Strategic Management Analysis for Amazon

This assignment provides a comprehensive analysis of Amazon's strategic management in the UK market. It uses various frameworks such as SWOT, PESTLE, and Porter's generic strategies to assess the company's strengths, weaknesses, opportunities, and threats. The report also discusses implementation issues such as knowledge of customers and failed products. It aims to provide suggestions for Amazon management to adopt suitable strategies for increasing their market share and growth rate in the UK market.

Amazon Global
Business Strategy
Analysis

Table of Contents
INTRODUCTION...........................................................................................................................1
Internal and External Analysis.........................................................................................................1
Sustainable competitive advantage..................................................................................................3
Recommendations............................................................................................................................5
Implementation issues......................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business strategies are the policies which are developed and implemented for the smooth
functioning of operations and activities of an organisation. Through the help of these strategies,
company can be able to achieve its desired goals efficiently. These strategies plays an essential
role in the development and growth of organisation as well as to increase the performance of
employees for the betterment of organisation. Amazon is taken organisation in this report which
is a retail online selling firm operating their operations all around the world. This report will
analyse the internal and external factors of the Amazon through SWOT and PESTLE analysis.
Further this report will identify the sustainable competitive advantage of Amazon with the help
of Vrio framework. In the end, Strategic recommendations based on SWOT, PESTLE and Vrio
framework analysis will be discussed along with the discussion of implementation issues using
Ansoff matrix.
Amazon is the America based electronic commerce company providing various types of
products and services using their online websites. It is headquartered in Seattle, Washington. The
company is providing cloud, video, artificial intelligence, video and audio downloads/streaming,
software, games, electronics, furniture, toys, and jewellery to their customers worldwide. The
company was established by Jeff Bezos in 1994 and sold its first book in 1995 (Azim and
Hassan, 2013). Following this, the company is one of the biggest e-commerce firm in internet
retail world. The vision of the company is “Our vision is to be earth's most customer centric
company; to build a place where people can come to find and discover anything they might want
to buy online”. For achieving its vision, company has adopted the transparent leadership style
which even reflects its mission statement.
Internal and External Analysis
SWOT analysis
The internal analysis is done with the help of SWOT analysis which is helpful for
determining the strengths,weakness, threats and opportunities which can influence the Amazon
both in negative and positive ways. The SWOT analysis of Amazon is discussed below:
Strengths Weakness
 Amazon has implemented cost
leadership, differentiation, and
 Amazon has adopted diversification
strategy in recent years which leads to
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focus strategies effectively due to
which the company is gaining
enough profit and margin.
 Company is effectively using its IT
and R&D department for staying
ahead of their competitors.
 The logistics and supply chain of
Amazon is very good due to which
they are delivering their products
and services efficiently to their
customers.
loosing its core competence of retailing
books online.
 Amazon is selling mainly on internet and
online websites using free shipping which
is a major weakness as it is loosing its
margin through such strategy.
 Amazon is using zero margin business
model which reduces the profit even when
the sales and revenue is high.
Threats Opportunities
 The biggest threat is the increasing
concern over the online shopping
due to theft and hacking which
leaves the data of its consumers
exposed.
 Because of the aggressive pricing
strategies adopted by company,
various lawsuits are faced by
company which is negatively
effecting the brand image.
 Opportunities is that company can increase
their portfolio of products for increasing the
margin and customers base.
 Great opportunities lies for company in
emerging markets like India in the online
retail industry.
Pestle analysis
This tool is used by the Amazon for determining the various external factors which can
effect the productivity and functioning of the company in the retail market (Borras Jr and Franco,
2012). These factors are discussed below:
Political: These factors focus on the governments activities and their effects on
operations of firm. The government of UK had blocked the amazon operations in past years. But
due to stability in government of UK in recent years has led the organisation to expand in UK
exponentially.
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Economical: These factors include inflation, economic stability etc. which can effect the
company economically (Frynas and Mellahi, 2015). The consumers in UK spend according to
the inflation which is a positive factor for company in improving the sales and margin. With the
increasing globalisation, company has new opportunities for providing new products in the UK
market.
Social: The customers in UK prefers quality based products and also uses online
shopping due to availability of various products at a single place. This has given an opportunity
to Amazon to add new products to their portfolio for increasing the market share and sales. Also
the disposal income level is high in UK which is in favour of company for increasing the
revenues of firm.
Technological: The technology in UK has increased very much along with the use of
social sites and internet. This has given rise to increase in online retail advertisement through
which company can gain high market share by reducing the cost of operations. This rise in
internet usage leads to more social bonding which in return will increase the sales and profit of
the company.
