Understanding the Organizational Strategies and Business Model of Amazon

This report provides an overview of the organizational strategies and business model of Amazon, including its vision, mission, core values, and current strategies. It also offers recommendations for future growth and success.

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BUSINESS REPORT
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Executive Summary:
The purpose of the report is to understand the organizational strategies and business model of
Amazon. The paper discussed about the elements like vision, mission, core values and current
business strategies of Amazon. The paper highlighted the segmentation strategies, operational
plan, marketing strategies and innovative purpose. The strategies of Amazon is based on
customer-centric approach with a simple and inventive operational plan. Amazon believes in
working backward, shaping and structuring product development plans by understanding
customer preferences. The paper presented recommendations such as, focus on service
offerings and categorization of b2b and b2c business as well as the investment completely in
logistic and warehouse units for merchandise.

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Table of Contents
Introduction................................................................................................................................3
Organization’s strategy:.........................................................................................................3
Vision statement.................................................................................................................3
Mission statement...............................................................................................................4
Core values.........................................................................................................................4
Criteria for accomplishing Amazon strategies:..................................................................5
Current strategies of Amazon:...........................................................................................6
Business Model:.....................................................................................................................7
Recommendations......................................................................................................................9
Conclusion................................................................................................................................10

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Introduction
A sum of initiatives and actions adopted by organization for the purpose of
accomplishing long-term objectives is known as organizational strategy. The planned actions
and initiatives comprises the strategic plan of organization. For executing organizational
strategies, involvement and contribution of employees from all levels are crucial.
Organizational strategies includes the vision and mission with the strategies regarding
establishment, growth and market need attainment. Business model of an organization
depicts the purpose of creating, executing, and value proposition in the cultural, social and
economic aspects. Business model of organizations includes all functional areas and growing
procedures. A business model serves the purpose of reflecting a complete description of the
core functions including, processes, purpose, offerings, target audience, infrastructure,
strategies, operational process and strategic infrastructure. The main purpose of the report is
to present an overview of the organizational strategies of Amazon and reflecting the functions
of organization for sustaining in the market by the depiction of Amazon’s business model. In
this paper, the summary of the recommendation will be provided that will determine market
opportunities for future of Amazon. The paper will be concluded by summarising the
organizational strategies and business practices of organization.
Discussion
Organization’s strategy:
Vision statement- The vision is “to be Earth’s most customer-centric company, where
customers can find and discover anything they might want to buy online, and endeavours to
offer its customers the lowest possible prices”.
The vision of Amazon is concentrated on the values of global reach, wide selection and a
strategic customer-centric approach. The vision of accomplishing ‘global reach’ by Amazon

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is facilitated for global leadership in e-commerce market (Amazon.com 2019). For Amazon,
their target customer is the whole world, as it includes a wide range of offerings for each and
every need. Amazon adopts product development, market development and market
penetration strategy for reaching to the goal of global expansion. Customers are considered to
be the most important stakeholders for Amazon, which is the reason for their customer-
centric approach in the operational process of online platform. The business growth and
development of Amazon is accommodated through widening the offerings in each product
mix element.
Mission statement- The mission is “to serve consumers through online and physical stores
and focus on selection, price and convenience’.
The corporate mission of Amazon is to ensure attractive services from e-commerce and
physical presence for satisfying the demand and needs of customers. The focus of Amazon is
directed towards the elements of convenience, price and selection. The ‘low price’ strategy of
Amazon is used as the step of building competitive strategy amongst competitors (Bell et al.
2015). Low price of the products in Amazon is facilitated through the initiatives of reducing
operational costs. The low cost strategy of Amazon is majorly linked with the value
proposition of wide variety of selection. Amazon includes a wide range of brands and
suppliers for responding to varying needs and desires of customers. The wide range
accommodate the options of selecting products based on customer preference, which may be
price, quality or specific feature (Welch 2015). The feature of convenience is accommodated
through online and offline presence, reaching out to mass population across the globe.
Core values
The core values of Amazon are Customer Obsession, Bias for Action, Ownership,
Invent and Simplify, are right, a lot and think big. The core values of the company also

