Issues in Global Marketing

Nathan Lodde, Jesse Derwinsky, Scott Rizzuto, Adam Jabouri, Drew

Prinsen
Nature of the problem: To develop a business strategy in response to entrants in the tablet market
including its target market and turning the sales success of the Kindle into business success.

 How should Amazon modify the positioning of the device in response to the new entrants in
the tablet market since its launch?

 What was the most promising target market for the Kindle Fire, and how should it be
positioned against competing products?

 How could Amazon turn the sales success of the Kindle Fire into business success?

Background
 Founded by Jeff Bezos
 Largest online bookstore by 1999 - 10% of the e-commerce market
 Marketplace partnerships allowed Amazon to outsource their long-tail offerings, ultimately
lowering overhead costs
 Lab126 hardware development group
 E-reader market sold combined 400,000 units by the end of 2007

 Monthly magazine subscriptions

 "The six major publishers"
 E-book ecosystems
 Kindle Fire came out in 2001, steal market share from Apple
 Leveraging its cloud-based software
 The best selling device that holiday season

Challenges
Competition

 Apple iBooks and Newstand

 iPad mini launch
 Its own E-reader

Target Markets
Media Junkies

 Worried about gorging the free month of amazon prime and not purchasing anything else

Children and Gamers

 Competition
 Slow processor and graphics card
  Getting third party developers to create special versions just for the kindle

Higher Education

 Itextbook
 Smaller screen
 B&N already trialing

Advertising

 These revenues will essentially remain flat in years to come

Growing e-Book market

 E-Books grew from 1% of total book sales to 15% of total book sales by 2012
 “Locked-in Buyer”

Continuous Innovation

 Consumers demand latest technology

 Faster page turns, improved battery life, more storage
 Whispersync

Aggressive Marketing

 Met with “The Big 6” publishers. Got them to agree to e-Book publishing
 Subsidized prices of e-Books
 Price war
 Limited time offers

 Need to market their product to focus on higher education market

 Focus Marketing

 Need to move into untapped markets

 Stick to undercutting the market/ with apple especially

 Stay away from Gaming market

 Increase Advertising revenues to increase

 Increase advertising profits

 Price point

BICG9703 01

Conclusion
Recommendations/Suggestions
Kindle Fire: Amazon's Heated Battle for the Tablet
Market
Focus
Critical Success Factors
 Amazon took a risk entering a new market
 Bet on consumers seeing a value proposition
 Risk of consumers downloading free content only on already subsidized hardware.
 Kindle ended being well positioned against competitor
Kindle Fire: Amazon's Heated Battle for the Tablet Market SWOT
Analysis & Matrix / MBA Resources
1. Kindle Fire: Amazon's Heated Battle for the Tablet Market
2. Sales & Marketing / MBA Resources

Definition of SWOT Analysis

What is SWOT Analysis & Matrix? How you can use SWOT
Analysis for Kindle Fire: Amazon's Heated Battle for the
Tablet Market
At EMBA PRO , we specialize at analyzing & providing comprehensive, corporate SWOT
Analysis of Kindle Fire: Amazon's Heated Battle for the Tablet Market case study. Kindle
Fire: Amazon's Heated Battle for the Tablet Market "referred as Kindle Amazon in this
analysis " is a Harvard Business Review (HBR) case study used for MBA & EMBA programs.
It is written by Mohanbir Sawhney, Joseph Owens, Pallavi Goodman and deals with topics
in areas such as Sales & Marketing Product development, Technology

SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats that
Kindle Amazon encounters both internally and in macro environment that it operates in.
Strengths and Weaknesses are often restricted to company’s internal - resources, skills and
limitations.

Opportunities and Threats are factors that are analyzed in view of the prevalent market
forces and other factors such as legal & environmental, economic , social, health & safety,
technological, and political.

According to global executive survey done by Harvard Business Review & Brightline
Initiative – Only 20% of the strategic targets set by organizations are realized. Rest 80% of
the strategic targets are not achieved because of incomprehensive planning, limited
resource allocation, and poor execution.

The successful organizations such as Kindle Amazon are the one who able to predict
market trends better than others, provide resources to develop products and services to
leverage those trends, able to counter competitors’ threats, and meet customers’ expected
value proposition.

Case Description of Kindle Fire: Amazon's Heated Battle

for the Tablet Market Case Study
This case is intended to illustrate to readers the challenges faced in 2011-2013 by Amazon's
CEO, Jeff Bezos, as he guided his company into the exploding tablet market. Faced with
the tough decision between focusing on the e-reader market-which Amazon had come to
dominate with its Kindle product line-and making a foray into tablets-for which it had no
expertise-Bezos chose the latter. Amazon sought to combine platform assets to create an
end-to-end experience that would let users find a "sweet spot" in the mix of features and
services. This strategy involved critical decisions such as selecting a customer segment to
target and a positioning for the new product, dubbed the Kindle Fire, as the tablet market
rapidly evolved. The Kindle Fire was designed to put the full Amazon experience right into
the laps of customers, and Bezos was betting that his customers would see the Kindle Fire
as the physical manifestation of all things Amazon. To achieve this, Amazon was willing to
heavily subsidize the Kindle Fire hardware device. The key assumption was that the
superior end-to-end experience Amazon had carefully created would lead to incremental
purchases of content as well as physical products and services, and the margins thus gained
would outweigh the hardware subsidy.

