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Dominant Strategy at Amazon

Source: https://stratechery.com/2013/amazons-dominant-strategy/

In class we often discuss very simple strategies and/or dominant strategies, but the article linked above illuminates the complexities in having a dominant strategy in the real world applications. Our class examples typically include 2 parties where the strategy they choose affects their outcome and possibly the outcome of the other party. But what happens when your company is involved in multiple sectors in the industry.

If you were to walk up to a stranger and ask them “What sector does Amazon fall under?” I’m sure their answers would vary between tech company or retail company. With that being said, Amazon has a lot of different competitors for the different industries it is involved in making its dominant strategy not as simple as the examples that we work on in our problem sets. It’s hard to decide if you want high quality good or low prices. For Amazon, a company both heavily involved in retail and technology, deciding their dominant strategy may raise concerns about the effect of one strategy in retail and the effect it will have on another strategy in technology.

Just recently Amazon acquired Whole Foods and that didn’t sit too well with Walmart—a powerhouse in the grocery industry. After its acquisition this year, Walmart asked companies that managed their data to take their data off of Amazon Web Services—a virtual cloud service that allows people and businesses to store their data. In this example we see that for Amazon their dominant strategy for their retail department may not have been the dominant strategy for their technology department. The article above will tell you in 2013 AWS only made up about 3% of its annual revenue. That number is now up to 10%, and the intersectionality between Walmart’s data on AWS and their annual revenue is (probably) particularly small.

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One Response to “ Dominant Strategy at Amazon ”

  • Amazon web services

    Thanks for giving the information about Aws.Amazon has a lot of different competitors for the different industries it is involved in making its dominant strategy not as simple as the examples that we work on in our problem sets.

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