Amazon’s shares continue to drop as analyst estimate a loss of $40.5 million for the year, the largest since 2002. As Jeff Bezos, the CEO of Amazon, invests heavily into these products and services, it doesn’t seem like the company is generating the amount of profit it estimated. The CEO’s currently method of growth is to “spend big and count on sales growth to make up for minuscule profit.” However, this strategy isn’t working as Amazon continues to report losses. In fact, I contend Amazon is distracted by other activities, such as the drones, smartphone, television programming, and that it is sidetracked from its online-retailing services.

First, I believe that it was a correct move for Amazon to have explored other options and expanded into other industries, as many of its competitors like Target and Walmart were integrating Amazon’s initial concept of “order online and we’ll ship it to your door” into their business strategies. Due to the increase in rivalry and the approaching saturation in the online retailing and delivery market, Amazon sought out other options like the production of Kindles to create additional revenue streams. Fast forward several years after the introduction of Kindles, we have Amazon investing and selling its own smartphone that turned out to be a “flop”, as well as retail prices that aren’t as competitive compared to Target and Walmart’s. In fact, customers are turning to less expensive alternatives like Walmart, “whose online prices [are] approximately 10% lower than” Amazon’s and Target, whose prices are 5% lower than Amazon’s. Perhaps the increase in pricing, or the inability to drive these prices down, is due to Amazon’s investment in its other business activities. Amazon should focus back on its core activities: online retailing, and try to offer it at competitive prices.

http://time.com/3536969/amazon-fire-phone-bust/

http://www.internetretailer.com/2014/10/03/amazon-feels-pricing-heat-walmartcom-and-targetcom

http://www.bloomberg.com/news/2014-10-24/amazon-ceo-bezos-faces-season-of-worsts-as-losses-mount.html

http://wac.450f.edgecastcdn.net/80450F/q103albany.com/files/2014/05/RS5193_160323946-scr.jpg

In the beginning of the October, Canadian Tire announced that it is going to invest in a digital strategy to bring products to its customers in a more efficient manner. Namely, Canadian Tire is aiming to “alert customers to deals on winter boots and shovels” via digital messages. While it doesn’t sound like a novel idea as all of us has received promotional emails from various retailers or stores with regards to discounts and promotions in the past, what makes Canadian Tire’s approach stand out is that it is alerting the customers about the deals on winter boots and shovels, as it snows.

I believe that Canadian Tire’s strategic thinking may very well provide them with a competitive edge over its competitors, as very few large retail stores provides such service. Also, by digitalizing and alerting through messages, Canadian Tire can better target the younger population, which are relying on and using more technology on a day to day basis to satisfy their needs (shopping online, looking at eflyers, etc.). Canadian Tire is taking advantage of today’s technology by providing customers easier access to its products; such ease may potentially lead to more profit. Canadian Tire’s strategy may even pave way to a growth in loyal customers due to its novel service (if they execute it well, that is).

Nonetheless, while this is an advantage and may attract potential customers due to its convenience, such digital strategy is not sustainable. Like McGrath mentioned, strategies these days needs to be transient — they need to be constantly revised, as such “advantage often evaporates in less than a year.” Especially in this day and age when technology develops rapidly, it would not be difficult for other firms to implement a similar or a more sophisticated system that would make Canadian Tire’s strategy seem outdated. As a result, Canadian Tire should continually look at what other firms are doing in response to its digital strategy and assess the opportunity cost of spending resources on developing the strategy if other firms are going to implement the same system.

Sources:

http://hbr.org/2013/06/transient-advantage

http://www.theglobeandmail.com/report-on-business/canadian-tire-to-make-multi-year-investment-in-digital-tech/article21002469/

The aboriginal people in Canada, officially referred to as the First Nation, can act as a powerful group that could potentially change a company’s strategy. In using a PEST analysis to examine the external environment for a business, the First Nation people can be regarded as an influential aspect of the S (social) in “PEST”.

As seen in the article linked, the First Nation people strongly opposed BC Hydro’s decision to construct a dam and a hydroelectric generating station. If successfully passed, the construction would cut through the lands of the First Nation people and destroy a plethora of wildlife and forests that would affect the lives of the aboriginal people. The First Nation chiefs strongly oppose BC Hydro’s project, and plan on taking their case to the Federal Court of Canada. Evidently, there is a conflict between the business and the First Nations. The actions that the group is taking may therefore impact the strategy of BC Hydro, as the First Nation chiefs are urging the government to reject the business’s proposal. BC Hydro would therefore need to reconsider and reconfigure its current project or abandon it if it does not go through with the government due to the First Nation people’s intervention.

http://www.vancouversun.com/news/First+Nation+chiefs+stage+Site+showdown/10215965/story.html

Stollery’s established its store in Toronto almost 114 years ago, and it has maintained its high-class position up until now, whereby the company has announced its closer next January or February. The article mentions that the firm has been facing rising competition pressure to sell its property. The question is, why? And how can we prevent this from happening in the future?

By applying some of Porter’s Five Forces, it is possible to identify the changes in the external environment, and possibly develop ways to make the firm less vulnerable to these changes if it were not closing.

The clothing industry — specifically the menswear industry — is growing rapidly, like the article mentioned. With the fact that the number of competitors is large, it immediately makes the market quite competitive. A company like Stollery’s would need to establish a unique selling proposition to differentiate itself from the many firms out there that are also offering men clothing. This also leads to the fact that there are a plethora of substitutes in the menswear industry, ranging from inexpensive to expensive stores with low cost of switching, making Stollery’s vulnerable to lost of sales if it is not differentiating itself. As a result, the buyer’s bargaining power is quite large — because customers have a large range of options to purchase menswear from.

Furthermore, there are few barriers to entry. There are few laws and regulations that are preventing new competitors from entering the market. Resources for producing menswear are also not exactly rare to the point that it is difficult to find. And while a certain degree of knowledge is required to operate in the menswear industry (such as the knowledge of trends, perhaps), it is not as difficult as, say, trying to enter into an industry like pharmaceutical.

Looking at just a few aspects of Porter’s Five Forces, along with the fact that “industry observers have said [Stollery’s is] tired and in need of an update,” it is evident that the changing external environment, especially the growth of competitors/substitutes and the changing tastes in fashion, contributed to the closure of an iconic menswear store. To give a possible start of how to deal with the changing external environment, Stollery’s may have utilized Porter’s Generic Strategy and perhaps focused on a smaller segment, for instance the focus differentiation strategy to reposition itself, as it seems like a high-end store.

http://www.theglobeandmail.com/report-on-business/iconic-upscale-mens-wear-store-to-close-in-toronto/article20932353/