Case Authors : Mohanbir Sawhney, Joseph Owens, Pallavi Goodman

Topic : Sales & Marketing

Related Areas : Product development, Technology

Case Study Solution & Analysis of Kindle Fire: Amazon's Heated Battle for the
Tablet Market

PESTEL / PEST / STEP Analysis of Kindle Fire: Amazon's Heated Battle for the
Tablet Market Case Study

What are the Four Elements of SWOT Analysis? How to

use them for Kindle Fire: Amazon's Heated Battle for the
Tablet Market case study?
The four key elements of SWOT analysis are - Strengths, Weaknesses, Opportunities &
Threats. Kindle Amazon can use strengths to create niche positioning in the market, can
strive to reduce & remove weaknesses so that it can better compete with competitors, look
out to leverage opportunities provided by industry structure, regulations and other
development in external environment, and finally make provisions and develop strategies
to mitigate threats that can undermine the business model of Kindle Amazon.

Opportunities Threats
Strengths Strength Opportunities (SO) Strength Threats (ST) Strategies
Strategies
Kindle Amazon can use two approaches -
Using Kindle Amazon strengths building on present strengths, or analyse the
to consolidate and expand the trend and build processes to two pronged
market position. market penetration approach.
Weaknesses Weakness Opportunities (WO) Weaknesses Threats (WT) Strategies
Strategies
Kindle Amazon should just get out of these
Building strategies based on business areas and focus on strength and threats
consumer oriented product box , or on weakness and opportunities box.
development and marketing
approach.
For more detailed SWOT Matrix strategy please go through the detailed analysis of
strengths, weaknesses, opportunities, and threats in next section.

What are Strengths in SWOT Analysis

Strengths - Kindle Fire: Amazon's Heated Battle for the

Tablet Market

Strengths are the Kindle Amazon capabilities and resources that it can leverage to build a
sustainable competitive advantage in the marketplace. Strengths come from positive
aspects of five key resources & capabilities - human resources, activities & processes, past
experiences and successes, physical resources such as land, building, and financial
resources .

- High Margins – Kindle Amazon charges a premium compare to its competitors. According
to Mohanbir Sawhney, Joseph Owens, Pallavi Goodman of Kindle Fire: Amazon's Heated
Battle for the Tablet Market case study, this has provided Kindle Amazon resources to not
only thwart competitive pressures but also to invest into research and development.

- Intellectual Property Rights – Kindle Amazon has garnered a wide array of patents and
copyrights through innovation and buying those rights from the creators. This can help
Kindle Amazon in thwarting the challenges of competitors in various industries Product
development, Technology.

- Managing Regulations and Business Environment – Kindle Amazon operates in an

environment where it faces numerous regulations and government diktats. In Product
development, Technology areas, the firm needs to navigate environment by building
strong relationship with lobby groups and political network.

- Superior product and services quality can help Kindle Amazon to further increase its
market share as the current customer are extremely loyal to it. According to Mohanbir
Sawhney, Joseph Owens, Pallavi Goodman in Kindle Fire: Amazon's Heated Battle for the
Tablet Market study – there are enough evidences that with such a high quality of products
and services, Kindle Amazon can compete with other global players in international
market.

- Strong Balance Sheet and Financial Statement of Kindle Amazon can help it to invest in
new and diverse projects that can further diversify the revenue stream and increase Return
on Sales (RoS) & other metrics.

- Successful Go To Market Track Record – Kindle Amazon has a highly successful track
record of both launching new products in the domestic market but also catering to the
various market based on the insights from local consumers. According to Mohanbir
Sawhney, Joseph Owens, Pallavi Goodman , Kindle Amazon has tested various concepts in
different markets and come up with successful Sales & Marketing solutions.

- Diverse Product Portfolio of Kindle Amazon – The products and brand portfolio of Kindle
Amazon is enabling it to target various segments in the domestic market at the same time.
This has enabled Kindle Amazon to build diverse revenue source and profit mix.

What are Weakness in SWOT Analysis

Weakness- Kindle Fire: Amazon's Heated Battle for the

Tablet Market
Weaknesses are the areas, capabilities or skills in which Kindle Amazon lacks. It limits the
ability of the firm to build a sustainable competitive advantage. Weaknesses come from
lack or absence of five key resources & capabilities - activities & processes, physical
resources such as land, building, past experiences and successes, human resources, and
financial resources .

- Track record on environment consideration is not very encouraging – Kindle Amazon track
record on environmental issues is not very encouraging. According to Mohanbir Sawhney,
Joseph Owens, Pallavi Goodman , this can lead to consumer backlash as customers are now
considering environmental protections as integral to part of doing business.

- Lack of Work force diversity – I believe that Kindle Amazon is not diverse enough given
that most of its growth so far is in its domestic market. According to Mohanbir Sawhney,
Joseph Owens, Pallavi Goodman , this can reduce the potential of success of Kindle
Amazon in the international market.

- Kindle Amazon business model can be easily replicated even with the number of patents
and copyrights the company possess. The intellectual property rights are very difficult to
implement in the industry that Kindle Amazon operates in. According to Mohanbir
Sawhney, Joseph Owens, Pallavi Goodman , Intellectual Property Rights are effective in
thwarting same size competition but it is difficult to stop start ups disrupting markets at
various other levels.

- Project Management is too focused on internal delivery rather than considering all the
interests of external stakeholders. This approach can lead to poor public relation and
customer backlash.

- Organization Culture – It seems that organization culture of Kindle Amazon is still

dominated by turf wars within various divisions, leading to managers keeping information
close to their chests. According to Mohanbir Sawhney, Joseph Owens, Pallavi Goodman of
Kindle Fire: Amazon's Heated Battle for the Tablet Market case study, this can lead to
serious road blocks in future growth as information in silos can result can lead to missed
opportunities in market place.

