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Amazon Costs of Production, Overall Market, and Recommendation

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The sector is one of the fastest growing globally and is outperforming the ordinary retail marketplace. It was created after 1995 and it was only the Internet that made it possible for such an industry not only to be established but to become one of the most flourishing sectors in the business environment. What is interesting is that, together with eBay is the pioneer in the field. Both companies were launched in 1995 and are still extremely successful. The creation of e-mail in 1996 had a huge impact on the development of online retail by introducing a fast and easy way to communicate with customers.

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The core competencies for Amazon has been identified as customer convenience and accessibility, unlimited options for selection, custom-made services, the superiority of the content of the web site, the efficient and good quality search tool to find the items of one’s choice and price. Amazon is building the core competencies through online market development and based on customer needs, also they use internet technology for financial issues and make easy for their customers. Using its Core Competency Agenda, the core competencies of Amazon are used in every segment of its matrix, excluding one. The competencies are being built in the new markets of live auctions, electronics items, greeting cards and tailoring of customer needs; the new core competencies are also being developed in the markets of e-commerce by financially collaborating themselves with internet technology companies such as, and, which are emerging tools for the internet marketplace. They are continuously getting advantage by growing their services and selections they offer such as readers, game players, and music listeners. The firm is not presently molting any out-dated competencies and not be at the position in the development cycle to have any disused competencies. The internet business of Amazon is a very positive and growing business for the company also because the major selling items like books, CDs are such belongings which do not intensify the customers’ desires to go and personally touch and feel the product before going for it. The sufficient and required information is enough to get the objects of consumers’ choice. The other problem of making the products are also handled by the company very efficiently and made the product available as early as possible enhances the trust and loyalty of the consumers towards the firm. has gained its wide popularity because of its perfect quality, quick services, and wide verities of products which lured consumes towards going for its products

Its unique way of doing marketing through the internet also came at such time when the graph of dot com bubble was on its peak. There was a huge opportunity for businesses also to go for such purchasing through internet. The consumers also got a new way of going for this market of books, and CDs. So, the company quickly spread its wings and captured the whole market as a part of first mover advantage in this business. The smart cell phones influence companies directions, online retailers have started to work on software for the phone. Amazon has offered an application for iPhone and blackberry, but that is just a small stuff. Amazon need to create a program for e-book readers and offers the titles through it. Amazon sells digital CDs both music and movies, it should focus on selling mobile-software which is growing very fast, the expectation of the mobile application would be $ 25 billions by 2014 whereas it was less than $1 billion two years ago. Amazon can make mobile bookstore software for different types of smart phones.

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In addition to Licensing or franchising, Joint venture, there is a better way of freedom to control which is Wholly owned subsidiary. It refers to a subsidiary fully owned or controlled by only one parent company, and there are exist two ways to set up subsidiary: first is set up a new firm from the beginning and construct a new set of production equipment; second is purchase an existing firm and its equipment. So Amazon should also develop like the other transactional corporations, through after a long period of survey and investigation about the condition of development in this area, through the acquisition of local companies or set up a new subsidiary to complete the integration with the local market, for example, amazon used to announced a $75 million deal to buy “”, will be for amazon joyo, under a wholly owned subsidiary in China(Wang, 2012), which rely on the strong platform and group advantage of Amazon, so in the management and operational funds aspects without having worry. But the through this way will spent a huge of money, then Amazon should planning in this aspect prudently, comprehensive estimation its operating situation and development prospect. Establish a wholly owned subsidiary of the company also need to take a lot of resources, so the risk what faced by Amazon may be high

One of source of risk is the target market of political or social uncertain or instability, and some risks like these may cause harm on company material property and personal safety when it become more serious, as long as fully understand the targets market of customer before they entering, the parent company will decrease these risks.

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All things considered, plan of maintaining the competitive edge in the market is to employ every resource it has to make profits

To achieve this, it has spent fifteen years and about $2 billion developing its internet store, which is one of the largest and most consistent worldwide. To maintain its market leadership, the company should implement counter-measures for dealing with the rise in property rentals, piracy, and unauthorized downloading of internet materials.

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Amazon. (n.d.). About Amazon. Retrieved 03 18, 2014, from Amazon. (n.d.). Amazon Prime Air. Retrieved 03 18, 2014, from Amazon. (n.d.). Global Locations. Retrieved 03 18, 2014, from

Burgeen. (2013, 06 29). Porter’s Generic Strategies. Retrieved 03 18, 2014, from

Chan, K. W., Peter, H. (1992) ‘Global Strategy and Multinationals’ Entry Mode Choice’, Journal of International Business Studies, 23(1), pp.29-53.

Johnson, G., Whittington, R., & Scholes, K. (2011). Exploring Strategy. Harlow: Pearson Education Limited. Netonomy.NET. (2013, 01 30). TOP 5 Largest online retailers – Who are these companies and how did they make it to the top?

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