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Category winner: The Economics of Amazon

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This case won the Economics, Politics and Business Environment category at The Case Centre Awards and Competitions 2016.
 
The case
Jeff Bezos

Who – the protagonists

Jeff Bezos, Founder, Chairman and CEO of Amazon.

What

Amazon is a worldwide online retail company which began by selling books, but now offers a vast range of products and services to its customers. It is the largest online retailer in the US.

Why

Supreme CourtIn the early 1990s, a US Supreme Court ruling, Quill Corp. v. North Dakota, caught Jeff Bezos’s attention: this ruling said that a state could only collect sales taxes from a company if it had a physical presence there. Bezos saw this as a significant opportunity for online retailers, especially in comparison to traditional retailers such as Walmart and others.

amazon-screenshotWhen

Bezos incorporated Amazon in July 1994 in the state of Washington and began selling books online a year later. The company expanded its operations throughout the 1990s and the 2000s to include a very wide range of products and services for its consumers in the US and beyond. Amazon expanded to Europe in 1998, Japan in 2000 and China in 2011.

Where

amazon graphAmazon’s headquarters are in Seattle, Washington, US. It has dedicated retail websites serving numerous countries, including the UK and across Europe, Canada, Brazil, Japan, India, China and Mexico.

Key quote

‘Mr Bezos has created a transaction engine that is reinventing the way entrepreneurs can do business. If his ambition is to colonise the entire infrastructure of consumption, it is not likely to be Amazon’s technological skills that set the limits, but the world’s willingness to accept him.’ – Barney Jopson, FT.com.

What next?

Jeff Bezos thought about the past twenty years at the head of the company he had built. He had admitted publicly in the past that his company could be disrupted one day, but hoped to push the due date as far as possible – beyond his lifetime if he could. Could he sustain his success into the future and maintain a competitive edge?
 
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The Economics of Amazon
Ref 214-073-1

Teaching note
Ref 214-073-8
The author

author

Jeremy Ghez

Jeremy explains why winning this award was so special and offers his top tips for writing successful cases.

Stunned and happy

I was stunned by the news of this award. I didn’t expect this: it was the first case I ever wrote. But I am very happy that it is a successful one. I wrote it for typical MBA and EMBA classes in managerial economics where participants are looking for a concrete, hands-on experience.

amazonCreative destruction

What Amazon represents today is significant at two levels. First, in my opinion, it is perhaps one of the most revealing examples of what creative destruction means in a 21st century economy. 

Creative destruction is the root cause of the company’s success, arguably, and could be the reason for its potential demise, as even its CEO, Jeff Bezos, fears.

Second, its role as a market place is becoming so central that it could attract the attention of regulators in the future. In fact, as banks did in the past, Amazon could become the best example of what ‘too big to fail’ actually means.

Demystifying success

AlibabaUltimately, this case aims to demystify the success of Amazon by making the reasons for the company's rise clear, and also by showing that its success is not the product of coincidence and should not be taken for granted.

In the end, Amazon, like any other firm, needs to learn how to reinvent. Enabling participants to tackle this question in class is easier when they think about this from the perspective of a key protagonist – like the CEO of the firm, Jeff Bezos. This is part of the hands-on experience.

Sometimes, as part of teaching this case, I also ask participants to place themselves in the shoes of Jack Ma, the CEO of Alibaba. This pushes them to think about how they could be game-changers themselves.

Top case writing tips

Pick a subject you love. Identify the defining equation of the subject, how it relates to theory – and better yet, how it challenges or redefines concepts that we've been teaching in classrooms for ages. In my opinion, this is how a subject comes alive, and lets participants be the heroes of the story. This will undoubtedly give them the hands-on experience they need to hone their own analysis of their business environment.

About the authors

Jeremy Ghez is Affiliate Professor of Economics and International Affairs, HEC Paris.
e ghez@hec.fr
tw @jeremyghez
 

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