Yahoo and Amazon: Building a Competitive Advantage Essay
Amazon.com was founded in the year 1994 by Jeffrey Pezzos. When it officially came online in the year 1995, it used to be known as Cadabra, Inc. Shortly after, the name was changed to Amazon. The main selling product was books. The founder knew that an online portal could hold an unlimited number of books, which would be a pretty tall order for a physical location. Amazon.com was first incorporated in Washington then later reincorporated in Delaware in the year 1996. It took a while though for the public to warm up to the services and products Amazon provided but eventually they did. Amazon recorded their first profits in the year 2001.
Amazon.com has grown to become today’s biggest online retail seller. When Amazon was founded in 1994, it was meant to specialize in the sale of books and it did for a while. Today however in addition to selling books, Amazon also sells DVDs, software, video games, electronics MP3 streaming, jewelry, video games and food. The public could purchase items online and Amazon would have them shipped to the buyers who were not within the countries. The founder strategized the beginning of this business based on a report that projected the growth of annual growth of web commerce at 2300%. He then came up with a list of items that he thought were most likely to sell online and from the list he made; he decided to specialize on five items he thought would be a definite sell online. The list he ended up with comprised of books, computer hardware, computer software, videos and compact discs.
Yahoo! was founded by two electric engineering graduates, David Filo and Jerry Young in the year 1994. When they founded it, it was a website that served as a guide to other websites. The website organized other websites in hierarchy and the site was known as Jerry and David’s guide to the World Wide Web. However, in 1995, the name was changed to what it is today, Yahoo. The yahoo.com domain was then created. During the late 1900s, the domain grew fast and eventually became a web portal. The word yahoo was already being used by other manufacturers as a trademark. So the founders added an exclamation mark and took control of the yahoo Trademark.
In the late 1900s, in a bid to expand its online range of services and the time users spent on the portal, Yahoo! acquired a communication’s company Four11 and a company that was known as Classicgames.com. The communications company had a webmail service known as rocket mail which Yahoo turned to yahoo mail. Classic Games became Yahoo Games. In addition to these, they acquired a web hosting company, a direct marketing company and another company known as eGroups. Yahoo changes eGroups to Yahoo! Groups and also launched an instant messaging service which they named yahoo messenger. This enabled Yahoo to diversify their range of services.
Yahoo managed to build a strong financial foundation and was in fact one of the few online companies that survived after the dot com bubble burst. Amazon also survived the dot com bubble burst and went on to grow into the financially sound corporation it is today. The two have grown largely due to strategic business planning in addition to the production of unique products and services.
Strategic Differences that have impacted the relative success of both Yahoo.com and Amazon.com
One of the main strategic differences that set Yahoo.com and Amazon.com apart is their strategic use of the World Wide Web. They both offer a good number of services online that were originally not available on the internet. They therefore have used the internet which is one of the most unifying global tools to provide mainstream goods and services. For instance, Amazon.com has stocked books online and availed them to anyone with access to the internet. Therefore one can review and purchase almost any book today on amazon without having to walk to a bookstore which may or may not have stocked the book in question. Amazon.com used the internet to enrich and ease the public’s lives.
Yahoo! On the other hand provides very much needed services to the public such as email services, search services, hosting etc. They also used the internet to avail much needed products to the public.
A second strategy that these two companies have employed is an effort to be self-sufficient and all rounded. For instance, Yahoo.com in addition to acquiring a domain, acquired hosting services to support their domain. This means that they looked at what it would take to maintain their services and acquired them instead of outsourcing. This strategy gives them an edge in the sense that they do not build their empire on someone else’s grounds. That is, not only do they seek to own the empire, but the grounds on which they are built as well. The operation of their domain is therefore not determined by whether or not their host hosts them because they provide their own hosting services.
Comparison of Amazon.com and Yahoo.com’s Strategic Planning
Both of them are similar in the sense that they have chosen to provide their services online. This provides them with a global market and makes them easily accessible at whatever time as opposed to physical business locations that require their customers to go to them. Operating online also gives them an edge because they are not limited by working hours. They are in operation twenty four hours a day, seven days a week, every day of the year. Customers can access these services even at the comfort of their homes.
This has proved to be a great strategy over time. One of the aspects of great customer service is the availability of goods and services whenever they are needed. Amazon.com was started in response to the great need for literature work all over the world. The founders understood that the need would grow with increasing literacy levels and increased globalization. They therefore preempted the public’s needs and provided a solution way before the need became too great.
