In: Operations Management
Imagine that Amazon has decided to diversify into the food delivery services. What method would you recommend that Amazon pursue to enter this industry?
When Amazon wants to take advantage of its existing market value, it needs to diversify into related companies and make use of the market that it has already created. Amazon will be connected with electronics by 6/10 customers.
Apparel: Fashion is a large part of Amazon, and the clothing sector has tremendous potential and margins. Amazon brand only extends its products if it wants to do so, since Amazon is typically synonymous with customer friendliness and confidence.
Transportation Services: Amazon will also consider supplying other e-tailing companies with its logistics services as a benefit. Amazon's distribution infrastructure is very well known to the last mile. This will certainly join the B2B segment by selling it to other rivals in the industry as a service. In terms of consumer loyalty and quality Amazon has already created a great brand. It can capitalize on these markets, using the power of its brand, by diversifying itself into the right areas.The last issue concerns the benefits and limitations of both forms of diversification. Diversification is of great importance as the company diversifies into different areas, and clearly knows how to maintain a strong position from day 1. Diversification into relevant areas would also improve the overall role of the organizationUnrelated diversification may require further investment, as it is an unknown market. One of the main benefits is, however, that if the core industry collapses because of market conditions, the business will still produce profits through unrelated diversification (as the sector is entirely different).
Analyze the players on the market first and try to do it differently.