Submitted by: Submitted by bballboi777
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Category: English Composition
Date Submitted: 04/24/2011 10:45 AM
The Porter’s five forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful because it helps understanding both the strength of the current competitive position and factors affecting the strategy development. Subsequently, amazon.com will be analyzed under this model:
Supplier Power
On the one hand amazon.com has marked advantages with most of their providers (books, audio, technology) for the reason that these companies do not charge their products until the moment that amazon.com sell them (frequent strategy from big companies). On top of that, amazon.com pays suppliers for those products only 35 days after that the item has been sold, nevertheless companies are prepared and ready to provide services and products to amazon.com. On the other hand, amazon.com has switched its primary operational system (Windows XP) to Linux (for more details see appendix E), this movement is estimated to save more than 15 millions of dollars to the company.
For small companies and publishers, amazon.com keeps a maximum of five items in their stock in order to reduce costs.
Suppliers consider amazon.com as an important and prestigious company hence, their commitment with amazon.com is clearly noticeable and essential.
Buyer Power
Once, Bill Gates (Microsoft’s owner) said, “I buy my books in amazon.com because I do not have time to go to the book store” (thetimes.com). Initially consumers that buy goods in amazon.com tend to become regular clients due to the low prices that amazon.com can offer. In addition these prices can be hard to reach by the competence.
Low prices is the principal attraction that amazon.com offers to each individual buyer. Moreover the low average of clients switching from amazon.com products and services to those of the competence is satisfactory.
Competitive Rivalry
Amazon.com is one of the first companies into the e-commerce field. This gives to amazon.com a certain level of...