Comparing Two Similar Businesses Essay
Comparing Two Similar Businesses Describe the history and core business of each company. Amazon was founded in 1994 by a man whose name is Jeff Bezos. Mr. Bezos originally started Amazon in his garage. He believed that only the internet had the ability to grant consumers the convenience of being able to browse a myriad selection of book titles in the shortest amount of time. In 1995 he started the website Amazon. com which was primarily an online book store at the time. “During the first 30 days of business, Amazon . com fulfilled orders for customers in 50 states and 45 countries- all shipped from his Seattle-area garage” (Overview, n. . ). In Two years later in 1997 Amazon went on to become public being listed on NASDAQ under the trade symbol of AMZN. Since then Amazon has expanded its consumer base by adding multiple products, features, and upgrades. The company now employs over 43,200 employees worldwide and is considered a world-class e-commerce platform. Borders bookstore was founded in 1971 by two brothers by the name of Tom and Louis Borders while they were attending college at the University of Michigan. Borders bookstore was once a leading retailer of books and educational items with stores located throughout the United States, Australia, and Puerto Rico.
In 1984 Kmart acquired a company by the name of Waldenbooks and in 1992 Kmart acquired Borders only to merge the two in hopes of generating greater sales (Borders Book Store, 2011). In 1997 Borders launched its first international store in Singapore that was 32,000 square feet making it the largest bookstore in the country. In 1998 things quickly began to change for the worst after being one of the country’s leading bookstores. Several stores began to close due to competition and Borders failing to change their business model.
With technology and customer demands rapidly changing Borders was unable to keep up with the times forcing them to file for Chapter 11 bankruptcy and closing all stores in September 2011. Compare and contrast the management approach each took to internet marketing and sales. When it comes to comparing the management approach that each business took to internet marketing and sales, the difference is day and night. Amazons management was proactive in ensuring that the company stayed ahead of its competitors. Management executives at Amazon did a fantastic job on diversifying their products, merchandise, and services to meet consumer demands.
Not only did they make the products and merchandise available, they made their website user friendly which in return made it easier for customers to navigate through products and make hassle free purchases. In September 1997, Amazon introduced one-click shopping to its customers. One click shopping allows customers to make online purchases with one click of a button. This feature allowed customer information to be stored for future purchases. This feature also provided great value to the customer(s) by saving them a lot of time by not having to manually re-enter billing and shipping information each time a purchase is made.
In 1998, Amazon acquired Internet Movie Database which provides members access to movies, television shows, and news in a chronologically timeline. This strategic move by Amazon proves that they are looking to expand their customer base from just book readers to a much broader market. September of 2001, Amazon opened a sports and outdoor store which catered to outdoor and family activities, a few years later Amazon expanded its clientele by opening a jewelry store. By diversifying their merchandise they have been able to attract many more customers with different needs.
However, with all of the changes that the company made, they never seemed to forget where they came from and they never lost sight of their initial focus. In November 2011 the company launched the amazing Amazon Kindle Fire. A hand-held tablet device that allowed users to be able to read books, checks email, and surf the web. The Kindle Fire had fierce competitors that included the Apple Ipad, Motorola Tablet, and the Android Galaxy tablet. The Kindle Fire made it easy and convenient for users to download, browse, and read books, magazines, newspapers or other media over a wireless network.
I believe that with an attempt to win over some Apple customers, Amazon launched Amazon MP3 which is an online music store owned and ran by Amazon. I have downloaded music from Amazon and iTunes with Amazon having the cheapest price, I can definitely see some customers possibly leaving iTunes just for that very reason. Amazon announced in May of 2011 that they are selling more Kindle books than printed books. You have to give Amazons management a lot of credit for their approach on internet marketing and sales. Borders management approach to internet and marketing sells were unacceptable.
