Strategic Management for Amazon: Evaluation of Competitive Strengths and Strategies for Competitive Advantage

This report evaluates the competitive strengths and market position of Amazon and suggests strategies for gaining competitive advantage through Porter's Generic Strategy. It also includes a reflection on the learnings from the report.

Strategic Management

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
PART A(1) Critical evaluation of the performance of your selected company by highlighting
its competitive strengths, market position and areas where improvement across the value
chain may be required............................................................................................................1
PART A(2) Strategic plan for Amazon with the help of appropriate tools to explain and justify
strategic choices to get competitive advantage......................................................................2
PART B Reflection.................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
Strategic management refers to the setting of an organisation's resources in order to
achieve its objectives by analysing its competitive environment, evaluating strategies, analysing
internal organisation and that management rolls out strategies across organisation. Amazon is an
E-commerce cloud computing and digital streaming and artificial intelligence platform that was
established in the year 1919-95 and headquartered at Seattle, Washington, US. The report will
cover an evaluation of performance of the company highlighting its competitive strength and
areas where it requires improvements. Moreover, it will explain about the strategies to gain
competitive advantage and get ahead of competition.
The competencies for Amazon has been identified as customer convenience and
accessibility, variety of products, customised services, superb web content and quality of web
through search engine optimisation. Amazon is building its competencies through online market
development based on customer needs and use of internet technology for secure payments and
make it easier for the customers to use it.
MAIN BODY
PART A(1) Critical evaluation of the performance of your selected company by highlighting its
competitive strengths, market position and areas where improvement across the value
chain may be required
Porter's Competitive Strategies
Gaining a competitive advantage over rivals or competitors can help Amazon to gain the
opportunity to improve its value chain (Bart, Chernonog and Avinadav, 2021). Amazon is among
the largest online retailers and is indeed a pioneer in the online retail sector,starting with the
online selling of books it diversified into selling everything online. The company has expanded
globally and operates around the world through a combination of localised portals and globalised
delivery and logistics platforms. The amazon has utilised technology as a source to increase
competitive advantage and leverage the synergies between its internal and external drivers to
imitate and improve its business model. Amazon's generic corporate strategy can be describes as
concentric diversification as it expanded itself in the technological field and moved ahead of its
rivals (de Paula and Fabri, 2021).
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In the world of e-commerce, Amazon is among the undisputed leaders with highest
margins because of changing customer's behaviour in 2020. A study by Sales-force showed that
the customers had switched 60% of their shopping through online stores and even believe they
will do more online shopping in future. It is predicted that the Amazon will cover 50% of the
entire e-commerce retail market this year and still have opportunities for growth. E-commerce
accounts for 14% of total retail business in 2020, according to the data provided by US Census
Bureau. The Amazon still leads in the logistics sector for online delivery with its delivery options
within 2 days with its own fleet delivery vehicles, huge warehouses and faster delivery
(Ginanneschi, 2021). Amazon has been among the most favoured by its Loyal customers who are
the support for its continuous growth. The Amazon continues to create value for its customers
and be at the top of their mind by generating products of value to attract customers such as
Amazon Prime, Prime Reading, Amazon Fresh, etc. Many of the global companies has
acknowledged Amazon as a key direct-to-customer channel and a potential extension of their
website.
PART A(2) Strategic plan for Amazon with the help of appropriate tools to explain and justify
strategic choices to get competitive advantage
The Amazon has adopted three main strategies of Porter's Generic Strategy for gaining
competitive advantage, which are cost leadership, customer differentiation and focus strategy
(Icaza, Borge-Diez and Galindo, 2022). Porter's Strategic model describes two ways of achieving
competitive advantage, either by differentiation or by cost. It also identifies two ways for
targeting the market, by focusing on a particular market sector or appealing to the macro market
area as a whole. This approach results in four separate competitive strategies: overall
differentiation; overall low costs; focused differentiation and focused low cost. The fifth element
combines the low cost and differentiation which is also called integrated approach. The first
strategy is based on the offer made by Amazon that produces same quality products with lower
price than the market, another strategy is related to differentiating the customers on various basis
(Juan Rivera PhD, 2021). At the end is the third one that focused on the niche market through
applying any of the two strategies. The Amazon's values affects positively to the competitive
advantages which are due to its strong values, customer satisfaction and operational frugality,
these two factors complement Amazon's operational approach in obtaining and sustaining an
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effective competitive benefit and boosts performance of employees and the firm. Due to its cost
saving approaches towards paying less base salary to its employees with respect to its
competitors it focusses much more on expansion of its business and branding (Manko, 2021).
