Stihl is a manufacturer of chain saws and other similar power tools. It has been shunning big retail chains like Home Depot and selling primarily through small retail shops. It has been doing well.
Recently, however, the growth and popularity of online market platforms such as the Amazon
Marketplace – where manufacturers can sell directly to consumers if they choose – has created both opportunities and threats to manufacturers such as Stihl.
Review the attached documents about the platform business model, Stihl, and Amazon. Suppose that you were a strategic consultant and Stihl hired you to evaluate whether it is worthwhile for Stihl to use the Amazon Marketplace to sell its power tools. Your analysis and answers will be considered by Stihl’s CEO as he develops company’s strategic planning for the next five years.
Based on information in the provided documents, please answer the following three questions.
1. What are pros and cons of Stihl using the Amazon Marketplace to sell its tools?
2. Based on your analysis, what would be your recommendation to Stihl on whether to use the Amazon Marketplace?
3. Might any changes in situation – such as increasing competition, change in product quality, or
change in its customer base – lead you to reverse your recommendation or call for a different approach?
Attached here are five documents.
1. Rothermeal, F. T. (2019). Business Strategy: Innovation, Entreneurship, and Platforms. Strategic Management, 4th Edition. Dubuque, Iowa, McGraw-Hill Education 249-253.
2. Stock, K. (2014). Stihl Chain Saws Thrive Outside the Big Box. Bloomberg.
3. Marketplace-Pulse (2019). Marketplaces Year in Review 2018, Marketplace Pulse.
4. Danziger, P. N. (2018). Thinking of Selling on Amazon Marketplace? Here Are the Pros and Cons. Forbes.
5. Greene, J. (2019). Amazon Tests Pop-up Feature Touting Its Lower-Priced Products. Wall Street Journal.