1. Amazon (454110) The Nature & Sources of Competitive Advantage
Bryan Arias, Shavena Smith, Patricia Martinez
Team 5
10am Class

2. Objectives of the chapter
Understand what Competitive Advantage is
Consider how Competitive Advantage can decrease through Imitation
Consider how resources can affect Competitive Advantage
Distinguish between Cost Advantage and Differentiation Advantage
Evaluate the challenge of achieving both effective differentiation and low cost

3. Important Definitions
Competitive Advantage- a condition or circumstance that puts a company in a favorable or superior business position
Time based competition- motions speed as a source of competitive advantage. (i.e. time is money)
Strategic Innovation- an organization’s process of reinventing or redesigning its corporate strategy to drive business growth, generate value for the company & its customers, and create competitive advantage
Uncertain Imitability- where there is ambiguity associated with the causes of a competitor’s success, any attempt to imitate that strategy is subject to uncertain success
Cost Advantage- A firm that can produce a product or service at a lower cost than the competition
Differentiation Advantage- the set of benefits that you are able to provide profitably, every day, within your normal operation that competitors cannot duplicate as routinely or as profitably

4. The emergence of Competitive Advantage
When two or more firms compete within the same market one firm possesses a competitive advantage over its rivals when it earns a persistently high rate of profit.
In the long run….
External sources of change Internal sources of change
-changing customer demand -new industries
-changing prices new customer segments
-technological change -new sources of competitive advantage
I’ll say this slide - Patricia

5. What is Amazon’s Competitive Advantage?
Cost? Convenience? No, it's the companies adaptability and flexibility that it provides to its customers and clients.
By providing products and services at an ease, the company sustains competitive superiority amongst its major competitors

6. Competitive Advantages for Amazon
Amazon Prime
Amazon Devices (Firestick, Alexa, Amazon Echo, Kindle)
Whole Foods
Amazon Prime Bundle
Treasure Truck

7. Sustaining Competitive Advantage
I’ll say this slide - Patricia
Figure 4.2 Sustaining competitive advantage: Types of isolating mechanisms

8. Key to Competitive Advantage in Industry
I’ll say this slide - Patricia

9. Value Chain Analysis for Cost Advantage
Break down the firm into separate activities
Establish the relative importance of diff. Activities in the total cost of the product
Compare costs by activity
Identify cost drivers
Identify linkages
Identify opportunities for reducing costs
I’ll say this slide - Patricia

10. Value Chain Analysis for Differentiation Advantage
Construct a value chain for the firm and the customer
Identify the drivers of uniqueness in each activity
Select the most promising differentiation variables for the firm
Locate linkages between the value chain of the firm and that of the buyer
I’ll say this slide - Patricia

11. Amazon’s Strategic Innovation
Most innovative company of 2017 ranked 1 out of 50
For offering even more and even faster
Walmart not ranked on the list
Alibaba ranked 11 on the list
Amazon recognized as responsible for more than 40% of online retail in 2017

12. Top 10 U.S. Companies based on % of e-commerce sales 2018

13. Projected retail e-commerce share of Amazon in the United States from 2016-2021

14. Internal Sources of Change
Strategic Innovation
New Industries
New Customer Segments
New Sources of Competitive Advantage

15. Amazon’s Main Industries & Competitors for each industry
e-commerce/retailer: at this point, the only remaining meaningful retailers for Amazon from competitive standpoint in the US is Walmart and Costco. Internationally, Alibaba is a huge competitor to Amazon.
Traffic/online advertising: Google and Facebook. In a lot of way, when Google and FB drives traffic to Amazon, they almost act like “distributor”. Amazon wants as much direct traffic as possible.
Cloud Computing: Google, Microsoft, Oracle
Stream media/movie: Netflix
Device and digital content: Apple

16. Amazon and Competitors’ Financials

17. Amazon’s, Ebay’s, & Google’s Revenue

18. Amazon & Google’s Equity (Stock Price) over past 5 Yrs

19. Amazon Balance Sheet

20. Amazon Liquidity Ratios

21. Amazon Growth Ratios

22. The greater the Difficulty The greater the Success
Summary
Making money in business requires establishing and sustaining competitive advantage. With great difficulty, firms must compete with rivals as they assess the resources and capabilities needed to imitate or substitute the competitive advantage of the incumbent firm.
Hence,
The greater the Difficulty
The greater the Success

23. Thank You