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Aubeyzon, Paco

Brown, Kenny
Mui, William
Perez, Jasmine
Rubalcava, Miguel

Amazon is one of the worlds leading companies of the online


retail industry. Amazon provides products and services that present
value to their customers while maintaining a prestigious image
surrounded by innovation. Information in todays world is seen, as
being very valuable, from a common conversation with a friend to an
interview with a potential employer, as the saying goes knowledge is
power. Amazon has made it much easier for customers to increase
their knowledge and power through the new innovative device we
know as the Kindle. The Kindle is a small revolutionary device that
allows readers to store up to 1500 e-books for their reading pleasure.
This allows its customers to go online and buy books at a much lower
price ($9.99) and be able to take their purchases everywhere in this
lightweight portable e-book reader. Amazon will back up anything over
the 1500 in their digital library for easy re-access to books one has
purchased in the past. This huge availability of information is an
ongoing trend and Amazon is most certainly running with this idea and
exploiting it to the highest potential possible with this device.
Great part of Amazons success in the e-book industry is their
solid positioning and strategies being implemented. One-way Amazon
has learned how to position itself to hold a competitive advantage
towards their competitors is using Porters generic strategies. These
strategies help visualize where a company stands in the industry.
These strategies include cost leadership, product differentiation, and
focus strategy. These three components are matched to either a
narrow or broad market, to better calculate the risk and advantages
depending on the size of the market.
A charting/value curve is also important to compare old
strategies to new ones. It also serves to compare the strategies taken
from a competitor in order to see where the competitive advantage is
at; whether its price, technology, customer service or innovation
Mission:

We seek to be Earths most customer-centric company. We seek


to provide a variety of unique, low cost, and innovative products. Our
products are developed to empower the consumers, with the most
dominant product in the industry.
Vision:
We seek 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.
Generic Strategy
The generic Strategy for Amazon and the Kindle consists of three
main parts. First of all and most importantly, we are focusing almost
100% on innovation. However we are focusing both in product and
company innovation. The reason we are focusing so much on
innovation is because we want to continue to constantly improve both
our product and company therefore making our products and services
more appealing to our customers.
The second part of our generic strategy is that we want to make
sure we lower our price for the kindle. We think it would be appropriate
to lower the price down to 99 dollars so that it can compete with
brands such as the Ipad.
Finally the last part of our generic strategy focuses on customer
service. We are not giving much importance to customer service,
because we feel as if it is not necessary to have a good customer
service in order to have a successful product.

The Diagram below indicates the strategy we feel best


represents Amazon and the kindles strategy to be the leader in the ebook industry as well as to achieve its mission and vision.

Low Cost

Innovation

Customer Service

The diagram below indicates the strategy we feel that does not
represent Amazon and the kindles strategy, however it doesnt mean
it could work for another company such as Sony.

Low Cost

Innovation

Charting/Value Curve

Customer Service

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0

Kindle

Sony e-reader

The above diagram shows the first chart/value curve that we had
done based on the current kindle. After strategizing and re-evaluating
the aspects that we could improve on to stay ahead of our competitors,
we came up with a new chart/value curve (Diagram below).

6
5
4
3
2
1
0

Kindle

Sony e-reader

Being the first e-reader to be put out and having that brand
identity and with the improvements we look forward to a greater
demand for the Kindle allowing our prices to be dropped due the mass
production needed of the device. We also want to improve our web
access by making it more efficient and effective by improving the
speed of wireless on the Kindle. Not only would customers appreciate
faster Internet but e-book availability as well. We hope to build
relationships with more publishers to gain access to a wider variety of
e-books. With the vast amount of e-books we hope to acquire, we plan
on improving our storage space to be able to withstand the capacity
that we soon will have.
A major setback for the Kindle is that Sony our competitor has a
great amount of features that consumers take interest in. Our strategy
is to improve our features by adding color so that consumers can have
a differentiation to choose from. Also add a light so that its easier to
read for those who enjoy doing so by the bedside or even in places
that there is a lack of brightness. An important feature that we also will
improve on is the text-to-speech by making it sound more human like
and less robotic like, also having the option to be read in a female or
males voice. We also plan on expanding on language barriers where
one could read in their preferred language. This will definitely bring in a
wider target market all over the world. Last is the ease of use. We feel
that adding a touch screen will definitely simplify the device where it
could be easier to highlight, get from one chapter to another, or even
hide the keyboard when not in use.

Balanced Scorecard

The balanced scorecard is a tool that enables managers to measure vision and
strategy against business and operating unit level performance. The balanced scorecard
gives us a clear understanding of the strategies presented and the steps needed in order to
achieve that goal. We will be analyzing the Financial, Internal Business Process, External,
and Learning and Growth perspectives for the Amazon Kindle e-reader.

To succeed
financially,
how should
we appear to
our shareholders?

Financial
Objectives
Lower Cost

Measures
Targets
-10%
of Ranked #1
Market

Increase Market
Share
Competitive Device

Retail Actual

60%

Improve
device

Color Touch
screen
Better
Technology

To satisfy
our
shareholders
and
customers, at
what business
processes
must we
excel?

External Business Process

To satisfy
our
shareholders
and
customers, at

Internal Business Process

Objectives
Brand Awareness

Measures
Market Share

Targets
60%

-Retain old customers


-Attract New
-Product Expansion
-Complementors

# of
customers
- Larger
Library
- Language
expansion

5%

Objectives
Lower Production
Cost
Lower Distribution

- 2 languages
- 10% more
eBooks

Measures
Amount saved

Targets
4%

Profit Pool

4%

Initiatives
Eliminate Wastes,
partnership with
manufacturers
Market Awareness
Hire More People,
add new product
features

Initiatives
Advertise in
different media
-Customer benefits
- Loyalty prices
-Partnerships
-Customer
feedback

Initiatives
Cheap contract with
manufacturers
Reduce Value Chain

what business
processes
must we
excel?

