Competitive Strategy Analysis of Amazon Kindle Fire: HI6006 Report

This report provides a comprehensive analysis of Amazon's competitive strategy for its Kindle Fire e-reader. It begins with an executive summary outlining the key aspects of the strategy, including price comparisons and market positioning against competitors like Apple and Samsung. The report then delves into Porter's Five Forces model to assess the competitive environment, highlighting the threats and opportunities Amazon faces. Furthermore, it explores the application of Porter's generic model to the Kindle Fire's strategic development. The analysis covers the competitive landscape, Amazon's strategic decisions, and the theoretical underpinnings of the company's approach. The report concludes by advocating for a price skimming policy to enhance Amazon's competitive position in the market. The report also includes an introduction, a briefing of the case, identification of strategic issues, theoretical conceptualization, strategic model application and a conclusion.

Running head: COMPETITIVE STRATEGY
COMPETITIVE STRATEGY
Name of the Student
Name of the University
Author Note

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Executive Summary
The reports clear an idea about the competitive strategy taken by Amazon for positioning the
Kindle Fire among other technological developments that already is presented in the market.
This report states that by means of comparing prices in the market Amazon has taken a good
share with that of Apple, Samsung, and other electronic gadget giants. This report also discusses
that having low prices right from the beginning will not help in getting the customer bases which
is the basic need for all the company before launching a product. Porter’s five forces is discussed
with the high and low threats that the company will face in developing a business strategy for
Kindle Fire. Porter’s generic model has been discussed in this report as it finds to be suitable
than any kind of strategic model to discuss for developing a good place for Kindle Fire. In
conclusion it has been stated that Price Skimming policy will help Amazon to strategically
compete with Apple and other technological giants for Kindle Fire.

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Table of Contents
Introduction......................................................................................................................................3
Briefing the Case.............................................................................................................................3
Identifying the Strategic Issue.........................................................................................................4
Theoretical Conceptualization.........................................................................................................6
Strategic Model Application............................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................13

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Introduction
Amazon is one of the largest and most used technological company that had its customer
in a global manner. The company has developed many technological products and in the coming
days, the company is going to present the customer with various technology-driven products.
Amazon Kindle Fire is one of those developments where the company allows its customer to
access different kinds of application in a single device. The report will look into the case of
Amazon’s entry into this e-reading market and develop its product for getting customers (Pon,
Seppälä and Kenney, 2014)
The report will also look into the ways through which the product has been strategically
positioning into the market by Amazon. A look will also be given on the competitors that already
have a good market share and the competitive strategy used by Amazon to get the shares of
market. Business strategy and its theory with its implementation will be followed in this report
along with the strategic model.
Briefing the Case
Kindle Fire case is one of the most challenging ones, where Jeff Bezos the CEO of the
company takes a recommendable step to enter into the markets of electronic tablets. At the
initial stage, it has been found that Bezos has to face tough competition for developing the
market of electronic readers. According to Obermaier and Joy (2014), taking the market of Sony
Reader is not easy for Amazon initially but somehow it has managed to get the position that is
required.
This decision by Amazon has been described by most of the industry experts as a critical
decision. Companies that do not have any kind of experience or skilled employees do not take

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such a decision. Bozes has taken this kind of decision in order to set a segment of the customer
with that of the company’s goal. This goal helps Amazon to position their product in the market
with that of its competitors. As opined by Ritala, Golnam and Wegmann (2014), with supreme
‘differentiation’ Amazon has to bring the product so that customers can show their interest with
that of Google nexus, Apple Tablet and Samsung Galaxy that already strides the market of e-
reading.
Amazon, in order to make the product available on the market, develops a competitive
strategy by developing the device runs only on Wi-Fi. This new development of Kindle not only
provides the customer with that of only e-reading but too it provides music, videos, and games.
In order to compete with Barnes & Noble Nook, Color Amazon provides its shopping app. This
new device also provides the customer with a free subscription for a month along with Amazon
Prime. For enhancing the performance, the company has installed Amazon Silk, an inbuilt
browser that edges directly with the cloud server of Amazon (Sanford, 2013)
Identifying the Strategic Issue
Amazon, according to most of the tech-savvy people is taking most of the market, which
is acquired by Apple. Not only that, the product is taking the products by Samsung, Nook, Sony,
and others by storm. The new device by Amazon developed with the development of color
touchscreen. Competition if to be looked at then the development of Amazon Kindle Fire
becomes a threat to iPad2 which is by Apple. As opined by Benghozi and Salvador (2016), most
of the research and development that are taken by Amazon stress on bringing innovations that
really make people astonished and gain a good market which has been of requirement.