- Implementation of Technology in Processes – Even though Kindle Amazon has integrated

technology in the backend processes it has still not able to harness the power of technology
in the front end processes.

What are Opportunities in SWOT Analysis

Opportunities- Kindle Fire: Amazon's Heated Battle for the
Tablet Market

Opportunities are macro environment factors and developments that Kindle Amazon can
leverage either to consolidate existing market position or use them for further expansion.
Opportunities can emerge from various factors such as - economic growth, political
developments & policy changes, increase in consumer disposable income, changes in
consumer preferences, and technological innovations .

- Growing Market Size and Evolving Preferences of Consumers – Over the last decade and
half the market size has grown at brisk pace. The influx of new customers has also led to
evolution of consumer preferences and tastes. This presents Kindle Amazon two big
challenges – how to maintain loyal customers and how to cater to the new customers.
Kindle Amazon has tried to diversify first using different brands and then by adding various
features based on customer preferences.

- Increase in Consumer Disposable Income – Kindle Amazon can use the increasing
disposable income to build a new business model where customers start paying
progressively for using its products. According to Mohanbir Sawhney, Joseph Owens,
Pallavi Goodman of Kindle Fire: Amazon's Heated Battle for the Tablet Market case study,
Kindle Amazon can use this trend to expand in adjacent areas Product development,
Technology.

- Reducing Cost of Market Entry and Marketing into International Markets – According to
Mohanbir Sawhney, Joseph Owens, Pallavi Goodman, globalization along with boom in
digital marketing and social media has considerably reduced the risks of market entry and
marketing in international market.

- Changing Technology Landscape – Machine learning and Artificial Intelligence boom is

transforming the technology landscape that Kindle Amazon operates in. According to
Mohanbir Sawhney, Joseph Owens, Pallavi Goodman , Kindle Amazon can use these
developments in improving efficiencies, lowering costs, and transforming processes.

- E-Commerce and Social Media Oriented Business Models – E-commerce business model
can help Kindle Amazon to tie up with local suppliers and logistics provider in international
market. Social media growth can help Kindle Amazon to reduce the cost of entering new
market and reaching to customers at a significantly lower marketing budget. It can also
lead to crowd sourcing various services and consumer oriented marketing based on the
data and purchase behavior.

- Access to International Talent in Global Market – One of the challenges Kindle Amazon
facing right now is limited access to high level talent market because of limited budget.
Expansion into international market can help Kindle Amazon to tap into international talent
market. According to Mohanbir Sawhney, Joseph Owens, Pallavi Goodman , it can also help
in bringing the talent into domestic market and expanding into new areas Product
development, Technology.

What are Threats in SWOT Analysis

Threats- Kindle Fire: Amazon's Heated Battle for the

Tablet Market

Threats are macro environment factors and developments that can derail business model
of Kindle Amazon. Threats can emerge from various factors such as - increase in consumer
disposable income, economic growth, changes in consumer preferences, technological
innovations, and political developments & policy changes .

- Threats of New Entrants because of Reducing Costs and Increasing Efficiencies – As

Kindle Amazon can leverage low cost of reaching customers using social media and e-
commerce, so can the competitors – both local and international competitors.

- Increasing bargaining power of buyers – Over the years the bargaining power of
customers of Kindle Amazon has increased significantly that is putting downward pressure
on prices. The company can pursue horizontal integration to consolidate and bring
efficiencies but I believe it will be a short term relief. According to Mohanbir Sawhney,
Joseph Owens, Pallavi Goodman , Kindle Amazon needs fundamental changes to business
model rather than cosmetic changes.

- Growing Protectionism - Kindle Amazon should hedge the risk against growing
protectionism ranging from – storing data into international market to diversifying risk by
operating into countries at different economic cycle.

- Culture of sticky prices in the industry – Kindle Amazon operates in an industry where
there is a culture of sticky prices. According to Mohanbir Sawhney, Joseph Owens, Pallavi
Goodman of Kindle Fire: Amazon's Heated Battle for the Tablet Market case study, this can
lead to inability on part of the organization to increase prices that its premium prices
deserve.

- Squeezing Middle Class in Developed and Developing World – The growing inequality is
one of the biggest threat to not only globalization but also to capitalism. Kindle Amazon
first hand witnessed the impact of it where it has seen lower demand of its products from
middle class customers in US and EU market.

- Credit Binge post 2008 Recession – Easy access to credit can be over any time, so Kindle
Amazon should focus on reducing its dependence on debt to expand. The party has lasted
for more than a decade and rollback from Fed can result in huge interest costs for Kindle
Amazon.
Kindle Fire: Amazon's Heated Battle for the Tablet Market Case
Study Solution & Analysis / MBA Resources
1. Kindle Fire: Amazon's Heated Battle for the Tablet Market
2. Sales & Marketing / MBA Resources

Introduction to case study solution

EMBA Pro case study solution for Kindle Fire: Amazon's

Heated Battle for the Tablet Market case study

At EMBA PRO, we provide corporate level professional case study solution. Kindle Fire:
Amazon's Heated Battle for the Tablet Market case study is a Harvard Business School
(HBR) case study written by Mohanbir Sawhney, Joseph Owens, Pallavi Goodman. The
Kindle Fire: Amazon's Heated Battle for the Tablet Market (referred as “Kindle Amazon”
from here on) case study provides evaluation & decision scenario in field of Sales &
Marketing. It also touches upon business topics such as - Value proposition, Product
development, Technology.