The company maintains its employee's loyalty through the distribution of the company's shares
among the employees. By doing so, it wants to convey the message to the employees that when
the company is going to be benefited and earn profits. The strategic initiatives for Amazon is
target multiple categories through the technology up-gradation. It applies segregation, growth
and novelty through alliances (Muralidharan, 2021). It highlights building sales volume and
externally while externally while minimising the costs internally which makes it more difficult
for competitors to attack. The success of the Amazon is High which means it may be followed by
other firms in future and with the change in the vision of Amazon to be the earth's largest book-
store to the earth largest selection.
The internet business of Amazon is very positive and growing business for the company
and it has also been the major seller of products online across the global online retail sector. The
sufficiency of required information is a key to sell the products effectively and efficiently
therefore, Amazon handles its products precisely and make them available to the customers on
time, with quality and variety of payment options. The company brought its online selling when
the graph of dot com bubble was at peak and constantly rising, which gave it the opportunity to
continue its business in far better ways (Rozhkova and et. al., 2021).
Amazon's generic strategy is cost leadership in a broad market segmentation and is also
suited to the companies with large market coverage and varied socio economic backgrounds.
Amazon has a very broad market segmentation, both global ,market and broad range of products
hence, its market segmentation is broad along with socio-economic background that makes a cost
leadership generic strategy. This strategy has been effective for Amazon even when the
competitors exists, most of them cannot imitate the strategy that Amazon follows.
Amazon generic strategy is cost leadership in a broad market segmentation, but the
company also uses differentiation. The company's differentiation strategy is swift delivery
services along with more products and services than its competitors. The another way it uses
differentiation is use of cutting edge technology (Soong and Tan, 2021). That is used for both the
consumers and producers. Amazon provides its online platform for shopping and quick delivery
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of nearly every product of the market due to its ability to cover more market share than profits by
balancing its financial and strategic objectives.
The last strategy the Amazon uses is unrelated diversification, by entering into existing
market such as, it is looking forward at the pharmaceutical delivery sector for an existing market.
Amazon's market penetration started with its online book store growing and expanding to the
biggest online retail store to offer everything. Their market development started in the US and it
diversified in many countries across the globe. The next move of Amazon was to enter European
and Asian countries like India and expand in their market (Wilson and Goffnett, 2021). The US
is the Amazon's biggest market and Japan is the fourth largest market for Amazon. Amazon has a
competitive advantage of low prices, variety, delivery and their adaptability.
The company that started as an online book-store and has transformed into a mass online
retailer using one competitive advantage adaptability. Amazon has a competitive advantage of
fulfilment from their logistics services to the importance of consumer goods being sold. The
Amazon is constantly increasing its market share and has diversified across the global market
retail sector and has a large price because of value. Integrated strategy in the highly competitive
market could be helpful to provide customers with distinction or low cost products. Amazon
strives to show more value than the average competitor but also to focus on keeping the costs
low. The approach was risky but it worked successfully with Amazon due to its implementation
proper use of this strategy in the global market. The amazon business strategy study complies the
idea, technology, innovations, inventions, partnerships and strategies that are crucial for growing
amazon as the biggest e-commerce, online platform.
Justification of Strategic Advantages
Amazon's innovative approach of online marketing doubtfully put it in the fore front in
terms of cost leadership. But the company needs to look for other ways of obtaining the
competitive advantages as well. The competitors are also finding the ways to achieve the cost
optimisation to compete with such a giant. Even this technology is not that secure in the long run
seeing the adoption of advanced technology by many other competitors. Amazon needs to look
for not only maintaining its existing customer base but also needs to look for market niche by
constantly analysing the threats of its close competitors (Zaramenskikh and Oleynik, 2021). The
another priority for the comp-any is to keep its skilled workforce engaged and don't let them go
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out therefore, it should constantly look after its employees and fulfil the deficit of the
remuneration. At the end, the key focus of the firm should be the innovation and adapt to the
rapid changes in the global market and it will definitely remain as the market leader in the e-
commerce business. Amazon was ranked at 8th in 2018 Fortune 500 list, then at 5th in 2019 and at
2nd in the 2020 list thereafter, it was continuously on coveted list each time with a rank better
than previous year.