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Among the different strategies taken by Amazon for developing competitiveness in the
market, a look is given to those that really helped the company to make a mark.
 Content development: This is very challenging for a technology-driven company
that also business on the e-commerce platform to develop a product that is
developed with content. Amazon Kindle Fire is developed in such a way that it
provides the customer with different apps of their choice other than e-reading. As
opined by Budzinski and Köhler (2015), developments that have been brought in
front by Amazon may take Google years later. The development brought by
Amazon provides movies, along with music and the pre-installed Amazon
shopping app.
 Overcoming the challenges: Amazon, has taken a good initiative to sell the
products among the customer all through the world. In making the product
available globally, the company has been in partnership with Radio Shack and
Best Buy for those people who still believe in retail shopping than that of the
online portals. This strategy has been taken by Amazon to beat the retail sale of
Apple, which has its own shop all over the globe. Amazon takes this as one of
their strategies to get over the retail sales of Apple (Azim, and Hassan, 2013)
 Developing Technology: Amazon is a technology-driven company and that most
of the developments are presented in such a way that it makes most of the people
to use it for once. The Kindle Fire developed with Amazon Silk, an inbuilt
software that edges directly with the cloud server of Amazon EC2. Not only that,
the company has developed a good understanding with Google and Android to
develop the branding of the product that they have developed.

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Still, it has been faced that there are many issues that Amazon faces while positioning the
product in the market. At the beginning:
 Comparing with Apple Amazon does not produce the brand in most of the
countries that Apple did all through the years. According to Hoelck and Ballon
(2015), competitive dynamics are different from those of the other and that the
companies involved in ICT produced it strategically. Amazon needs to look for
other countries other than the USA.
 Amazon although it makes a good move to lessen the price of Kindle Fire it is not
assured by the CEO of the company. The company has only assured of 7 inches
color screen at the cheapest rate and not the 10-inch screen. This may lead to
dissatisfaction among the customers who are eagerly waiting for the product to
launch (Mazzei, and Noble, 2017).
 Amazon although tying up with Google and Android but does not provide any
kind of facilities to MS Office. In developing market and position the product
strategically Amazon need to look for the things that are of need among the
customer (Segarra et al. 2016).
Theoretical Conceptualization
Amazon is one of the largest and renowned multinational companies that have its
customers all over the globe. Among the different strategies that are followed for the
development of the market, it has been found that Amazon’s Business Strategy makes it possible
for the company to attract customers. Amazon, which also business on technological
development along with e-commerce is making, strides with the Kindle Fire. From the very
beginning, the company focuses on achieving the goals of the organization. According to Kantor

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and Streitfeld (2015), although most of the greatest ideas developed inside Amazon try to make it
a point that the competition needs to meet successfully and that strategies need to take according
to that. Among the different theories that help companies to develop business In order to get a
theoretical conceptualization regarding Kindle Fire, Porter’s Five Forces found to be the best. Competitive Rivalry: Amazon from the day of its inception is found to have
competed in the fields that have a good number of renowned global competitors.
The same goes for the Kindle fire that the company has developed to compete
against iPad 2, Samsung Galaxy and many others. This is one of the intensities
which is found to be high as Apple has different retail stores in many parts of the
world which Amazon has been lacking in. Although Amazon provides most of the
products in the e-commerce platform having a retail outlet will surely help in
gaining more customers. Samsung too, have their own retail outlets and that the
company makes it clear that in case of any problem they will help customer to
repair the entire thing in a short time (Hitt, Ireland and Hoskisson, 2016)
 Bargaining Power of the Buyers: The vision and mission statement of Amazon
makes it vivid that the business approach is forwarded towards the customer. In
order to gain a good base of customers, the company provides most of the items at
the cheapest price. In the case of Kindle Fire, it has been found that the company
wants to market it at the cheapest price for the customer. Samsung and Apple
already have a good share of the market. In order to beat those rivals this kind of
strategy has been taken by Amazon. This intensity is found to be high as most of
the customers will be bewildered to choose between the best products at higher
prices or choose the cheapest product by Amazon (Henri et al. 2015).