Our immersive learning methodology from – case study discussions to simulations tools
help MBA and EMBA professionals to - gain new insight, deepen their knowledge of the
Sales & Marketing field, and broaden their skill set.

Case Description of Kindle Fire: Amazon's Heated Battle

for the Tablet Market Case Study

This case is intended to illustrate to readers the challenges faced in 2011-2013 by Amazon's
CEO, Jeff Bezos, as he guided his company into the exploding tablet market. Faced with
the tough decision between focusing on the e-reader market-which Amazon had come to
dominate with its Kindle product line-and making a foray into tablets-for which it had no
expertise-Bezos chose the latter. Amazon sought to combine platform assets to create an
end-to-end experience that would let users find a "sweet spot" in the mix of features and
services. This strategy involved critical decisions such as selecting a customer segment to
target and a positioning for the new product, dubbed the Kindle Fire, as the tablet market
rapidly evolved. The Kindle Fire was designed to put the full Amazon experience right into
the laps of customers, and Bezos was betting that his customers would see the Kindle Fire
as the physical manifestation of all things Amazon. To achieve this, Amazon was willing to
heavily subsidize the Kindle Fire hardware device. The key assumption was that the
superior end-to-end experience Amazon had carefully created would lead to incremental
purchases of content as well as physical products and services, and the margins thus gained
would outweigh the hardware subsidy.

Case Authors : Mohanbir Sawhney, Joseph Owens, Pallavi Goodman

Topic : Sales & Marketing

Related Areas : Product development, Technology

What is the Case Study Method ? How can you use it to

write case solution for Kindle Fire: Amazon's Heated
Battle for the Tablet Market case study?

Almost all of the case studies contain well defined situations. MBA and EMBA professional
can take advantage of these situations to - apply theoretical framework, recommend new
processes, and use quantitative methods to suggest course of action.

Awareness of the common situations can help MBA & EMBA professionals read the case
study more efficiently, discuss it more effectively among the team members, narrow down
the options, and write cogently.

Case Study Solution Approaches

Three Step Approach to Kindle Fire: Amazon's Heated Battle for the Tablet
Market Case Study Solution

The three step case study solution approach comprises –

Conclusions – MBA & EMBA professionals should state their conclusions at the very start. It
helps in communicating the points directly and the direction one took.

Reasons – At the second stage provide the reasons for the conclusions. Why you choose
one course of action over the other. For example why the change effort failed in the case
and what can be done to rectify it. Or how the marketing budget can be better spent using
social media rather than traditional media.

Evidences – Finally you should provide evidences to support your reasons. It has to come
from the data provided within the case study rather than data from outside world.
Evidences should be both compelling and consistent. In case study method there is ‘no
right’ answer, just how effectively you analyzed the situation based on incomplete
information and multiple scenarios.

Case Study Solution of Kindle Fire: Amazon's Heated

Battle for the Tablet Market

We write Kindle Fire: Amazon's Heated Battle for the Tablet Market case study solution
using Harvard Business Review case writing framework & HBR Sales & Marketing learning
notes. We try to cover all the bases in the field of Sales & Marketing, Product development,
Technology and other related areas.

Objectives of using various frameworks in Kindle Fire:

Amazon's Heated Battle for the Tablet Market case study
solution

By using the above frameworks for Kindle Fire: Amazon's Heated Battle for the Tablet
Market case study solutions, you can clearly draw conclusions on the following areas –

What are the strength and weaknesses of Kindle Amazon (SWOT Analysis)

What are external factors that are impacting the business environment (PESTEL Analysis)

Should Kindle Amazon enter new market or launch new product (Opportunities & Threats
from SWOT Analysis)

What will be the expected profitability of the new products or services (Porter Five Forces
Analysis)

How it can improve the profitability in a given industry (Porter Value Chain Analysis)

What are the resources needed to increase profitability (VRIO Analysis)

Finally which business to continue, where to invest further and from which to get out (BCG
Growth Share Analysis)

SWOT Analysis of Kindle Fire: Amazon's Heated Battle for

the Tablet Market

SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths
and Weaknesses are result of Kindle Amazon internal factors, while opportunities and
threats arise from developments in external environment in which Kindle Amazon
operates. SWOT analysis will help us in not only getting a better insight into Kindle Amazon
present competitive advantage but also help us in how things have to evolve to maintain
and consolidate the competitive advantage.

Strengths
- High customer loyalty & repeat purchase among existing customers – Kindle Amazon old
customers are still loyal to the firm even though it has limited success with millennial. I
believe that Kindle Amazon can make a transition even by keeping these people on board.

- Experienced and successful leadership team – Kindle Amazon management team has
been a success over last decade by successfully predicting trends in the industry.

Weakness
- Little experience of international market – Even though it is a major player in local market,
Kindle Amazon has little experience in international market. According to Mohanbir
Sawhney, Joseph Owens, Pallavi Goodman , Kindle Amazon needs international talent to
penetrate into developing markets.

- Kindle Amazon business model can be easily replicated by competitors – According to

Mohanbir Sawhney, Joseph Owens, Pallavi Goodman , the business model of Kindle
Amazon can be easily replicated by players in the industry.
Opportunities
- Developments in Artificial Intelligence – Kindle Amazon can use developments in artificial
intelligence to better predict consumer demand, cater to niche segments, and make better
recommendation engines.