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includes hire and develop the best, frugality, insist on highest standards, earn trust of others,
deliver results, vocally self-critical, dive deep and have backbone; disagree and commit. The
core values and principles are similar.
The core value of customer obsession is achieved by the practice of leaders, who
works backwards by first concentrating on customer. Amazon believes in addressing
customer needs more than competitors’ strategies (Zhu and Liu 2018). The ownership at
Amazon is primarily directed towards leaders, who focusses on long-term goal. Another main
core values is invent and simplify. The lower prices and customer satisfaction of customers
are executed by innovative measures and simplifying the operational process (Stummer,
Kundisch and Decker 2018). The core value of hiring and developing the best is achieved by
employing exceptional talent with the practice of coaching employees for moulding and
developing skills of employees. Amazon always believes in thinking big for targeting mass
population. Bias for action is accommodated through the action of accepting calculative risk.
The core value of Amazon also includes frugality, which believes in accomplishing more in
less resources. The practices of invention, self-sufficiency and resourcefulness leads to the
principle of frugality.
Criteria for accomplishing Amazon strategies:
 Knowing customer: Understanding the customers’ need and demand majorly supports
the success of Amazon. Amazon studies consumer buying pattern to personalize the
account on Amazon. Amazon offers a wide range of products for addressing the
potential needs and demand of mass population.
 Maximizing data: The data collected from the buying or searching pattern of the
customers in online platform is utilized strategically for constructing personalized
experiences for customer. Behavioural insights are assessed through buying pattern,
search analysis and data from customer feedback (Wegmann et al. 2018).

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 Obsession with customer service: Customer-centric approach leads Amazon to the
path of success and every functional processes in the company.
Current strategies of Amazon:
 Prime as hub of wheel- The strategy of incorporating a segment of Amazon prime was
planned based on the initiative of expanding the value proposition, by offering free
shipping option. According to report of Jeff Bezos, Amazon prime reached the goal of
100 million prime subscribers in the year 2018. The data depicted one of the greatest
establishments in the field of customer loyalty. Currently Amazon Prime offers free
shipping on various eligible orders, streaming videos and movies, exclusive deals,
reading offerings and free-same day offers on eligible codes.
 Fuelling small businesses: For the construction of a wide product range, Amazon
includes numerous suppliers or businesses. The relationship of Amazon with the small
business is complete mutual as the small businesses are suppliers and stakeholders for
the company and the small businesses depends on Amazon for reaching end
consumer.
 Supply chain operation and home delivery: The whole supply chain process of
Amazon is focussed on the objective incorporating convenience. Amazon is handling
own shipping processes for around 26 percent orders, as per Wolfe Research (Gavrić,
Kirin and Čukanović-Karavidić 2016).
 Growth strategy- Amazon follows the strategy of product development, market
development and market penetration for a wider reach. Amazon have grown in terms
of sales and reach by 160 percent, 232.88 billion dollars in the year 2018
(Edition.cnn.com 2019). The 160 percent growth was based on the data of 2014, 89
billion dollars. From 2017 to 2018, the revenue growth was around 31 percent.
Amazon originally started by selling books, followed by growing through products

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from every segment and value (Rossman 2016). However, technology was only used
in the selling platform (e-commerce) and in the supply chain process. The company
Amazon is dedicated towards increasing the value offerings for building customer
experience. The growth strategy of Amazon includes incorporating advanced
technology of Artificial Intelligence in its own product line, Alexa. Amazon have
undergone product development, market development and product development by
entering into pharmacy industry.
 Targeting strategy- The target strategy of Amazon is very unique as it targets
everyone and anyone from the world with its wide options and low cost strategy.
Business Model:
Amazon is considered as largest e-commerce business in world. The business model
of Amazon is completely based on customer-centric approach and practice of incorporating
innovation and simplicity. The business model of Amazon can be explained in phases of
development. Amazon is based on the strategy of directly selling to the consumers. The
company stores its merchandise and inventory in the warehouses of Amazon, from where a
percentage of products are sold through online platform depending on the demand of
customer. The buying behaviour of customers is influenced by the wide range of products
and varying prices, which presents an option for consumers to select desirable product in
accordance with their preferences. In association with the strategy of direct sales, the
company offers a platform for numerous businesses (both small and large) for the purpose of
selling products directly to the end users (Aversa et al. 2015). The company does not charges
fee from retailers partners for listing their products but charges an amount after the item is
being sold. Amazon charges 0.00 dollars from individual seller for every item sold in
Amazon with the additional flexible closing fees from 0.45 dollar to 1.35 dollars. Amazon