Environmental: The company has opportunities in UK market by reducing the effect of
their operations on environment due to increased awareness of environmental sustainability.
Company is following the environmental rules and laws by reducing the use of sustainable
resources in their operations. Also the company is reducing their environmental waste for
protecting the environment.
Legal: Non availability of regulatory standards like data protection act for e-commerce in
UK is good for the Amazon to expand without any hindrance from government (Grant, 2016).
Several lawsuits are faced by the company in past which are still effecting the company's brand
image. Management needs to ensure that they are following the necessary laws otherwise these
can effects the company again in future.
Sustainable competitive advantage
Porter's generic strategy
This theory is used by the amazon for getting an upper competitive edge in the market
over their rivals. This strategy states the ways to achieve an upper edge in the market over the
competitors by using four strategies for increasing the growth and expansion in the retail industry
of United Kingdom.
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Cost leadership strategy states that firms in any industry should provide high quality
based products to the customers for enhancing the sales and profit of the company in the market
(Hill, Jones and Schilling, 2014). Through this strategy, Amazon is increasing their sales and
growth in the UK market by offering improved quality products. The market share and revenues
are also increasing through this strategy which can provide an upper hand in the market to the
company.
Differentiation strategy states that companies should provide unique and highly
innovated products and services to the customers which are easily differentiated from the
products of rivals. Amazon is also investing a lot of amount in their R&D activities for
introducing such unique products and services. Through this strategy, the market share and sales
of products can increase which is beneficial for the company to sustain in the market as well as
to increase their customer's base. This strategy is beneficial for the company to retain their
customers effectively to purchase the products from somewhere else.
Cost focus states that organisations focus on a niche market i.e. at a particular part of
market to determine the needs and demands of customers for providing them good products at
lower prices possible (Hua, Cheng and Wang, 2011). Through such strategy, Amazon can
provide their products at low prices than their competitor for achieving sustainability in the
market. Through this strategy, the sales of products can increase which in results also increase
the revenue and profit of the company in the UK market.
Differentiation focus states that organisations should offer their products in the market
with some unique and exciting features to distinguishing them from their competitors. By
unique features, customers tends to attract towards the products which will strengthen the
position of the company in the UK market by increasing the sales and revenue of the company.
Through this strategy, Amazon can increase the customers base and market share in the retail
industry of UK.
Through the cost leadership strategy, the company has the required competitive edge in
the market by continuous improvement in their information technology infrastructure and in
research and development for optimising their performance. Through the above discussed
strategies, company is providing their products and services effectively to the customers for
sustaining in the market as well as to retain the existing customers for a long period of time
(Lasserre, 2017). Through the cost leadership strategy, Amazon can provide their products and
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services at the lowest possible price to their end users,which can further increase their customer
base and sales. Also through the strategy of cost leadership, competitive advantage is gained by
the company for supporting the mission and vision statement of Amazon.
Recommendations
Strategic recommendations for the Amazon are discussed using the Ansoff matrix.
Ansoff matrix
This is a tool which is extensively used by the various organisations for planning
effective strategies and policies and offers a structured way to implement the strategies towards
achieving the growth and success in the future time (Laudon and Traver, 2013). Amazon can use
this tool for determining the suitable strategy necessary for their future growth and to improve
the efficiency of their operations. This model provide 4 strategies which will be discussed below:
Market penetration strategy focus mainly on providing the existing products in the same
market at comparatively low prices for enhancing the market share and sales of products. By
using this strategy, Amazon can increase their market share in the online retail industry of United
Kingdom. The sales of products of Amazon is already very high due to which it can reduce the
prices for getting an upper competitive edge in the market. The sales will also increase through
this strategy, so company does not need to worry about the margin as the margin will also
increase with increase in sales.
Product Development strategy states that organisations needs to offer new products and
services within the existing market with some pretty modifications in the quality and features
(Rothaermel, 2015). By improving the quality and features, Amazon can attracts more customers
in the market and also can increase their market share of their products. If adopted successfully,
Amazon can further strengthen their presence and market position in the UK market. Through
adopting this strategy, Amazon can introduce new products in the UK market for achieving more
market share and sales which will positively influence the growth and productivity of the
company.
Market development strategy states that the organisations should offer their products and
services in an entirely new market for expansion and to enhance their customers numbers. When
this strategy is implemented successfully in Amazon, then the company can further expand their
operations and activities in the UK market for increasing their market coverage and also to
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increase the customer base for enhancing the growth and development of the firm in the UK
market.
