In: Economics
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The cost factor is the main managing choice that drove Amazon's choice of delivering distinctive segments that goes into Kindle. Truly, these are the correct choices since the assembling costs will include upto the all out expense of the item, they needed to keep it low by keeping up great quality. So as to contend in the wild challenge, Kindle brought to the table the item at low cost and high usefulness which Asian nations lead at. Subsequently Amazon's choice of delivering distinctive part at better places are correct choices. The way that just $40– $50 of the esteem related with assembling the Kindle goes to U.S. organizations is certainly not an indication of decrease of American intensity, There are numerous makers in US and Germany, however since the mission of Kindly was to offer items at low value, they were left with no other choice. This reality just shows the high estimation of the American Dollar. In the event that Amazon had made all the required segments for Kindle, at that point the expense of the item would have raised. This would have made it troublesome for Kindle to enter the market. The challenge would have been intense, influencing the organization to settle on a few different systems so as to enter into market.
Amazon has rapidly expanded its market and diversifies its selling activities to include a wide variety of product. This has automatically given arisen to large scale economies or lower per unit costs.
Yet it had to face the challenge of keeping the costs involved in Kindle low and strive to provide high quality product.These reflect upon the goals of Amazon, which could be profit making as well as providing quality service (with the aim of customer satisfaction).
Amazon would be better off pursuing market penetration policy and enter more and more newer markets especially the Asian markets since Asian countries are highly populated countries , relatively, more so the South Asian countries, whose population follows the demonstration effect (imitating the west)
Another important aspect is the exchange rate between the US dollar and other currencies of the world. The high estimation of the US dollar shows in effect that the demand for American goods and services is considerably high giving the impression that American goods and services have created a brand name for themselves.
Amazon’s ability to provide Kindle also shows that it enjoys certain technical economies through the use of sophisticated and advanced use of technology as also greater specialization which largely leads to low per unit costs and increased labor productivity.