Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

FINAL EXAM – Quarter 2 2023

Strategic Business Management

BUSM7086

Question 1 

Read the case and the summary below and answer the questions that follow:

Amazon was launched as an online bookstore in 1995, but it has constantly reinvented its business model since then. At the beginning, Amazon’s business model was based on the “sell all, carry few” strategy wherein Amazon offered more than a million books online, but it actually stocked only about 200. In 1998 they changed to a “sell all, carry more” model by focusing around excellent delivery and efficient logistics. Moreover, in 2006 they developed a new business model aimed at serving an entirely different customer: third party sellers. Over the years, Amazon had disrupted the online retail industry and transformed itself from an e-commerce player to a powerful digital media platform focused on growth and innovation.

The four pillars of Amazon’s business model were low prices, wide selection, convenience, and customer service. Due to these four unique value propositions, its value chains and resources, the company could gain a competitive advantage over its rivals.  

Amazon generated revenues by selling products to customers through its retail website, by charging third party sellers who sold products on Amazon’s website, by serving as a platform for independent publishers to publish books on Kindle and by providing web technology infrastructure with its cloud business to developers and enterprises. It followed a high fixed costs and low marginal costs business model. However, the business model was profitless, since free cash flow was directly invested back into the business by expanding operations and investing in new technology and customer service initiatives. Amazon’s strategy was to put long-term investment and value creation ahead of short-term profits.

Shareholders have been tolerant with the investment strategy of Amazon, but someday investors will likely demand profits. This will mean Amazon has to increase prices which harms its reputation as a low-cost leader. It also will reduce the pace of growth. The director, Bezos, remains undaunted. He said Amazon’s business model would continue to be to invest in its future.

In July 2015, Amazon surpassed Wal-Mart as the world’s largest retailer by market value after a surprise second quarter profit that led to a surge in the company’s stock value. Analysts noted that Amazon was capable of both investing in itself and sustaining long-term profits. However, the battle will be tough as competitors are set to give the company a hard fight.

PART A (10 marks)

Q 1.1 Analyse the business model of Amazon and explain how it leads to a competitive advantage. (5 marks)

Q 1.2 Is Amazon inside-out oriented or outside-in oriented? Why? What are the benefits and drawbacks? (5 marks)

Question 2

Read the case and the summary below and answer the questions that follow:

Ten years after the foundation of the Change Foundation by the Ontario Hospital Association (OHA), the newly appointed CEO Cathy Fooks was evaluating her options for the future direction of the Change Foundation. The Foundation has always had a very clear mission: evolve the health care system in Ontario with knowledge creation and knowledge transfer. It used to do this through funding as a granting agency, offering small amounts of funding to a wide range of projects. However, the OHA which still had control over the Change Foundation, felt unhappy with the progress that was being achieved. They believed the small research projects were not turning the anticipated health system transformation into a reality. Because of the limited resources of the organization, at least in capacity, it seemed impossible to guarantee high quality evidence based research as well as impact on such a broad area of topics. OHA thus went to develop a strategic plan for the Change Foundation to understand the current situation and to select key strategic priorities for the following years. The remaining question is whether Fooks would support these strategic priorities and which direction for the Change Foundation she would propose.

PART B (10 marks)

Q 2.1 Describe the Strategic Planning process of 2005-2006, applying the theoretical strategy formation activities.  (5 marks)

Q 2.2 Which of the five strategic directions mentioned at the end of the case would you recommend for Fooks and why? (5 marks)

Question 3

Think back to your experience with the MEGA Learning simulation 

PART C (3 marks) 

3.1 Did you follow a deliberate strategy or did your strategy emerge over time? Please explain.

PART D (4 marks)

3.2 Which particular decisions were determined by your company vision and which ones were shaped by how your competitors were behaving?

PART E (3 marks)

3.3 What was the rationale behind your approach, and did it change at any point during the Simulation? If yes, why? If no, why not? What was the outcome of your decisions?