Amazon placed ecosystems at the core of its strategy which consists of merchants, app
developers, publishers, analysts, writers, app developers and journalists who creates the word for
Amazon platform. Another strategy was customer derived selling and customer orientation for
selling its products and generate higher revenues. The company also focused on improving
human resource because thy are expected to take on heavy wok-load, when they are with the
good quality leaders.
PART B Reflection
From the above report I had learnt about the Amazon company which is a multinational
e-commerce, online digital streaming and artificial intelligence company established in the year
1919-96 and headquartered at Seattle, Washington, US. TI had understood about competitive
strengths, market position and improvement across value chain that may be required to expand
and have competitive advantage. I had learnt that Porter's Generic Strategy can be adopted by an
organisation especially for gaining competitive advantage, consisting of strategies such as cost
leadership, customer differentiation and focus strategy. I had learnt about Porter's Strategic
model describes two ways of achieving competitive advantage, either by differentiation or by
cost. It also identifies two ways for targeting the market, by focusing on a particular market
sector or appealing to the macro market area as a whole. I have learnt about the various strategies
for gaining competitive advantage. I have learnt about the practices that could be adopted for the
improvement of business and get ahead of competition. This would be beneficial for me while
working within an organisation and take it to the greater heights of success.
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CONCLUSION
The report had been explaining about strategic management practice which refers to the
utilising of an organisation's resources in order to achieve its objectives. It is done by analysing
its competitive environment, evaluating strategies, analysing internal organisation and that
management rolls out strategies across organisation. Further, the report had been evaluating the
performance of an organisation by highlighting competitive strengths, market position and areas
where areas where improvement across the value chain may be required. Moreover, the report
had been evaluating the porter's generic strategy to help the company to gain competitive
advantage. At the end, an reflection of self ability and ability enhancement after the career
development is given.
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REFERENCES
Books and Journals
Bart, N., Chernonog, T. and Avinadav, T., 2021. Revenue-sharing contracts in supply chains: a
comprehensive literature review. International Journal of Production Research, 59(21).
pp.6633-6658.
de Paula, D. G. and Fabri, L. B., 2021. Public finance, taxation, and environment post-Covid-19:
perspectives for Brazil. In Environmental Taxation in the Pandemic Era. Edward Elgar
Publishing.
Ginanneschi, M., 2021. Long-term strategic thinking, the Themis method and the future of
food. Technological Forecasting and Social Change, 165. p.120468.
Icaza, D., Borge-Diez, D. and Galindo, S. P., 2022. Analysis and proposal of energy planning
and renewable energy plans in South America: Case study of Ecuador. Renewable
Energy, 182. pp.314-342.
Juan Rivera PhD, C. P. A., 2021. STRATEGIES FOR GLOBAL OPERATIONS. Strategic
Finance. 102(7). pp.46-53.
Manko, B. A., 2021. Big data: The effect of analytics on marketing and business. Journal of
Information Technology Teaching Cases. p.20438869211057284.
Muralidharan, K., 2021. Achieving and Promoting Lean, Green, and Clean Quality Objectives.
In Sustainable Development and Quality of Life (pp. 203-214). Springer, Singapore.
Rozhkova, D. and et. al., 2021, October. Brand Valuation of the Russian Bank: Interbrand
Model. In The 2018 International Conference on Digital Science (pp. 219-230). Springer,
Cham.
Soong, G. H. and Tan, C. C., 2021, November. Sentiment Analysis on 10-K Financial Reports
using Machine Learning Approaches. In 2021 IEEE 11th International Conference on
System Engineering and Technology (ICSET) (pp. 124-129). IEEE.
Wilson, M. and Goffnett, S., 2021. Reverse logistics: Understanding end-of-life product
management. Business Horizons.
Zaramenskikh, E. and Oleynik, A., 2021. Design Patterns for Digital Platforms. In Digital
Transformation and New Challenges (pp. 109-123). Springer, Cham.
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