I do not believe that management did anything right to boost internet sells. Furthermore, Borders did not change with the times. They failed to expand their customer base the in many ways that Amazon did. The only thing that they offered was books and very little music. I can almost say for sure that a competitive analysis was never done because if it was management would see that their business strategy was not effective and that they were being blown away by the competition. Analyze 3 reasons for Amazon’s success despite not turning a profit for the first five to six (5-6) years.
One reason for Amazon’s success despite not turning a profit for the first five to six years is because they made the decision to offer thirty percent discounts on books costing more than twenty dollars the summer before the first recorded profit. The results from their decision brought in more customers. “It’s Adam Smith economics that volume will go up when prices go down” (Hansell, S. , 2002). They also realized that they had to cut cost and by doing that, they eliminated 1,300 employees and closed several retail stores across the country and a couple of distribution facilities As a result of their action efficiency improved noticeably.
Amazons cost declined by twenty-four percent while shipping orders rose by twenty-three percent. Another reason why Amazon became successful is because they made alliances with well-known retailors such as Toys“R”Us, Target Corporation, Borders Group, and the National Basketball Association. The last and equally important reason to why Amazon has been successful is because they are a one-stop shop. Amazon has made it possible for customers to find virtually anything they want to buy online.
Instead of sticking to just selling books online they diversified themselves by offering more products often at cheaper prices than the competition. It also allows average people like you and I the opportunity to sell new and used items at fixed prices to Amazon customers around the world on their website. Amazon continues to maintain its dominant status as the best e-commerce platform around and is still growing. This company will be around for years to come. Discuss 3 reasons Borders, although initially successful and profitable, ended up in Chapter 11.
Borders Books initially started off successful and very profitable mainly because of the lack of competition at the time. Boarders profit rose to When Borders first started out, they were the cream of the crop when it came down to selling books. However, Borders failed tremendously when it came to changing their business model and trying to keep ahead of the competition. When the ecommerce era began, it seemed like Borders did not take notice in what the competition was doing. Borders was ruined by overwhelming debt and sluggishness in adapting to a rapidly changing industry.
By “failing to catch onto the growing importance of the Web and electronic books, not reacting quickly enough to declining music and DVD sales, and hiring four CEOs in five years without book-selling experience”(A. P. , 2011), Borders was destined for failure. A huge mistake that Borders made was when it contracted out its electronic commerce business to Amazon which to me would be a conflict of interest being that Amazon was also in the book selling business and therefore Amazon had no incentive to promote Borders. Discuss the extent to which the management of each company adapted to changing market condition.
Management at Amazon adapted to the changing of market conditions pretty well. Amazon took notice of how electronic commerce could positively impact sales and bring in huge profits. With that in mind, Amazon committed itself to taking electronic commerce to the next level. They invested more money in e-commerce instead of their retail stores. They also expanded their merchandise to give customers more options to choose from. Management at Borders did not adapt so well to changing market conditions. Amazon did not invest in electronic commerce until it was too late.
Instead they invested in retail buildings that did not produce enough revenue to keep them above water with a change in market conditions. Recommend 3 ways a company should build in flexibility to back up its decision-making process so as to adapt to changing market conditions. A few ways that a company can back up its decision making process to adapt to changing market conditions is to assess need for strategic change, complete a situational analysis to determine the need for a strategic change, and choose strategic alternatives (Williams, 2010, p. 98) References Associated Press, (2011).
Winston-Salem Borders store to remain open despite bankruptcy. Retrieved from http://www2. journalnow. com/member-center/share-this/print/? content=ar788688 Borders Book Store: Its History and Developments, (n. d. ), Retrieved from http://www. bordersbookstore. net/ Hansell, S,(2002), Technology; A Surprise From Amazon: Its First Profit. Retrieved from http://www. nytimes. com/2002/01/23/business/technology-a-surprise-from-amazon-its-first-profit. html? pagewanted=print&src=pm Overview (n. d. ) Retrieved from http://phx. corporate-ir. net/phoenix. zhtml? c=176060&p=irol-mediakit_pf Williams, C. , (2010, p. 98) Management