Farmer Representative Organization in Lucknow | Rashtriya Kisan Manch
Strategy Analysis of Amazon's fire Phone
1. Amazon
What happened with the Fire Phone?
Donatienne Vanlandeghem – Lisa Troy – Darpan Argawal – Hami Usta
2. Agenda
• Introduction
• External analysis of the smartphone industry
• Amazon’s strenghts and weaknesses
• Why Amazon’s Fire Phone failed ?
• Recommendations
3. What is Amazon?
3 CORE BUSINESSES
« Our vision is to be
Earth’s most consumer
centric company »
107 $BN IN NET SALES
304 M ACTIVE CUSTOMER
ACCOUNTS
NUMBER 1 E-TAILER IN THE US
5. 5 forces of the Smartphone Industry
Rivalry
between
Competitors
Entry Barriers
Power of Buyers
Substitute Threat
Power of
Suppliers
High
High
High
Moderate
Low
6. Inbound Logistics
• Reduced returns
to suppliers due
to forecasting
abilities.
• C.R.M efficiency
allows for insight
on customers
experience
Outbound Logistics
• Global Partners
& Locations.
• Availability
order Bound
products
• Amazon Prime:
Fast & Free
Shipment
Marketing & Sales
• Discounts & price
reductions.
• E-commerce and
E-Marketing
through websites.
Services
• 30 days free
return policy
• Effective use of
C.R.M.S
• Use of
Marketplace to
increase channel
& range of
products
Operations
• Easy and Fast
payment system.
• On line
customer
contacts and
feedback centres
• Use of E.R.P.S
Company Infrastructure
Vast amounts of data available of customer's world wide to deliver required & recommended products &
Strategies.
Vast no. of orders worldwide with heavy investment leveraging over suppliers resulting in cost-reduction.
Human Resource Management
Offers highly skilled work benefits.
Strategic Placement of storage facilities leads to reduction of overhead costs.
Technology Development
Renting computing resources to other companies reduces total cost of ownership.
Standardize equipment's to digitalize media for on line download.
Setting up new research labs
Procurement
Use E-procurement for easier and faster communication with suppliers.
“Fair Procurement” Policy adopted by Amazon.
Warehouses & Distribution centres to avoid transaction cost of contracting out
Value
Added -
Cost =
Margin
Overview of Amazon’s Value Chain
SECONDARYACTIVITIES
PRIMARYACTIVITIES
7. Amazon’s Competitive Advantage
• Differentiator: Process (Logistics &
Operations)
• Cost Leadership – Product & Pricing
• Ecosystem with Dynamic Community
• Convenience
• Technological Capabilities
8. Key Resources & Capabilities
• Global partners & suppliers
• Brand Equity (Amazon)
• Employees
• Advanced R&D centres with Strong R&D team.
• Large Warehouses & fulfilment centres in different countries.
• Quality in customer support.
• Effective Market Strategy
• Total assets worth $170 billion (2015)
• Ability to integrate across functions.
• Easy & fast payment system
10. Recommendations : two ways to go
Amazon credibility in this industry
has already been compromised
Focus ressources on more profitable
businesses and projects currently
being developped at Amazon
Huge investment lost
Shared risks and relatively low
probability of major losses
Speed to market
Creating a competitor in the US
market
Risk on the Amazon brand
Exit the smartphone industry Strategic alliance with smartphone
manufacturer
11. Xiaomi for a potential partnership
• Possibility to provide a top
smartphone at a very competitive
price : fit with Amazon brand image
• Xiaomi is consumer driven, just as
Amazon. This consumer focus was
what lacked in the Fire Phone.
• First step into the US and Western
market
• Power of the Amazon brand and
the Amazon ecosystem (TV; Kindle;
Prime)
Why for Amazon ? Why for Xiaomi ?
Amazon Prime, an annually paid membership offering free two-day shipping in the United States as well as discounted one-day shipping rates, which current users regard as the key reason for subscribing to the service. Amazon Prime has since opened to other countries and has also expanded to offer instant streaming of selected movies and television shows through Amazon Instant Video and music.
Political: privacy issues: FBI asks Apple to unblock iPhone, many Android users worried about their data being used by Google
Economic: Maturing smartphone market (23% CAGR between 2010-2015, only 2% CAGR expected between 2015-2020), push for lower-priced phones
Social: interconnectivity: we are part of an increasing number of online communities (your sports app, social media, online shopping, banks, mobile operators, …)
Technology: Today we have big data, the next step is optimizing their exploitation through artificial intelligence and machine learning. "It's hard to overstate how big of an impact it's going to have on society over the next 20 years," Bezos said.
Android OS is expected to capture 59% of the market in 2017, Windows OS under 5% market share
Quality in customer support: 24 hour operations, free returns in 30 days