Strategic Management Aspects of Amazon.com. Inc

STRATEGIC MANAGEMENT 11 11 STRATEGIC MANAGEMENT Strategic management Name of the Student Name of the University Authors note Executive Summary This reports aim to discuss the strategic management aspects of the ecommerce giant Amazon.com. Task 1 4 Task 2 7 Task 3 9 Task 4 10 References 12 Appendix 13 Task 1 Company Background Company overview Amazon. Com’s products are low cost and maintain moderate to high quality (aboutamazon.com 2019).

Running head: STRATEGIC MANAGEMENT
Strategic management
Name of the Student
Name of the University
Authors note

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Executive Summary
This reports aim to discuss the strategic management aspects of the ecommerce giant
Amazon.com. Inc. this company has gained highest position in the online merchandise
business. There are different analysis tools used to evaluate the strategies like SWOT,
Porter’s Five Force, PESTEL and Ansoff. Analysis of Amazon’s strategic endeavours have
helped in creating an insight of their business models. Strategic direction and strategic
position has been determined through the report. Finally, the report ends with the company’s
objectives of next five years.

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Table of Contents
Task 1.............................................................................................................................4
Task 2.............................................................................................................................7
Task 3.............................................................................................................................9
Task 4...........................................................................................................................10
References....................................................................................................................12
Appendix......................................................................................................................13

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Task 1
Company Background
Company overview
Amazon. Com is a Seattle, Washington based company and it operates in the markets
of e-commerce, digital streaming and Cloud computing. This report will discuss about the e-
commerce strategies of this company. Amazon has established itself as the largest online
retail marketplace. This company was founded by Jeff Bezos in 1994 (aboutamazon.com
2019). It started as an online bookstore and soon expanded its endeavours to other retail
products. As online markets have huge scope to explore, this company is continuously trying
new marketing and business strategies to achieve higher goals. Unique use of technology
makes this company stand apart in the strong competitive market span. Amazon. Com’s
products are low cost and maintain moderate to high quality (aboutamazon.com 2019).
Analysis of Macro environment and industry attractiveness
PESTEL
Political
 Political situations of a company influences the business of Amazon. The
political stability will give the company scope to expand its business.
 The laws that government sets for e-commerce impacts the overall business.
The business investment of Amazon in countries like Maldives, China and
India are impressive. But they have to comply with the laws of e-commerce to
expand their business in a country
 Cyber-crime control is another governmental issue that helps the companies
like Amazon to survive challenges.

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Economic
 Amazon has shown remarkable growth in the areas with positive economic
conditions. The developed economy of the countries like USA and UK,
Amazon’s growth of revenue is the highest.
 Economic recessions in a country like China, could affect the growth of this
company.
 Booming of online retailing is increasing competition for Amazon in present
times.
Social
 Behaviours and trends could affect the business of Amazon in negative or
positive way (Lüttgens and Diener 2016).
 The social trend and life style has increased the scope for Amazon online
products.
Technological
 Technological interventions has helped the context of online business to the
utmost. The whole concept of Amazon’s online retailing stands on the
technological ground.
 Amazon is using technology to the best for their delivery system. The treat of
cybercrime is a problem for online retailers.
Environmental
 Amazon is working on reducing the emission for the sake of environment.
 Unlike before, this company is now disclosing its environmental impact on
public.

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Legal
 Laws and regulations should be complied in any business.
 The laws that can influence the business of Amazon are discrimination law,
anti-trust laws and consumer protection laws.
Porter’s five Forces
Thereat of new entrants
Online retailing is becoming popular day by day and that is why new companies are
entering the market with their innovative approaches. Therefore, the threat of new entrants
are high for Amazon.
Bargaining power of the Buyer
Bargaining power of Amazon’s customer are high as they could switch to other
companies and options online easily.
Bargaining power of the Supplier
Suppliers bargaining power for Amazon is moderate to low. This company has
incorporated products of various range. That gives it advantage in bargaining with wide range
of suppliers in a large extend (Aithal 2016).
Threat of substitute products
Amazon has wide range of products and threat of substitute products is low to
moderate. The company has been successful to establish itself as a strong
Rivalry among existing firms
Amazon has been successful to manage the rivalry in the market till date.

