Chapter #15 Case

Group #3

Keti Gabunia
Keti Nutsubidze
David Tsiramua
Tornike Samkharadze

BORDERS BOOKS AND AMAZON.COM DECIDE TO DO BUSINESS TOGETHER

Borders Books, the leading chain of bookshop retailers, entered into an agreement with Amazon.com,
the online retailer, to fulfill Internet orders from the Borders.com Web site. Using Table 15.3 and the
following questions, what organizational form would you predict for this business relationship?

Questions & Answers

1. Are Amazon. com’ s warehouses, Web pages, and one-click sales methods fully redeployable to
other products? If so, name a few such products. If not, why not?

Answer: Amazons warehouses web pages and one click sales methods are fully redeployable to
other products being an efficient redeployment durable asset it can be redeployed to other products
also. Some such products can be garments, vehicles etc. It is redeployable like kindle, mobile
phones, other durable goods, books etc.

2. Are Borders’ fixed assets fully redeployable? If so, suggest how. If not, why not?

Answer: Yes. Borders has also one click order system through internet and they have also stock of
their products

3. Is Borders dependent on Amazon as a unique complement? That is, is Amazon .com the only
potential company that could process Internet-based orders for Borders?

Answer: Although Amazon has entered into an agreement with Borders Books to fulfill Internet
orders from the Borders.com Web site. It is not a unique compliment for Borders Books. There is a
possibility that the agreement in which Borders Books entered with Amazon.com to fulfill the
internet orders from the Borders.com Website could have been done by some other website like
Walmart, eBay, Best Buy, Family Dollar, RadioShack.

4. Is Amazon dependent on Borders for referrals, or does it have its own Internet based order
flow?

Answer: Amazon has separate retail websites for several countries with international shipping for
certain other countries and a variety of products apart from books though books are an integral part
of its sale products.

5. Is your answer consistent with the multiyear fee-for-service contract between Borders and
Amazon.com whereby Amazon processes the order, ships the book, records the sales, and pays
Borders a referral fee? One Borders executive described this as a “low-risk, low-return”
approach to online sales while retaining Borders’ focus on its core mission of running
bookshops.

Answer: Yes it will be low return-low risk because Border will get a referral fees and Amazon has
large customer base.