- Lucrative Opportunities in International Markets – Globalization has led to opportunities

in the international market. Kindle Amazon is in prime position to tap on those
opportunities and grow the market share.

Threats
- Age and life-cycle segmentation of Kindle Amazon shows that the company still hasn’t
able to penetrate the millennial market.

- Customers are moving toward mobile first environment which can hamper the growth as
Kindle Amazon still hasn’t got a comprehensive mobile strategy.

Once all the factors mentioned in the Kindle Fire: Amazon's Heated Battle for the Tablet
Market case study are organized based on SWOT analysis, just remove the non essential
factors. This will help you in building a weighted SWOT analysis which reflects the real
importance of factors rather than just tabulation of all the factors mentioned in the case.

What is PESTEL Analysis

PESTEL /PEST / STEP Analysis of Kindle Fire: Amazon's

Heated Battle for the Tablet Market Case Study

PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal
factors that impact the macro environment in which Kindle Amazon operates in. Mohanbir
Sawhney, Joseph Owens, Pallavi Goodman provides extensive information about PESTEL
factors in Kindle Fire: Amazon's Heated Battle for the Tablet Market case study.
Political Factors
- Little dangers of armed conflict – Based on the research done by international foreign
policy institutions, it is safe to conclude that there is very little probability of country
entering into an armed conflict with another state.

- Political consensus among various parties regarding taxation rate and investment policies.
Over the years the country has progressively worked to lower the entry of barrier and
streamline the tax structure.

Economic Factors
- Foreign Exchange movement is also an indicator of economic stability. Kindle Amazon
should closely consider the forex inflow and outflow. A number of Kindle Amazon
competitors have lost money in countries such as Brazil, Argentina, and Venezuela due to
volatile forex market.

- According to Mohanbir Sawhney, Joseph Owens, Pallavi Goodman . Kindle Amazon

should closely monitor consumer disposable income level, household debt level, and level
of efficiency of local financial markets.

Social Factors
- Demographic shifts in the economy are also a good social indicator for Kindle Amazon to
predict not only overall trend in market but also demand for Kindle Amazon product among
its core customer segments.

- Leisure activities, social attitudes & power structures in society - are needed to be
analyzed by Kindle Amazon before launching any new products as they will impact the
demand of the products.

Technological Factors
- Artificial intelligence and machine learning will give rise to importance of speed over
planning. Kindle Amazon needs to build strategies to operate in such an environment.

- 5G has potential to transform the business environment especially in terms of marketing

and promotion for Kindle Amazon.

Environmental Factors
- Environmental regulations can impact the cost structure of Kindle Amazon. It can further
impact the cost of doing business in certain markets.
- Consumer activism is significantly impacting Kindle Amazon branding, marketing and
corporate social responsibility (CSR) initiatives.

Legal Factors
- Intellectual property rights are one area where Kindle Amazon can face legal threats in
some of the markets it is operating in.

- Property rights are also an area of concern for Kindle Amazon as it needs to make
significant Product development, Technology infrastructure investment just to enter new
market.

What are Porter Five Forces

Porter Five Forces Analysis of Kindle Fire: Amazon's

Heated Battle for the Tablet Market

You can use Porter Five Forces to analyze the industry in which Kindle Amazon operates in
and what are the levers of profitability in those segments – differentiation, Product
development, Technology. Michael Porter Five Forces of Strategy are –

Competition among existing players,

Bargaining power of suppliers,

Bargaining power of buyers,

Threat of new entrants, and

Threat of substitutes

Porter Five Forces can help in answering following questions for writing case study solution
for Kindle Fire: Amazon's Heated Battle for the Tablet Market -

How attractive is the industry described in the Kindle Fire: Amazon's Heated Battle for the
Tablet Market?

Are some segments more attractive than others? Why? Identify, analyze, and evaluate the
strategy of the Kindle Amazon featured in the Kindle Fire: Amazon's Heated Battle for the
Tablet Market case study.

What are the pros and Cons of each strategy? What impact Kindle Amazon actions will
have on industry and economy on whole?

What is VRIO Analysis

VRIO Analysis of Kindle Fire: Amazon's Heated Battle for

the Tablet Market

VRIO stands for – Value of the resource that Kindle Amazon possess, Rareness of those
resource, Imitation Risk that competitors pose, and Organizational Competence of Kindle
Amazon. VRIO and VRIN analysis can help the firm.

Competitive
Resources Value Rare Imitation Organization Advantage
Vision of the Yes No Can't be imitated Not based on Can Lead to
Leadership for by competitors information provided Strong
Next Set of in the case Competitive
Challenges Advantage
Alignment of Yes No Each of the firm Yes, company has Still lots of
Activities with has its own organizational skills potential to
Kindle Amazon strategy to extract the build on it
Corporate maximum out of it.
Strategy
Brand Positioning Yes No Can be imitated by Yes, the firm has Temporary
in Comparison to competitors but it positioned its brands Competitive
the Competitors will require big based on consumer Advantage
marketing budget behavior

What is Porter Value Chain

Porter Value Chain Analysis of Kindle Fire: Amazon's
Heated Battle for the Tablet Market

As the name suggests Value Chain framework is developed by Michael Porter in 1980’s and
it is primarily used for analyzing Kindle Amazon relative cost and value structure. Managers
can use Porter Value Chain framework to disaggregate various processes and their relative
costs in the Kindle Amazon.

This will help in answering – the related costs and various sources of competitive
advantages of Kindle Amazon in the markets it operates in. The process can also be done to
competitors to understand their competitive advantages and competitive strategies.

