Evaluate Amazon’s Diversification Strategy. Essay

Words: 4065
Pages: 17

Diversification in E- Commerce


Diana Reyes – 27828


Economies of scope and synergies in business operations are consequences of diversification strategies. It is possible to classify companies according to the type of diversification strategy selected. Unrelated diversifiers are companies that diversify across industry, while related diversifiers are firms that diversify within the industry (Kim, Hwang and Burgers 1989). Companies pursuing related diversification over a period of time have achieved superior performance than companies following an unrelated diversification (Palepu 1985). Amazon has started its business by selling books and music, soon after it incorporated online auctions for airlines tickets
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|Lock-in |Switching cost |Repeat purchase supported by large database and e-mails proposing personalized offers based on the previous purchased. |
| |Positive network externalities |Dominant design proprietary business process: Shopping cart. |
| | |Customized one click featuring as a standard feature. |
| | |Personalized interface, direct advertising, target emails and facilitates cross-selling. |
| | |Creation of a network: the community of interest which allow customer to write book review. |
|Novelty |New transaction structure |Amazon used its database and knowledge to diversify in several ranges of products. |
| |New transactional content |Offers a range wider than any other brick and mortar