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Diversification Strategies

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Diversification Strategies
Diversification strategies are strategies used by companies to try to increase profitability through greater sales volumes obtained by new products and/or services. Amazon.com has diversified quite a bit since its conception in 1995. Starting out as an online bookstore, and evolving into a one stop e-shopping hub where millions of people shop for a variety of different items over the internet. Amazon.com today is one of the largest online retailers in the world. However, when companies try diversification strategies they are not always as successful. Time Warner, one of the largest media companies in the world tried to diversify their business by stepping into unknown territory in 2000. When Time Warner purchased AOL at the peak of the dotcom bubble era, they had no idea that they were going to lose billions of dollars due to the acquisition. In 1994, Jeff Bezos founded Amazon.com, and in 1995 the website went online. Before Amazon.com was founded, Jeff Bezos was paying very close attention to the rapid rise of the World Wide Web, stating in 1994 that it was growing at an annual rate of 2,300 percent. When Bezos decided to create an internet based company, he began doing his research by creating a list of the top 20 mail-order companies, and realized there were no book mail-order companies. Bezos parents supported his new business idea, and invested $300,000 they had saved for retirement to help get their sons company started. When Amazon.com went online in 1995, the company simply started as an online bookstore. While some of the largest brick-and-mortar book stores across the United States could offer its customers thousands of books, Amazon.com could offer its customers much more through its website (References for Business). After operations began successfully in Jeff Bezos garage, Amazon.com became such a popular website on the World Wide Web, it moved to its first warehouse in Seattle. At first, Amazon.com only carried about 2,000 different


References: Arango, T. (2010). How the aol-time warner merger went so wrong. Retrieved from http://www.nytimes.com/2010/01/11/business/media/11merger.html?pagewanted=all Funding Universe. Amazon.com, inc. . Retrieved from http://www.fundinguniverse.com/company-histories/Amazoncom-Inc-Company-History.html Johnson, T. (2000). That’s aol folks…. Retrieved from http://money.cnn.com/2000/01/10/deals/aol_warner/ Kramer, L. (2009). Why the AOL-Time Warner Merger Was a Good Idea. Retrieved from http://www.thedailybeast.com/articles/2009/05/04/how-time-warner-blew-it.html Levy, A. (2011). Facebook’s value tops amazon.com; trails only google on web. Retrieved from http://www.businessweek.com/news/2011-01-28/facebook-s-value-tops-amazon-com-trails-only-google-on-web.html Lopes, J. (2011). The pros and cons of amazon’s growth and diversification. Retrieved from http://jananomba.blogspot.com/2011/06/pros-and-cons-of-amazons-growth-and.html Reference for Business. (Encyclopedia of Business, 2nd ed.). Jeff Bezos 1964— biography. Retrieved from http://www.referenceforbusiness.com/biography/A-E/Bezos-Jeff-1964.html
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