1. Describe, in brief, the histories of both of Amazon.com and Yahoo.com, and determine the core business of each. Yahoo and Amazon have been seeking to have a competitive advantage for years. Since they were incorporated, the companies have experienced a mix of challenges and success as they strive to gain market share. To start with, Yahoo was established in 1995. Yahoo is one of the global technology companies that compete for the growing number online users in the recent world. The company delivers digital content and experiences on various platforms including mobile devices. Furthermore, the company provides properties and online services. Marketing services is a major business for the company. Generally, the company earns revenues from text-based links to advertisers, search advertising, display advertising, and other essential sources.
The company has five core segments that include Search and Market Places, Communications and Communities, Developers and Platform Offerings, Advertise and Publisher offerings and Services, and Media. Lastly, the company has operations in approximately 60 countries. Nonetheless, Amazon was incorporated in 1995. It offers online retailing services to customers across the world. Amazon focuses on convenience, selection, and price. In addition to the direct retailing services, the company allows other small and medium sized businesses to sell their products through the company’s websites. The customers and business are able to complete their orders and transactions in Amazon’s websites.
Other individuals such as authors, musicians, and filmmakers are also able to sell their products using the same platform. Millions of products are offered through the website. The website may be accessed through PCs, and even mobile applications. The core segments of the company include the International segment, and the North American segment. Generally, the company has witnessed substantial growth since its inception. The success of the company may be attributed to the strategic actions implemented by Jeffrey Bezos, the founder of the company (Amit, 2012). The next section will illustrate the strategic difference between the companies.
2. Determine the key strategic differences that have impacted the relative success of both Amazon.com and Yahoo.com. Provide two (2) specific examples of such strategic differences to support the response. The strategic actions undertaken by the company would determine the success of the company (Coulson-Thomas, 2013). Yahoo and Amazon have implemented different strategic actions since their establishment. On the fore, Yahoo core business does not involve direct retailing. Yahoo provides a platform for business people who engage in e-commerce. From the sales earned in the Yahoo stores, the company is able to earn commission. Particularly, the company’s core business involves advertising and marketing services.
This contributes to a huge chunk of the company’s revenues. As far as human resources are concerned, Yahoo employees do not have a high level of autonomy as compared to the situation in Amazon. Yahoo coordinates with entertainment content providers and media in improving their website. They do not invest in the employees in enhancing creativity and innovation as compared to Amazon. On the other hand, Amazon has a different approach as far as online retailing is concerned. Initially, the company was involves in selling books in its websites. No other business used the website to sell or market its services. Amazon engaged directly with its customers.
In the initial years of the company, this was an effective strategy. The company was a monopoly in the online book selling. This created a barrier for potential entrant. However, with the improvement in technology the company had to diversify its operations in order to sustain its position in the market. Other competitors were reaping big from diversified products; hence, the need for the company to similarly expand its operations. Therefore, the company had to modify its operations to fits to the growing market for online retailing.
3. Compare and contrast the approach to strategic planning that each company has pursued in order to achieve a competitive advantage. Focus specifically on both intended and emergent strategies. Strategic planning is an important step for any company that seeks to gain a competitive advantage in the market. There is need for the company’s management to set out plans and strategic actions in achieving the organization’s goals and objectives (Hill, 2013). An effective designed strategic planning process would steer the company to success. Basically, there are intended and emergent strategies. The intended strategies are those that the companies hope to implement. The effective implementation of the intended strategies would lead to the realized strategies.
On the other hand, emergent strategies are those that are not planned for by the management. They are unexpected and are always as a result of competitors actions. In the case of Amazon and Yahoo, both intended and emergent strategies were implemented in achieving competitive advantage. One of the emergent strategies that Amazon implemented is the diversification strategy. The Company allows other businesses to sell their products in the company’s website. This provides a variety of products and services for customers. The diversification strategy was in response to the increasing competition from businesses that equally have diversified portfolio.
Nonetheless, the level of product diversification in Yahoo is not commensurate to that of Amazon. The company offers space for other businesses to sell their products through its website. However, the company itself does not engage in direct selling of the products. The company has various features in its website ranging from games, emailing, to financial news updates. The main aim of the company in providing a variety of features in its website is increasing traffic. More traffic in the company’s website implies that there will be more clients demanding the advertising services of the company. In increasing its popularity in the market, the company invested in aggressive advertising. Next, both companies have invested in expansion strategy. With increase in globalization, there is potential market for online retailing. Amazon has an international segment, which focuses on the global market. Lastly, Yahoo and Amazon have different approaches on employees’ motivation. Amazon employs a participative approach whereas Yahoo is mainly autocratic. Amazon employees are free to make decisions that concern new ideas and the success of the company. This has been critical for the success of the company.
4. Analyze the manner in which each company’s distinctive competencies help to shape the strategies that each company pursues. Provide a rationale to support the response. Distinctive and core competencies are essential in transforming the strategies of the companies (Mellat-Parast, 2013). Effective strategic implementation depends on the distinctive competencies. On the fore, Amazon has various distinctive competencies that have assisted it in shaping its strategies. The technology experts of the company have been critical in its strategic implementation. Innovation being essential for the company, the technology experts has improving the service provision quality. The websites have been effectively designed to meet the customer’s needs and requirements. Another distinctive competency involves the association program. Allowing other enterprises to conduct business in its website has been significant for the company’s diversification strategy.
Therefore, the association program has shaped the company’s diversification strategy. On the other hand, Yahoo has various distinctive competencies that have played a role in its strategic planning. As pointed out earlier, the company’s website host a range of service. This is essential in improving the number of visitors in its website. With respect to this, the company’s marketing strategy has been shaped by the distinct website. Furthermore, the company’s expansion and diversification strategies are supported by the numerous services offered in its website. The company has also been effective in forming strategic partnerships, for instance, the collaboration with Microsoft. The partnerships have gone a long way in reducing the company’s operating expenses despite the numerous challenges and competition.
5. Recommend one (1) functional level strategy for each company which prescribes the essential ways in which each may achieve superior efficiency, quality, innovation, and customer responsiveness. Provide a rationale to support the response. The functional level strategies are effective in achieving the business and corporate level strategies. They are implemented at the operational level, and directly involve the employees. I would recommend an effective marketing strategy for Amazon. The company is in a competitive environment with eBay being its largest competitor. Amazon should ensure that its products are offered at a low price as part of its marketing strategy. For instance, the company should offer discounts or free shipping with an aim of attracting more customers. They should be speedy delivery of the products in order to earn superior efficiency.
The response to customer complaints and inquiries should also be fast. This would improve the company’s competitiveness. Nonetheless, I would recommend both a human resource and marketing strategy for Yahoo. The company’s competitiveness has been low in the recent years. The company should invest in recruitment of skilled personnel that would contribute in enhancing its research and development. Furthermore, the management should allow for independent decision making. This would reinforce the innovation strategy since independent decision making promotes creativity. Next, the company should modify its marketing strategy to meet the needs of the current dynamic environment. More emphasis should be on social media marketing. This approach is cheaper and has a wider coverage (Amit, 2012). The company may be close to prospective customers through Facebook, twitter, and YouTube.
Amit, R. &. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41-49.
Coulson-Thomas, C. (2013). Implementing strategies and policies. , . Strategic Direction, 29(3), 33-35. doi:doi:10.1108/02580541311304643
Hill, C. &. (2013). Strategic management: An integrated approach (10th ed.). Independence, KY: Cengage.
Mellat-Parast, M. (2013). Supply chain quality management. International Journal of Quality & Reliability Management, 30(5), 511-529. doi:10.1108/02656711311315495