Homework Global E-Business
Chapter 1
Case Study 1.1
Question 1: As an investor in a digital business such as Uber, which financial and customer-related
metrics would you use to assess and benchmark the current business success and future growth
potential of the company?
Customer-related metrics:
- Popular routes in specific areas
- Feedback of the ride, about drivers
- Customer satisfaction by CSAT
- Customer loyalty by Net promoter score
- Customer churn: meaning how many customers changed from Uber to a different business
Financial-related metrics:
- Revenue
- Return on Investment
- Net profit
- Cash Flow
Question 2: Complete a situation analysis for Uber focusing on an assessment of the main business
risks that could damage the future growth potential of the Uber business.
Main Business risks:
One of the main business risks for Uber is probably regular Taxi drivers or Taxi companies. If, like in
London, these drivers continue to protest against Uber and put pressure on their respective
governments, it could have negative consequences for Uber. Also, strict rules, like in Europe can be a
business risk. For example is Uber at the moment only allowed in Munich and Berlin, German cities.
German law requires specific documents in order to transport people from A to B and charge money
for it (Personenbeförderungsschein). Other business risks include self-driving cars. As mentioned in
the text, Uber has to invest in these cars to obtain a market position. It is yet to see if Uber will be
willing to invest capital for that. Another risk for Uber could be the upgrade and expansion of public
transportation. If public transportation becomes more reliable and better it may be a better
alternative than driving a car or getting an Uber/Taxi. And of course, emerging markets with cheap
labor like China can be a problem. As mentioned in the text, there will be alternatives for Uber, which
can be more successful or better. In Portugal for example Uber now competes with Bolt. Bolt has
started there to offer similar driving services and not only bikes and scooters.
Question 3: For the main business risks to Uber identified in Question 2, suggest approaches the
company could use to minimize these risks.
- Invest in self-driving cars or the technology to be a first mover
- Try to compensate cheaper competition with better quality or better services
- Upgrade public image
Case Study 1.2
Question: Assess how the characteristics of digital, together with strategic decisions taken by its
management team, have supported Amazon’s continued growth.
Amazon's continued growth can be attributed to a combination of the characteristics of the
digital landscape and strategic decisions made by its management team. Here's an
assessment of how these factors have played a crucial role:
1. E-commerce Dominance:
Digital Characteristics: Amazon leveraged the rise of e-commerce, where consumers
increasingly prefer shopping online due to convenience and a wide product selection.
Strategic Decisions: Amazon invested heavily in building a vast online marketplace and
optimizing its user experience, ensuring a seamless and convenient shopping process for
customers.
2. Logistics and Fulfillment:
Digital Characteristics: Advances in logistics technology, tracking systems, and data analytics
have enabled efficient supply chain management.
Strategic Decisions: Amazon built an extensive logistics and fulfillment network, including
warehouses, robots, and delivery services, which shortened delivery times and improved
customer satisfaction.
3. Data-Driven Decision-Making:
Digital Characteristics: The digital landscape provides access to massive amounts of customer
data, which can be analyzed to make informed business decisions.
Strategic Decisions: Amazon has made data central to its strategy, using it to personalize
recommendations, optimize pricing, and enhance customer experiences.
4. Cloud Computing (AWS):
Digital Characteristics: The growth of cloud computing has created opportunities for
businesses to scale their operations efficiently.
Strategic Decisions: Amazon Web Services (AWS) was launched, offering cloud infrastructure
and services to businesses, which has become a significant revenue driver and allowed
Amazon to diversify its offerings.
5. Customer-Centric Approach:
Digital Characteristics: Digital platforms enable direct interaction with customers and rapid
feedback collection.
Strategic Decisions: Amazon prioritizes customer satisfaction and continuously invests in
improving customer service, which fosters customer loyalty and word-of-mouth marketing.
6. Prime Membership:
Digital Characteristics: The subscription model is facilitated by digital technology, allowing for
the creation of services like Amazon Prime.
Strategic Decisions: Amazon introduced Prime, bundling various digital services, such as fast
shipping, streaming, and e-books, which encourages customer loyalty and increases customer
lifetime value.
7. Marketplace Model:
Digital Characteristics: Online marketplaces can scale rapidly and efficiently, bringing together
buyers and sellers.
Strategic Decisions: Amazon embraced the marketplace model, allowing third-party sellers to
list their products on the platform, significantly expanding its product catalog without taking
on the inventory risk.
8. International Expansion:
Digital Characteristics: The global reach of the internet enables international expansion with
relative ease.
Strategic Decisions: Amazon aggressively expanded into international markets, adapting its
offerings and logistics to local conditions, thus broadening its customer base.
9. Innovation and Diversification:
Digital Characteristics: The digital landscape allows for rapid innovation and diversification of
services.
Strategic Decisions: Amazon continually innovates, entering new markets such as groceries
(Amazon Fresh), smart devices (Echo), and entertainment (Amazon Studios), diversifying its
revenue streams.
10. Long-Term Vision:
Digital Characteristics: Digital platforms enable companies to think long-term and invest in
innovation without immediate profitability.
Strategic Decisions: Amazon's management, led by Jeff Bezos, has consistently emphasized a
long-term vision and willingness to forgo short-term profits to invest in growth and
innovation.
In conclusion, Amazon's sustained growth is the result of a strategic alignment with the
characteristics of the digital landscape. Its management team's decisions to leverage these
digital capabilities, continuously innovate, and maintain a strong customer-centric approach
have allowed Amazon to remain a dominant force in the global marketplace.