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 Bargaining Power of the Suppliers: This intensity is low but at times it is found
to be moderate. Amazon Kindle Fire is developed in such a way that it provides
the customer with the best option of e-learning. Suppliers in this perspective are
those who helped in developing the Kindle Fire. Foxconn which has developed
the Kindle for Amazon found not to take the orders as they are busy with
developing Apple iPad2. In order to make their mark in the market, Amazon
contracted with Quanta a Taiwan based company that previously developed the
Sony Reader. Amazon makes it a point that by providing book stocks they will
earn revenue and not by selling Kindle Fire at high rates (Blake and Berger,
2013).
Figure 1: Theoretical conceptualization of Porter’s Five Forces
(Source: As influenced by PETZOLD, JUNKER and RIEMENSCHNEIDER,
2014)
High competition
Bargaining power
of customer is
high
Bargaining power
of supplier is low
to moderate
High threats of
substitution
New wntry threat
is high

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 Threat of Substitution: This is high for Kindle Fire as already the product is
struggling to take place in the markets that already captured by Apple, Samsung,
and Sony. Substitute although help the company to make a good position in the
market it has been found that having the product at the low cost is making
confusion among the customer. As opined by PETZOLD, JUNKER and
RIEMENSCHNEIDER (2014), already there are a number of substitutions in the
market. Amazon if tries to bring the product at the lowest price then it will create
a problem between the customer and that for the brand Apple customers are
specific to that of Samsung.
 Threat of new entrants: This force is weak as getting this competitive market is
very tough and other firms will not risk having the technological development.
According to Benghozi and Salvador (2016), Amazon although take a critical step
in developing the software that has been of requirement other companies will not
take this risk step as if the product does not get a position in the market then the
company will be down financially.
Strategic Model Application
Amazon has been in the market for many years and that the company has been
developing different technological gadgets that meet the satisfactory needs of the customer. In
the market which is full of competition and that the giants hold most shares of the market, it is
really tough to hold a part of it. Amazon in order to get a part of the market needs to look for
competitive strategies that help in getting the market. The company in Cost Leadership will use
Price Skimming for Kindle Fire than place it in economic pricing. The reason behind this is that
it helps the company to meet the demands of both segments of the customer. According to

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Benghozi and Salvador (2015), in the beginning, it is wise for a technological product to hike the
price and then if customers are satisfied then the price needs to be lowered.
Figure 2: Porter’s Generic Model for Kindle Fire
(Source: As influenced by Datta, Hill and Weert, 2013)
The product when it hits the market Amazon will give a discount to those people who
buy the same product through online stores. In this way, Kindle Fire needs to be placed in the
market by Amazon so that it can compete against its biggest competitor in the technological
field, Apple. According to Porter’s Generic model, Differentiation plays a vital role. As opined
by Datta, Hill and Weert (2013), technological development between two companies will always
Source of Competitive Advantage
Cost Focus
Cost reduction by supplying
in bulk amount
Good relationship with
suppliers
Differentiation
Focus
Cost Switching
Placing in retail stores
Cost Leadership
Price skimming
Cut cost through online
Differentiation
Similar product with price
differentiation
Latest technology use
BroadNarrow
Porter’s Generic Model for Kindle Fire to
Compete

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make a healthy competition but having differentiation in price helps a company to gain most of
the market. Amazon needs to sell the products after a few times at the lowest price and not like
Apple where price found not to fluctuate. Amazon, although provide color touch screen eye
protection technology, will allow customers of Apple to get diverted.
In Cost, Focus Amazon needs to look at the development of supply. If the supply is made
heavy then by that virtue there will be cost reduction. Although this area of strategy is very
narrow it helps in reducing most of the cost that the company will bear after launching Kindle
Fire in the market. As stated by Sena and Sena (2013), in gaining market for any kind of product
it is essential for any company to have a good rapport with that of the suppliers for generating
profits in higher levels.
Amazon needs to make sure, that the cost of the product will not exceed and that they
need to follow cost switching techniques. Although the differentiation focus is very narrow this
technique will help the company to make a good mark in the field. Amazon needs to develop
good communication with the retail giants so that they can make their product visible in the
offline market places. Apple has stores in different locations and for that reason; Amazon needs
to develop a good rapport with the offline technology retail giants to make their product visible
(Kang, Feinberg and Papalambros, 2013).
Conclusion
In conclusion, it can be said that Amazon needs to develop the product in such a way that
it fulfills the desire of the customer. In order to gain more space in the market it is not essential
that Kindle Fire have to developed with that of the technologies of Apple. Amazon needs to
develop the product in such a way that it allows a customer to have the things in one device.