Competitive Advantage of Amazon through VRIO - Business Management

This article discusses the competitive advantage of Amazon through VRIO analysis. It also includes a SWOT and PESTEL analysis, current corporate level strategy, and strategic recommendations.

Running head: BUSINESS MANAGEMENT
BUSINESS MANAGEMENT
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Table of Contents
1. Background to Amazon...............................................................................................................2
2. Competitive advantage of the organization through VRIO.........................................................2
3. Core competency matrix..............................................................................................................4
4. Current Corporate level strategy of the organization..................................................................5
5. Identification of issues through external and internal environments of the organization............5
5.1 SWOT analysis......................................................................................................................5
5.2 PESTEL analysis...................................................................................................................6
5.3 Issues that are faced by the organization...............................................................................7
6. Strategic recommendations..........................................................................................................7
7. Conclusion...................................................................................................................................8
References........................................................................................................................................9

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1. Background to Amazon
Amazon is an American e- commerce and cloud computing organization, which was
founded by Jeff Bezos in the year 1994. The strategic growth of the organization depended on
the long term vision of the investors. Product diversification and the growth of the customer
base of the organization helped in enhancing the sustainable expansion of the business in
different economies. The quick development of the organization depended on the dedicated
innovation in the line of cloud infrastructure services through the creation of AWS (Amazon
Web Services) (Amazon.com., 2018). On the other hand, the wide range of commodities that are
provided by the organization has helped in supporting the growth process of the same while
operating in diverse international markets.
2. Competitive advantage of the organization through VRIO
Capabilities of
the
organization
Valuable Rare Inimitable Exploited Implications
Brand image Yes Yes Yes Yes Competitive
advantage
Diversificatio
n of the
products
Yes Yes No Yes Temporary
advantage
Vertical
integration
Yes Yes No Yes Temporary
advantage

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Continuous
innovation
Yes Yes Yes Yes Competitive
advantage
Huge range of
products
Yes Yes Yes Yes Competitive
advantage
Brand image
The competitive edge of the concerned organization, Amazon, is dependent on the brand
image of the business in the international markets through increasing the quality of products and
assurance that is provided by the same resulting to customer loyalty. The customer loyalty of the
organization has helped the business in maintaining their sustainable position in the competitive
markets where players like Alibaba and Walmart. The enhanced brand image of the organization
has helped the same in enhancing the sales units facilitating the profitability of the venture
(Amazon.com., 2018).
Diversification of the products
The organization has undertaken a product and service diversification strategy which has
added to the competitive edge of the same in the competitive markets. The organization has
taken steps to identify the needs of the customers in order to position the product and service
offerings, which has added to the competitive edge of the business. However, the products that
are positioned by the organization are imitable in nature, which has affected the trust factors
among the customers (Amazon.com., 2018). However, the imitable products and services have
affected the brand image of the organization which has also affected the propositions of the
business.

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Vertical integration
The organization undertakes vertical integration strategy in order to ensure the wider
range of product and service offerings of the same as per the needs of the customers in the
different international markets.
Continuous innovation
Continuous innovation in the processes of the business has helped the same in gaining a
competitive advantage over the other market players. The technological innovations that are
undertaken by the business through the formulation of AWS and the integration of the AI in the
portals has helped the business in identifying the demand and controlling the same through
suitable supplies (Amazon.com., 2018). The technological innovations that are undertaken by the
organization has helped the same in maintaining the smooth functioning of the processes.
However, the imitable nature of the technological innovations that are made by the organization
has affected the position of the business in the market.
Huge range of products
The wide range of products that are offered by the organization has helped the business in
enhancing the sales volume. On the other hand, the different aspects of change that are
undertaken by the organization are based on the product differentiation strategies that are framed
by the business in order to compete with the other market players. The wide range of product and
service offerings of the business has helped the same in attracting the attention of huge amount
of consumers, which has helped the organization in improving their market position.

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3. Core competency matrix
Existing market New market
New competencies  Speed of delivery
 Building on the strong
bonds with the
distributors
 Emergence of different
disruptive technologies
 Fierce competition
among the market
players
Old competencies  Higher prices related
to the competitors
 Identification of the
needs of the customers
 Entering into
international markets
(Amazon.com., 2018)
4. Current Corporate level strategy of the organization
The concerned organization aims at undertaking different operations through the
formulation of different strategies. The section will be focusing on the identification of the
current corporate level strategies that are undertaken by Amazon.
 Amazon focuses on the long term vision of upholding the sustenance of the business
while competing in the different international markets (Amazon.com., 2018)
 The wide range of products and services and product differentiations strategy of the
organization has helped the same in maintaining a huge customer base of the business

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 Competitive pricing strategy and cost leadership strategy of the organization has helped
the business in enhancing the operations through attracting the attention of the customers
towards the wide range of product offerings
5. Identification of issues through external and internal environments of the organization
5.1 SWOT analysis
Strengths
 Huge variety of products
 Customer centric business initiatives of
the organization
 Strategic acquisitions
 Developments in the IT and E-
commerce retailing industry
 Efficiency of the delivery networks
(Amazon.com., 2018)
Weaknesses
 Imitable nature of the products that are
offered by the organization
(Amazon.com., 2018)
 Maximization of core competencies
 Issues in the stakeholder management
Opportunities
 Expansion in the developing economies
 Investing in brick and mortar stores
Threats
 Lower profit margins of the
organization
 Threat of new entrants and substitutes
in the operating markets
 Fierce completion in the e- commerce
markets

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5.2 PESTEL analysis
Political Free trade policies in the developing economies has
helped the organization in undertaking a
spontaneous growth
Economic Economic growth in the emerging markets like
china and India (Amazon.com., 2018)
Social The shifts in the retail marketing to the e-commerce
businesses has helped in the growth of the
organization in different economies
Technological The utilization of Big data and AI technologies will
be helping the organization in enhancing the
operation of the same in different developing
countries (Amazon.com., 2018)
Legal The implementation of General Data Protection
Regulation has helped the organization in
maintaining the efficacy of the data security
Environmental Sustainability practices of the organization helped
in the growth process of the same as per the
environmental regulations
5.3 Issues that are faced by the organization
The issues that are faced by the organization are being enumerated in this section of the
discussion:

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 Issues in stakeholder management in the business process has affected the smooth
functioning of the business units
 Fierce competition in the e- commerce industry from Alibaba and Walmart
 Lower profit margins of the organization affected the sustainable operations of the same
6. Strategic recommendations
The strategic recommended actions that might be undertaken by the organization are:
 Encouraging the involvement of the stakeholders in the processes that are planned by the
business and managing the same through better communication
 Establishing suitable marketing techniques in order to sustain in the competitive markets
 Revising the pricing structure that is imposed by the organization on the products and
services will be helping the same in enhancing the profitability of the same
7. Conclusion
Therefore, it can be stated through the discussion that Amazon face different issues that
might affect the business processes of the same while operating in diverse international markets.
On the other hand, the discussion also enumerates the different competencies that are faced by
the concerned organization and thereby recommend mitigation strategies in order to resolve the
issues that are faced by the same.

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References
Amazon.com. (2018). Amazon.com: Frank T. Rothaermel. Retrieved from
https://www.amazon.com/Frank-T-Rothaermel/s?page=1&rh=i%3Aaps%2Ck%3AFrank
%20T.%20Rothaermel