Ben & Jerry's vs Amazon: Contrasting Business Models
Explore the differences between iconic companies Ben & Jerry's and Amazon, analyzing aspects such as history, competition, initial capital requirements, corporate culture, and more to understand the contrasting paths to success in the business world.
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Presentation Transcript
Strategy Letter I: Ben & Jerry s vs. Amazon Phillip Guest November 12, 2014
Introduction Brief History of Ben & Jerry s and Amazon Differences between the two models Spolsky s Advice when choosing a model
Brief History of Ben & Jerrys Began in 1978 Revenue for 1984 was over $4 Million Revenue for 1992 was $132 Million By 2008, annual sales were exceeding $200 Million
Brief History of Amazon.com Founded in 1994 by Jeff Bezos In 2000, began offering e-commerce platform to additional retailers In 2003, reported revenue of $5.26 Billion In 2013, reported revenue of $74.45 Billion
Differences Between Models 1. Established Competitors 2. Network Effect and Customer Lock-in 3. Initial Capital Required 4. Importance of Corporate Culture 5. Learning from Mistakes 6. What Rate of Growth Offers Employees 7. Chances of Success
Established Competitors Ben & Jerry s o Slowly win customers from competitors Amazon o Land grab o Get as many customers as possible before competition shows up
Network Effect & Customer Lock-in Ben & Jerry s o No network effect or customer lock-in Amazon o Works when you have both
Initial Capital Require Ben & Jerry s o Initial investment is low o Reinvest profits to grow Amazon o Large amount of capital required o Substitute money for time to beat competition
Importance of Corporate Culture Ben & Jerry s o Corporate culture is important o Allows for mentorship and adherence to company values Amazon o Corporate culture is impossible o Growing too fast for mentorship o The number of employees means there will be many different sets of values
Learning From Mistakes Ben & Jerry s o Mistakes hurt company o Must learn from these mistakes Amazon o Growing too fast to notice mistakes o Mistakes are easy to cover with money
Growth Rate & Employees Ben & Jerry s o Growth over long amount of time o Translates to job security for employees o Comfortable work space is important to make up for lower wages Amazon o Get big fast o Able to offer high salaries o Hours may be long
Chances of Success Ben & Jerry s o High chance of success o In the event of failure, losses will be low Amazon o High chance of failure o In the event of success, payoff may be great
Choosing a Model Must choose one Choose Amazon if: o No competition o Network effect and customer lock-in Choose Ben & Jerry s if: o Entering an established market o Set goals of sustainability and profitability
Choosing a Model Consider personal values o Which company would you rather work for? Stick to choice o Cannot be both
Conclusion History of Ben & Jerry s and Amazon Differences between models Guidelines when make the choice
References http://www.joelonsoftware.com/articles/fog0000000056. html http://www.benjerry.com/about-us http://www.entrepreneur.com/article/197626 http://phx.corporate- ir.net/phoenix.zhtml?c=176060&p=irol-factSheet http://www.nasdaq.com/symbol/amzn/revenue-eps http://www.forbes.com/sites/ryanmac/2014/06/05/bezos -net-worth-rises-1-4-billion-on-rumors-of-3-d-amazon- smartphone/