Diversification strategy states that the organisations should introduce a new product or
service in the entirely new market for increasing their operations, products and services
(Sarstedt, Wilczynski and Melewar, 2013). Through such strategy, Amazon can expand their
reach in other markets also where the online retail industry is performing low due to non
availability of the products and services. This strategy is very risky and requires a huge amount
of investment in research and implementation.
From the above discussed strategies, It can be recommended to the Amazon that from the
analysis of SWOT, PESTLE, Porter generic strategies that the company should adopt
diversification strategy for further expansion and growth in the UK market. Through this
strategy, Amazon can increase their profitability with the help of sales volume obtained from the
newly formed products in new market. Company can expand in a new segment of the retail
industry through this strategy and can increase the market share in that new market. Through
this, the company can improve the quality of their products and services along with the supply
and distribution chain. Company can analyse the current issues related to the supply and
distribution chain, quality of products and operations in the existing market and then can
improve these in the new market.
Implementation issues
While entering in a new market with new products, there are several issues which can be
faced by the Amazon while implementing the recommended strategy. These issues can be related
to Quality, operations, resources, consumer behaviour etc. which can influence the growth and
success of the products and of Amazon in the new market. Management of Amazon must
determine these issues properly and try to resolve them for effective implementation of the
Diversification strategy. These issues are discussed below: Risk: When an organisation introduces new products in the new market then it does not
have the necessary experience and understanding of marketing condition. In this case,
organisations needs to invest heavily in research for gathering the necessary knowledge
or information (Ungson and Wong, 2014). Also due to the lack of knowledge, Amazon
needs to determine the risks as these risks can turn a potentially profit into loss.
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Management of Amazon must determine these risks on the performance of the product
offered in that market. Stakeholder Perceptions: Stakeholders perception is necessary for the growth and
success of the new product in the new market. For this, Amazon needs to analyse the
requirements and needs of their various stakeholders of the new market. As without
having knowledge regarding the buying behaviour of customers, The introduced products
can fails due to not meeting the expectations of customers. Also while recruiting the
employees in the new market, Amazon should identify their needs so that their demands
can be fulfilled for serving the customers with required efficiency. Resource Constraints: These constraints are the barriers which Amazon can face while
implementing the Differentiation strategy. These constraints arise due to not proper
utilising the resources such as infrastructure, manpower, raw materials etc. When these
resources are utilised properly then company can ensure that they will get a competitive
advantage and growth in the new market (Yunis And et. al., 2012). When diversifying in
new market with new product, Amazon may require new skills and competence which is
not available to company for operating in new market. So, management of Amazon
should determine the utilisation of resources in a proper manner for ensuring that the
product will perform good in the market.
 Budget constraints: When introducing a new product in the new market, companies
requires new infrastructure, resources and machinery which is costly and huge amount of
money is required for these. There is no guarantee that the newly introduced product will
perform good in the market and will increase the revenue. So in the initial phase, heavy
investment is needed for manufacturing the product. So management must allocate the
essential budget for controlling these budget constraints.
CONCLUSION
It can be concluded from the above discussed report that the Amazon is a big company in
the online retail industry. The company is using SWOT, PESTLE, Porter's generic strategies for
determining the various internal and external factors which can influence the activities of firm in
getting an upper competitive advantage over the competitors. Through the help of Ansoff matrix,
suggestions are given to the Amazon management in order to adopt suitable strategies for
increasing their market share and growth rate in the market of United Kingdom. The
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implementation issues such as knowledge of customers, failed product etc. are also discussed in
the report for determining the issues related to implementation of suggested strategy.
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REFERENCES
Books and Journals
Azim, R. and Hassan, A., 2013. Impact analysis of wireless and mobile technology on business
management strategies. Journal of Information and Knowledge Management. 2(2).
pp.141-150.
Borras Jr, S.M. and Franco, J.C., 2012. Global land grabbing and trajectories of agrarian change:
A preliminary analysis. Journal of agrarian change. 12(1). pp.34-59.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hua, G., Cheng, T.C.E. and Wang, S., 2011. Electronic books: To “E” or not to “E”? A strategic
analysis of distribution channel choices of publishers. International Journal of
Production Economics. 129(2). pp.338-346.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Laudon, K.C. and Traver, C.G., 2013. E-commerce. Pearson.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education,.
Sarstedt, M., Wilczynski, P. and Melewar, T.C., 2013. Measuring reputation in global markets—
A comparison of reputation measures’ convergent and criterion validities. Journal of
World Business. 48(3). pp.329-339.
Ungson, G.R. and Wong, Y.Y., 2014. Global strategic management. Routledge.
Yunis, M.M. And et. al., 2012. ICT maturity as a driver to global competitiveness: a national
level analysis. International Journal of Accounting & Information Management. 20(3).
pp.255-281.
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