Amazon has become one of the world’s largest and most successful companies, thanks to its unparalleled ability to diversify. Through its various subsidiaries and services, Amazon offers a vast range of products and services, ranging from cloud computing to physical products. Amazon’s diversification has allowed it to remain competitive in a variety of markets, while still focusing on its core business.
Amazon’s diversification strategy can be divided into two categories: related and unrelated diversification. Related diversification involves investing in businesses that are related to the company’s core business, such as Amazon Web Services (AWS), Amazon Fresh, and Amazon Prime. This type of diversification allows the company to leverage its existing customer base, resources, and technology for new markets.
Unrelated diversification involves investing in businesses that are not related to the company’s core business. For example, Amazon recently acquired Whole Foods Market for $13.7 billion dollars in 2017.
This acquisition opens up a whole new market for Amazon – grocery stores – which is completely unrelated to their core business of online retailing. By investing in this new market, Amazon is able to increase their customer base and expand their product offerings.
The key benefit of diversification is that it allows companies like Amazon to spread out their risk across multiple markets or industries. This reduces their dependence on any one market or industry which helps them remain competitive in the long run. Additionally, by expanding into different markets or industries with existing customers or technology, companies can also leverage their existing knowledge and resources for new opportunities which can lead to growth and profitability over time.
Overall, it is clear that Amazon has been very successful with both related and unrelated diversification strategies; allowing them to remain competitive in multiple markets while still focusing on their core business of online retailing. Through both related and unrelated diversification strategies, companies like Amazon can reduce risk while increasing customer base and product offerings; leading to more sustainable long-term growth.
Conclusion:
In conclusion, it is evident that Amazon has been able to successfully employ both related and unrelated diversification strategies; allowing them to remain competitive in multiple markets while still focusing on their core business of online retailing. It is clear that both types of diversifications have enabled Amazon’s success as a global leader in e-commerce.