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charges around 6 percent to 25 percent closing fees from the professional sellers (Bocken and
Short 2016). The Business model also categorizes its customer group into two segments,
regular customers and customers with subscription. The function of customer segmentation in
Amazon Prime is incorporated due to the purpose of stimulating customer loyalty. Amazon
also offers own brand products like Kindle, e-books, Alexa, accessories and Kindle (Dolata
2017).
The operating model of Amazon was completely based on the customer-centric
approach. The company have marked a record in sales in the last five years, 232.88 billion
dollars in the year 2018. The operating model of Amazon is based on the long-term objective
of attracting and retaining customers by continual motivation (Massa, Tucci and Afuah
2017). Amazon have completed around 25 years in business and have firmly maintained its
competitive position by establishing fundamental components including, operating model
based on customer-centric approach and value proposition by exclusive offerings,
experiences and services (Trkman, Budler and Groznik 2015).
Amazon have divided the consumer market into four categories, geographic,
demographic, psychographic and behavioural. Amazon targets more than 100 countries, both
urban and rural regions. The demographical elements that are targeted by Amazon are people
with age group of 13- above, both females and males. The lifecycle stage targeted by
Amazon are teenagers, bachelors, newly married couples, full nest I, full nest II, full nest III,
empty nest I, empty nest II. The behavioural segments that are targeted by Amazon are hard
core values, regular and switchers, the people who finds value on variety, competitive price,
and convenience in online shopping, people who are easy going, ambitious and determined.
Psychographic elements included in target group are all social classes, aspirer, explorer and
struggler.

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The marketing strategies of Amazon includes, wide range of offerings, customer-
friendly interface, simpler distribution strategy of selling directly to customers and utilizing
extensive customer information for customizing experiences.
The product development approach of Amazon is based on the strategy of backward
approach. The strategy of ‘working backward’ focussed completely on customers. The step of
framing product development strategy is developed through the first phase of understanding
customer demand, buying behaviour and searching pattern. All the other operational and
marketing process is followed after understanding customers.
The innovative practices of Amazon is embedded into the business model of the
company. After the establishment of the company, e-commerce company. The innovative
journey of Amazon can be witnessed from the growth timeline in Amazon (Garner 2018).
The company started from selling books to selling its own products, Kindle, Alexa and
accessories. From simply selling books to incorporating Artificial Intelligence, the company
have marked a long way (Lichtenthaler 2018). The innovative practices are based on the
principle of working backwards and innovation in internal environment by shaping employee
involvement based on understanding of customers.
The growth strategy of company involves, market development like Amazon
Pharmacy, product development like Kindle, Alexa and market penetration by offering
varying price ranges.
Change management in Amazon is completely based on customer-centric approach
and co-creating processes with well-trained skilled employees. The implementation plan of
Amazon is directly focussed on end users.

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Recommendations
o One of the opportunities for Amazon is completely owning warehousing and logistic
units for decreasing the operational cost by the strategy of backward integration.
o Another opportunities lies in expanding its service offerings, introduction of self-
check-in counter technology can be a revolution in the market.
o The company also has opportunities in B2B segment, by categorizing the product and
service offerings
Conclusion
Therefore, it can be concluded by the paper that organizations should learn from the
evolution of Amazon as it is completely based on working from backwards. The development
of products, idea and/or idea starts with a comprehensive understanding of the target market.
Companies should learn to keep the operational process simple yet inventive for addressing
the increasing competition. Amazon has adopted every step of accomplishing the current
position from learning from customer data for behavioural insights to incorporating Artificial
Intelligence products. However, Amazon should recognize the changing business
environment for opportunities. The opportunities that has been recommended for future are,
equal concentration on B2B businesses and service offerings. Amazon should also invest in
complete company-owned logistic and warehousing units.

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