According to Michael Porter – Competitive Advantage is a relative term and has to be

understood in the context of rivalry within an industry. So Value Chain competitive
benchmarking should be done based on industry structure and bottlenecks.

What is BCG Growth Share Matrix

BCG Growth Share Matrix of Kindle Fire: Amazon's Heated

Battle for the Tablet Market

BCG Growth Share Matrix is very valuable tool to analyze Kindle Amazon strategic
positioning in various sectors that it operates in and strategic options that are available to
it.

Product Market segmentation in BCG Growth Share matrix should be done with great care
as there can be a scenario where Kindle Amazon can be market leader in the industry
without being a dominant player or segment leader in any of the segment.

BCG analysis should comprise not only growth share of industry & Kindle Amazon business
unit but also Kindle Amazon - overall profitability, level of debt, debt paying capacity,
growth potential, expansion expertise, dividend requirements from shareholders, and
overall competitive strength.

Two key considerations while using BCG Growth Share Matrix for Kindle Fire: Amazon's
Heated Battle for the Tablet Market case study solution -
How to calculate Weighted Average Market Share using BCG Growth Share Matrix

Relative Weighted Average Market Share Vs Largest Competitor

What is PESTEL / PEST / STEP Analysis? How you can use
PESTEL Analysis for Kindle Fire: Amazon's Heated Battle for
the Tablet Market
At EMBA PRO, we specialize at providing professional PESTEL analysis & other strategic
management MBA resources. Kindle Fire: Amazon's Heated Battle for the Tablet Market
case study PESTEL analysis includes macro environment factors that impact the overall
business environment – Political, Economic, Social, Technological, Environmental, and
Legal factors.

Kindle Fire: Amazon's Heated Battle for the Tablet Market case study (referred as “Kindle
Amazon” for purpose of this article) is a Harvard Business School (HBR) case study
covering topics such as Sales & Marketing and strategic management. It is written by
Mohanbir Sawhney, Joseph Owens, Pallavi Goodman and shed light on critical areas in field
of Sales & Marketing, Product development, Technology that the protagonist in the case
study is facing.

Managers at Kindle Amazon need to examine three inter-related environments in order to

come up with an effective strategy. The three inter-related environments are – industry
environment in which the company operates in, the geographic market or country in which
company operates, and wider socio economic / macro environment. PESTEL analysis is
mainly the assessment of macro environment factors.

Case Description of Kindle Fire: Amazon's Heated Battle for

the Tablet Market Case Study

This case is intended to illustrate to readers the challenges faced in 2011-2013 by Amazon's
CEO, Jeff Bezos, as he guided his company into the exploding tablet market. Faced with
the tough decision between focusing on the e-reader market-which Amazon had come to
dominate with its Kindle product line-and making a foray into tablets-for which it had no
expertise-Bezos chose the latter. Amazon sought to combine platform assets to create an
end-to-end experience that would let users find a "sweet spot" in the mix of features and
services. This strategy involved critical decisions such as selecting a customer segment to
target and a positioning for the new product, dubbed the Kindle Fire, as the tablet market
rapidly evolved. The Kindle Fire was designed to put the full Amazon experience right into
the laps of customers, and Bezos was betting that his customers would see the Kindle Fire
as the physical manifestation of all things Amazon. To achieve this, Amazon was willing to
heavily subsidize the Kindle Fire hardware device. The key assumption was that the
superior end-to-end experience Amazon had carefully created would lead to incremental
purchases of content as well as physical products and services, and the margins thus gained
would outweigh the hardware subsidy.

Case Authors : Mohanbir Sawhney, Joseph Owens, Pallavi Goodman

Topic : Sales & Marketing

Related Areas : Product development, Technology

Case Study Solution & Analysis of Kindle Fire: Amazon's Heated Battle for the Tablet
Market

SWOT Analysis of Kindle Fire: Amazon's Heated Battle for the Tablet Market

Importance of PESTEL Analysis in Strategy Management &

Planning Process

Strategy planning process often requires five steps –

1. Choosing the vision, mission and the reason of existence for Kindle Amazon.

2. Analyze the Kindle Amazon external competitive environment to identify opportunities

and threats. PESTEL analysis is critical to understand the external threats & opportunities
arising because of the macro environment developments. Changes in macro environment
forces can impact the Porter Five Forces & industry attractiveness. Thus significantly
impacting the ability of Kindle Amazon to build sustainable competitive advantage

3. Analyze Strengths and Weaknesses of Kindle Amazon.

4. Developing strategies that can capitalize on Kindle Amazon strengths and help mitigate
weaknesses and impact of threats of macro-environment.

5. Execution of the strategy and building a feedback loop, using which managers at Kindle
Amazon can fine tune processes and strategies going forward.

The Industrial Organization (I/O) approach advocates that for sustainable competitive
advantage external factors are as important as internal factors of the Kindle Amazon.
According to Michael Porter organizational performance is to large extend determined by
various industry forces.

What are Political Factors in PESTEL / PEST Analysis

The political factors play a huge role in not only investment decision by transnational
corporations but also by companies such as – Kindle Amazon. Political environment and
other factors not only impact the cost of doing business but also long term sustainability.
Some of the political factors are – governance system, democracy & institutions, military
coup chances, probability of armed conflict, law and order in market etc.

Political Factors that Impact Kindle Fire: Amazon's Heated

Battle for the Tablet Market

- Size of Government Budgets – both Local Governments and National Government – The
government at both national level and local levels are running deficit budgets which is
boosting growth in the short term but may lead to increase in inflation over medium term.
The bond rating of national government is investment grade.