Cost
Increase IT for better # of site hits,
site navigation
customer
feedback

To achieve
our vision,
how will we
sustain our
ability
change and
improve?

Learning and Growth

Faster site,
improved site
security

Objectives
Improve Customer
Service

Measures
Employees
train

Targets
100%
satisfaction

Adopt new
Technology

Amount of
technology
implemented

Per year

IT Seminars,
employee training

Initiatives
- Teach employees
manners
- Staff training
Improve hardware
and software

Financial
The financial perspective of the balanced scorecard involves
strategies for growth, profitability, and risk when viewed from the
shareholder or owners perspective. In this case for the Amazon Kindle,
our financial objectives are to lower the cost of the Amazon Kindle from
the current price of $259.00 6 Kindle, and $489.00 9.7 Kindle DX. We
will measure this by setting the price of the Kindle according to the
market price of similar eReader devices such as the Sony eReader. We
plan on marking down the Kindle by no more than 10% of its current
price. Our target is to be the number 1 product, where consumers will
be able to afford and purchase the Kindle instead of the other devices
in the market. With the Apple iPad available on the market, key pricing
would be the best way to counter attack our competitors. Our initiative
in offering a lower cost is to eliminate possible wastes of materials, and
possible partnerships with manufacturers.
Another financial objective is to increase/retain our market share
of 60% in the eReader industry. It is important that we retain our
market share since we have new products emerging such as the Apple
iPad, which will strongly influence the eReader industry. We will

measure our market share by the actual numbers in the eReader


industry. Our initiative in increasing/retaining our market share is by
market awareness such as marketing. We will advertise more through
media advertisements. Television ads are very powerful especially to
grab the consumers attention and focus them away from their
competitors.
Our last financial objective is to have a competitive device. We
would like to improve the Kindle by adding new features such as color,
touch screen, and etc. In order for us to compete in the changing
eReader market place, we have to incorporate new technology. How
will we do this? Well we will need invest in the new technology, and
hire engineers to improve the Kindle device.
External
The external scorecard is all about the customers. In order to
fulfill this card the strategies need to be geared toward customer
satisfaction, and that is given them more choices to pick from. There
are three main strategies that will ensure customer satisfaction, which
will contribute greatly in all four aspects of our strategies.
The first is brand awareness. We want to keep increasing brand
awareness on the kindle and the coming new version to continue the
hype and talk that has been created with the ipad and other new
entrants. To measure this we will see if our percentage of market
share has increased. As of now we have 60% of the market share on ereader sales, and we want to keep dominating if not increase that
percentage. In order to do this we will spend more on advertising costs
in different media, like in technology websites and magazines,
newspaper and even TV ads.
The second strategy is to attract new customers and retain the
old. To see if our team has accomplished this difficult task, we will see
if the numbers of users online have increased. Our specific target for

the end of the year would be an increase of 5%. In order to accomplish


this strategy we will give customer benefits and loyalty prices. These
include discounts for purchasing various e-books, discounts for being a
member, free e-books for doing filling out surveys, and free e-books of
gift cards for recommending a friend. These benefits increase
customer satisfaction and make them happy which allows us to sell
more products. For loyalty prices, we will be giving plenty of discounts
to returning customers, or customers that have been with us since the
beginning. This will help us retain the old, while attracting new ones
with out new benefit programs.
The last task is to bring up a larger selection of products for our
users. This means expanding our online library, not only by presenting
more e-books to people, but also expand the language barrier into
Spanish, French and German. This will not only extend our kindles and
library to other continents but also expand on our customer base. To
present more variety to our American based customers, we want to
offer different kindles with different options. The bad side of this is the
increase in production costs. Some of the changes that could happen
are an availability of different colors; touch screen, and adding color to
the screen. To accomplish this we will need several partnerships with
our manufacturers and publishers. Forming reliable partnerships with
these will allow us to increase the number of e-books in our library, and
expand to different languages.
Internal Business Process
The internal business process perspective reflects strategic
priorities among processes according to their contributions to customer
and shareholder satisfaction. In order to satisfy our customers and
shareholders, we must lower our production costs. This means we will
have to form partnerships or get cheaper contracts with the
manufacturers and suppliers. We will measure this by our quarter

end/year end financial overview. Realistically speaking, we hope to


lower production cost by at least 5%.
With lower production cost, we can also try to lower distribution
cost. We will measure lower distribution costs through the profit pool,
and we aim to lower distribution costs at least 5%. According to the
profit pool diagram we constructed, distribution costs are the second
highest after retail. We aim to increase profitability in retailing the
Kindle.
Our last internal business process objective is to increase IT for
better site navigation. Our target is to improve site security, prevent
web attacks, security flaws and to provide our users a faster site. We
will host online seminars to empower and educate our employees, as
well as live customer support. This is similar to the genius bar we will
find at the Apple store, but only youre in a virtual environment. Our
measures will be based upon the number of website visits, and
customer feedback.
Learning and Growth
Learning and growth is all about strategizing and implementing
objectives to better our management and employees. Teaching,
training and enabling our employees to be aware of how the company
operates and generates revenue and value will better the overall
company. To do this we had two main objectives. Improving customer
service by training our employees on manners and customer
relationship will let the company have a better image. We are looking
for 100% customer satisfaction, which is not an easy target, but a
possible one.
Secondly we will adopt new technology. Adopting new
technology is looking for better and faster ways to work our website
engine and improve customer experience in the site. To do this better
hardware is needed in order to perform at an optimum pace.