Andrew Walker's Profile
Amy, thanks for the write-up. I’ve been following Amazon closely for years and its interesting to see your analysis.
Personally I find it suspect that Jeff Bezos can one day flip a switch and make Amazon terrifically profitable instantly without fundamentally undermining the company’s culture. Because Bezos essentially wants to penetrate and dominate every possible market available to him AND create new markets, a vast amount of Amazon’s capital and manpower is tied up in long-term projects that may or may not pay dividends for years, if not decades. To me, if the company’s strategic outcome is to own the channel for nearly every product or service for nearly every human being, I think their business and operating models are incredibly synergistic and complementary.
However, if the operating and business models are to make a very profitable company that can grow remarkably fast in perpetuity, I become concerned. The only way to instantly or near instantly become very profitable would be to reduce customer service, increase prices, and/or reduce many long-term high risk projects. There are serious risks to do any of these, as it creates strategic openings for new or existing competitors to exploit. If Amazon has grown so big that it truly owns the retail market for a vast amount of needs and wants for the global product, raising prices could trigger antitrust proceedings. Amazon could become the AT&T and Bell of yesteryear.
I would also like to get your take on how the new regulations being proposed on government internet intervention could sway their business model. Would the new requirements to treat everyone equally retrench Amazon’s competitive advantage, making them even more potent of a competitor? Or could public push back from these regulations reverse them and create paid speedways within internet traffic; how would this affect their operating model?
Very well written and very compelling. A few thoughts on your post:
– It appears that Allergen primarily focuses on the growth by acquisition with little thought of producing products through its own R&D. With acquisitions at a red hot pace, what is the future of Allergen/Pfizer when there are no large acquisitions to be had? Can they sustain the same level of growth by purchasing each year large quantities of small pharmaceutical companies that have 1-2 promising drugs which the small company has bet the farm on? Or will the growth start to plateau as these targets become either too rare or too expensive as Allergen concurrently does not have a significant pipeline of potential drugs?
– Is this position defensible if the United States and other first world economies pass legislation or regulations penalizing companies that do a vast majority of their business in the United States but are headquartered in an economic safe haven? How would the operational and the business models need to change to adapt to this threat?
– How does Allergen so successfully combine the merged businesses? M&A is an inherently difficult and messy process with failures littered across the competitive horizon. Would it make more sense to qualify Allergen’s primary competitive competency as a company that excels not as a pharma company but as an organization that has mastered the M&A process? From your write-up, I would be interested to learn more about how they do so well combining companies and whether their acquired companies are largely shaved of their HR expenditures in favor of keeping the intellectual property. Do they fold the new IP into their current production capabilities and shutter the purchased company’s plants, decreasing the expenses of merging? Or do they keep the full company largely in tact with only redundancies removed? Great post!