- Threat of Terrorist Attacks – We believe in the world of post 9/11, corporations such as
Kindle Amazon have to live with operating under the shadow of a terrorist attack. The
prudent policy should be to take insurance and other types of hedging instruments to
mitigate the losses occurring because of the terrorist attacks.

- International Trade & Other Treaties – The country has a good record of adhering to
international treaties it has done with various global partners. The government of each
party has adhered to the treaties done by previous governments, so there is a consistency
in both rule of law and regulations.

- Likelihood of Entering into an Armed Conflict – From the information in the Kindle Fire:
Amazon's Heated Battle for the Tablet Market case study, I don’t think there is a likelihood
of country entering into an armed conflict with a neighboring country.

- Judiciary Independence – In the matter of commercial and business decisions, judiciary of

the country is independent to a large extent. Business do face problem when the conflict is
between public interest and proprietary technology similar to ruling in South Africa where
government & judiciary allowed generic AIDS drug irrespective of patents of global
companies.
- Segregation of Political Responsibilities between Different Government Agencies – There
are numerous government agencies which reduces the risk of overwhelming pressure by
one agency. But on the flip side it does increases both time and cost of doing business and
getting certifications and clearances.

- Political Governance System – Based on the information provided in the Kindle Fire:
Amazon's Heated Battle for the Tablet Market case study, it seems that the country have a
stable political system. Kindle Amazon can make strategies based on the stable political
environment.

- Transition of Government and Changes in Policy – There is consistency in policy making

from one government to another. Secondly governments from all parties adhere to the
treaties made by the previous governments.

What are Economic Factors in PESTEL / PEST Analysis

Economic factors of a country and region have a direct impact on the potential
attractiveness of a given market. Some of the economic factors that Kindle Amazon should
evaluate both in the present market and one in which it wants to enter are – inflation rate,
GDP growth rate, disposable income level etc.

Economic Factors that Impact Kindle Fire: Amazon's Heated

Battle for the Tablet Market

- Inflation Rate – The inflation rate can impact the demand of Kindle Amazon products.
Higher inflation may require Kindle Amazon to continuously increase prices in line of
inflation which could lead to lower levels brand loyalty and constant endeavors to manage
costs. Cost Based Pricing could be a bad strategy under such conditions.

- Fiscal and Monetary Policies – The Republican government tax break culture has
increased the deficit and it can lead to fiscal trouble for the economy in coming years.

- Work Force Productivity – Work force productivity in US has grown by 25-30 % in last two
decades even though the salaries are not reflecting those gains. It can enable Kindle
Amazon to hire skilled workforce at competitive salaries.
- GDP Trend & Rate of Economic Growth – The higher GDP growth rate signals growing
demand in the economy. Kindle Amazon can leverage this trend by expanding its product
range and targeting new customers. One way to start is by closely mapping the changes in
– consumer buying behavior and emerging value proposition.

- Financial Market Structure and Availability of Capital at Reasonable Rates – The

quantitative easing policy of Federal Reserve has led to liquidity flooding all across the
global financial markets. Kindle Amazon can borrow cheaply under such circumstances. But
this strategy entails risks when interest rate will go up.

- Inequality Index / Ranking on Gini Index – Gini Index and level of inequality are a great
barometer for harmony and development of a society. If there is huge income inequality in
the society then the likelihood of conflict and crime increases. It can lead to uncertainty and
suppression of consumption in both short term and long term.

- Level of Household Income and Savings Rate – Increasing consumption and stagnant
household income in United States had led to credit binge consumption. It has decimated
the culture of savings as people don’t have enough to save. Kindle Amazon needs to be
careful about building marketing strategy that is dependent on “Purchase on Credit”
consumer behavior.

What are Social Factors in PESTEL / PEST Analysis

Social factors such as demography trends, power structure in the society, women
participation in workforce etc have immense impact over not only the country's economy
but also on workforce talent availability and level of consumer demand.

Social Factors that Impact- Kindle Fire: Amazon's Heated

Battle for the Tablet Market

- Societal Norms and Hierarchy – What sort of hierarchy and norms are acceptable in
society also influence the types and level of consumption in a society. In highly hierarchical
societies the power of decision making often reside at the top

- Education Level in Society – Education level of the society impacts both the quality of jobs
and level of income. High level of education often results in better jobs, higher income and
higher spending on complex and aspirational products.
- Level of Social Concerns & Awareness in Society – Higher level of social concerns in the
society often result higher consumer activism and pressure from non-governmental
organizations, & pressure groups.

- Power Structure in Society – Kindle Amazon should carefully analyze both - What is the
power structure in the society? How it impacts the demand in the economy. For example
the power structure in US economy is slowly moving towards the older generation as that
generation has higher disposable income compare to the younger generation.

- Demographic Trend – The demographic trend is one of the key factors in demand
forecasting of an economy. For example as the population of USA and EU is growing old
the demand for products mostly catering to this segment will grow. Kindle Amazon should
consider demographic trends before new product developments and integrate features
that cater to this segment. As population is ageing it will require less tech intensive
products.

- Types of Immigration & Attitude towards Immigrants – Given the latest developments
such as Brexit and Immigrant detention on Southern border of United States. Attitude
towards immigration has come under sharp focus. Kindle Amazon should have capabilities
to navigate under this hyper sensitive environment.

- Attitude towards Leisure – Kindle Amazon should conduct an ethnographic research to

understand both attitude towards leisure activities and choice of leisure activities.
Experience economy is one of the fastest growing segments both among millennials and
among baby-boomers.

