survivors”, 2008). It has signed up over 370,000 customers, ranging from web start-ups to the New York Times, which used Amazon’s infrastructure to digitize much of its archive (“The three survivors”, 2008). Amazon also offers services to programmers so they can build and run their own applications.

Comparison and Contrast

Distinctive Competencies

Functional Level Strategy

The functional level of the organization is the level of the operating divisions and departments (“Hierarchical levels of,” 2010). The strategic issues at the functional level are related to business processes and the value chain. Functional level strategies in marketing, finance, operations, human resources, and R&D involve the development and coordination of resources through which business unit level strategies can be executed efficiently and effectively (“Hierarchical levels of,” 2010).

References:

Hierarchical Levels of Strategy. (2010, January 1).Hierarchical Levels of Strategy. Retrieved April 27, 2014, from http://www.quickmba.com/strategy/levels/

The three survivors. (2008, June 21). The Economist. Retrieved April 27, 2014, from http://www.economist.com/node/11580247


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