Yahoo’s mission statement also is strategically stated to keep their business activities focused on the end goal. Usually strategically defining a mission statement helps keep a business focused and helps them plan better (Rea, 1998). Yahoo’s mission statement is to become the world’s most essential global internet service for both businesses and consumers. With this in mind, they strategize and plan activities geared towards this goal. A strong, clear and achievable mission statement is often the first step towards great planning (May, 2010).
Amazon too has a mission that defines the decisions made and the kind of activities they carry out. Their mission is to become the most customer centric online company in the world, where customers can find and purchase whatever they need online. They in support of this goal have increased over the years the diversity of their shipping services all over the world. Amazon as the earth’s most customer centric company acts as both their mission and vision.
Both Yahoo and Amazon have got a lot of opportunities they can tap into. One of them is the increasing need for oneness as the world increasingly becomes globalized (Blozis, 2009). There is need for the availability of central service providers. Therefore chances are as more of the world warms up to using the internet to buy and sell goods and services, the need for the availability of a functioning platform for the same increases. The fact that they have been in operation for almost two decades now gives them a competitive edge over companies that may be founded eventually when the need for online provision of goods and services is greater.
They also have an opportunity to tap into the masses of the younger generation who are generally more receptive to advanced technology and its use to make life easier. This can be done by introducing the younger generation’s majority of product and service needs online such as school books, computer and video games, technology gadgets etc. (Simerson, 2011).
Amazon’s greatest strength is the online sale of books. This as their competitive edge has been made even greater by the availability of e books. They have an opportunity to tap into almost any market in the world. With more authors wanting to reach a bigger audience every day, Amazon is unlikely to run out of stock.
Yahoo could tap into the chance to have its services accessed on mobile phones and tabs. People are increasingly using their mobile phones and tablets to access the internet. It is possible that in the future these services will be accessed more often over these portable gadgets than they will be through computers. In future the internet will probably be accessed through other devices such as television sets and personal organizers and Yahoo has the opportunity to provide its services through these mediums.
Competition is always a threat for companies. Yahoo today faces one of its most fierce competitions from google who provide almost similar products and services. Yahoo increasingly has to better its products and fight to maintain its market share in addition to working to increase it. Amazon also faces competition from the many sellers who are selling goods online today including the manufacturers of goods choosing to sell online via their own sites instead of outsourcing their online selling work to Amazon (Weller, 2001). This means that Amazon must continually provide value for service not only to consumers but to manufacturers as well.
Amazon’s access to e books is an advantage as well as a disadvantage. It means that they might lose out on some customers as books are shared on public online sites or on social media or even resold by buyers at values way below their value. This was a problem when all they sold were copies in paperback. The emergence of eBooks however makes that much easier to duplicate and share these books at a much faster rate than it would be to do it for paperback books.
Yahoo.com and Amazon.com have tapped into the provision of services that will always be needed. The services provided are unlikely to ever be irrelevant in the world. In fact, increased development and globalization increases the need for these services. These two companies therefore have amazing potential for continuity.
One of Amazon’s greatest strength is the fact that they are not restricted in the number and diversity of products they can sell on their site. It means that the number of products they provide can only increase over time, which means that they have a definite window for growth. They also enjoy better economies of scale that they would if they stocked up in physical shops around the world.
They also have better edge at advertising due to the huge traffic they attract. They therefore attract advertisers which is a source of income for them.
Amazon’s strength, availability online also serves as one of its biggest weaknesses. The fact that they are only available online gives them access to good clientele number but still locks out some clients who may not have access to the internet or who would rather have their goods delivered immediately. This is especially true for products that are mainstream, in which case the customer may not want to wait for them to be shipped but would rather leave their houses and purchase them at a store.
Yahoo’s major weakness is its lack of differentiation in packaging its products. This is mostly because most of the products it offers are offered by other companies and it lacks any differentiation edge to the other companies’ products.
Weller, A. C. (2001). Editorial peer review: Its strengths and weaknesses. Medford, NJ: Information Today.
Blozis, D. E., & Cohen, S. (2009). Yahoo income: How anyone of any age, location, and/or background can build a highly profitable online business with Yahoo. Ocala, Fla: Atlantic Pub. Group.
Simerson, B. K. (2011). Strategic planning: A practical guide to strategy formulation and execution. Santa Barbara, Calif: Praeger.
May, G. L. (2010). Strategic planning: Fundamentals for small business. New York: Business Expert Press.
Rea, P. J., & Kerzner, H. (1998). Strategic planning: A practical guide. New York: Wiley.