- Attitude towards Authority – Various cultures in different part of the world have different
attitude towards authority. In Asia authority is respected while in west it is something to
rebel against. Kindle Amazon should carefully analyze the attitude towards authority
before launching a marketing campaign for its products and services.

What are Technological Factors in PESTEL / PEST Analysis

Technology is fast disrupting business models across various industries. Some of the
technology trends that are impacting the macro environment are – developments in
artificial intelligence, use of machine learning and big data analytics to predict consumer
behavior, growing importance of platforms over service providers etc.
Technological Factors that Impact Kindle Fire: Amazon's
Heated Battle for the Tablet Market

- Integration of Technology into Society & Business Processes – Uber failed in China
because it tried to enter before smartphone were widespread in China. Kindle Amazon
should build a strategy that can integrate societal values, infrastructure, and Kindle
Amazon business model.

- Cost of Production and Trends – Kindle Amazon should assess - What are the cost of
production trends in the economy and level of automatization. We at EMBA Pro believe
that in near future the sector most disrupted by technological innovation is manufacturing
and production.

- Preparedness for 5G Related Infrastructure – Countries across the world are trying to
prepare themselves to install 5G infrastructure. Kindle Amazon should assess to what level
the local market is prepared to roll out the 5G connectivity.

- Empowerment of Supply Chain Partners – Kindle Amazon should analyze areas where
technology can empower supply chain partners. This can help Kindle Amazon to bring in
more transparency and make supply chain more flexible.

- Intellectual Property Rights and Patents Protection – Before entering new market Kindle
Amazon should focus on the environment for intellectual property rights.

- Likelihood of Technology Disruption – If the country is hub of technology companies then

there is a high chance of technology disruption among various industries. Kindle Amazon
has to assess whether it can live with the fast pace of technology disruption in its industry.

- Technology transfer and licensing issues for Kindle Amazon – laws and culture of licensing
of IPR and other digital assets should be analyzed carefully so that Kindle Amazon can
avoid shakedowns and IPR thefts.

- Acceptance of Mobile Payments and Fintech Services – One of the areas where US are
lacking behind China is Mobile Payments. Kindle Amazon should assess what are preferred
choice of mobile payments in local economy and chose the business model based on it.

What are Environmental Factors in PESTEL / PEST Analysis

Environmental factors are fast gaining traction not only among consumers but also among
regulators and policy makers. Climate change and changing ecosystem is leading to the
extinction of more than 20% of species on the planet by the turn of this century.

Environmental Factors that Impact Kindle Fire: Amazon's

Heated Battle for the Tablet Market

- Corporate Social Responsibilities Culture – Are Kindle Amazon present CSR efforts
applicable in the new market or does it needs to have new initiative to cater to the
prospective market.

- Recycle Policies – What are the recycle policies in prospective market and how Kindle
Amazon can adhere to those policies.

- Influence of Climate Change – How climate change will impact Kindle Amazon business
model and supply chain. For example if the supply chain is not flexible it can lead to
bottlenecks if shipments from one part of the world are delayed because of sudden climate
shift.

- Environmental Regulation Impacting Absolute Cost Advantage Dynamics in the Industry.

- Waste Management – What is the policy of waste management in the prospective market
and how Kindle Amazon can adhere to the waste management requirements in that
market.

- Focus & Spending on Renewable Technologies – How much of the budget is spend on
renewable energy sources and how Kindle Amazon can make this investment as part of its
competitive strategy.

- Level of Consumer Activism Regarding Environmental Concerns – Kindle Amazon needs

to know the level of consumer activism regarding environmental concerns is. It will help
Kindle Amazon in both developing environmentally friendly products and thwarting PR
stumble blocks.

What are Legal Factors in PESTEL / PEST Analysis

Legal factors often govern – conditions to enter the market, laws to operate in the market,
and procedure to resolve any dispute with other stakeholders. If the legal system is not
strong then Kindle Amazon can face numerous challenges – from consumer petitions to
shakedowns from authorities.

Legal Factors that Impact Kindle Fire: Amazon's Heated

Battle for the Tablet Market

- Intellectual Property Rights Protection – Kindle Amazon should assess the level of
protection that intellectual property rights get under the legal system of the country.

- Transparency in Judiciary System & Processes – Transparency is essential for fair and
consistent decision making. If the process is consistent and transparent then Kindle
Amazon can plan ahead with greater conviction.

- Business Laws – Before entering into new market – Kindle Amazon has to assess what are
the business laws and how they are different from home market.

- Health & Safety Laws – What are the health and safety laws in the country and what
Kindle Amazon needs to do to comply with them. Different countries have different
attitude towards health and safety so it is better for Kindle Amazon to conduct a thorough
research before entering the market.

- Data Protection Laws – Kindle Amazon needs to assess what are the data laws in the
country and what it needs to do to comply with them. For example most of EU countries
now want the EU citizen data to be saved in EU countries only.

- Time Taken for Court Proceedings – Even if the country has best of the laws, it doesn’t
mean much if they can’t be enforced in a timely manner. Kindle Amazon should do a
primary research regarding how much time it often takes to conclude a court case in the
country given the sort of legal challenges Kindle Amazon can face.

- Consumer Protection Laws – Kindle Amazon needs to know what are the consumer laws,
what is the rate of enforcement, what is the attitude of authorities towards consumer
protection laws, and what is the role activist groups in enforcement of consumer protection
laws.