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Task 2
Strategic Position
SWOT analysis
Strength
 Largest options of merchandised
selections and low cost leadership
 Third party sellers in huge
proportion
 Interaction between AWS,
marketplace and Amazon Prime
 High capacity and speed of delivery
 Strong brand identity and name
 Highest revenue gainer in the
industry
Opportunities
 Increased disposal income of
customers
 Launching of new Amazon Prime
Air that would deliver the products
to the consumer using drones.
 Access to internet and home delivery
has made people habituated for
online shopping.
Weakness
 Imitability of the business model
 Lack of free shipping availability in
some areas
 Brick-and-mortar presence is limited
 Controversies regarding tax
avoidance
Threats
 Cyber crime
 Government regulations in some
countries
 Aggressive competition
Table 1: SWOT analysis of Amazon
(Source: Created by the author)

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Achieving competitive advantage in an aggressive market like online market, is not
easy. Amazon have not only achieved the status of number one online retailer, it has
maintained its position as that for a long period (Santos and Laczniak 2015). The basic reason
is their innovative and strategic marketing. Among all other online retailers, Amazon has the
highest variety of product range. The CRM of this company has implemented various
customer-centric processes that gives the company overview of the buying behaviour of the
customers.
The company’s strong logistic chains allowed it differentiate itself from other
companies. Delivery services and customer satisfactions factors are better than any other
competitors in the market. Strategic supply and delivery partnership has enabled it to cut the
cost of production (Gürel and Tat 2017).
GLOCAL is the strategy that differentiates Amazon form other online markets. This
company absorbs or forms partnership with the local companies for getting advantage in local
markets. At the same time, the company is expanding its global reach. This e-commerce giant
has acquired companies like IMDB.com, Junglee.com and woot.com to generate revenues in
online marketing (Smith, Rupp and Offodile 2017).
The business model that this company follows is easy to imitate. The entry barriers of
this industry is also low. Therefore, there is a constant threat of new company entries. Several
controversies have influenced the business of Amazon in recent times. Recession in some of
the countries like China, affected the growth of Amazon and resulted in debts. Another issue
is product fails. Kindle was a hit in market, but products like Kindle fire and fire phones did
not do well in USA and other parts. In some marketplaces, the regulations and restrictions
imposed by the government has negative influence on Amazon’s business. In spite all these

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short comings, the brand Amazon has successfully established its market value. It has a
strong customer base and supply chain.
Task 3
Strategic Direction
Amazon is one of those few companies that has achieved the highest margins in lesser
time. It has modelled its business is such a way that helped it gaining advantages in
ecommerce markets. Future strategies setting and reviewing present process of Amazon could
be evaluated through Ansoff matrix analysis. This matrix is used to understand a company’s
stand in respect to their market conditions and products. [Referred to Appendix 1]
ANSOF Matrix
Market Penetration
Amazon gives special importance to its market penetration strategies. This is mainly
about selling the existing products in already set markets. Basically the products are
reintroduced with new features. Amazon’s brand equity is high and it has strong customer
base. This company seeks to change their services and products according to the demand of
the consumers. The company website has the recommendation and customer experience
sharing features in it. This is the thing that gives Amazon required information of the trends
of market and their products review. Data science application and machine learning created a
positive implication on sales volume of existing products.
Product Development

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This part of Ansoff matrix concentrates on developing of new products to sell in the
existing markets. This one of the core strategy that the company adopts (Gurcaylilar-
Yenidogan and Aksoy 2018). The first step was the unique idea of selling the physical books
in the online platform. This retailer sales over 500 million products through their websites.
Products like Kindle have created a unique identity of the brand in the existing markets. The
company people are regularly introducing new third party sellers with new products. Vast and
strategic supply chain has helped in new product development. For example, Amazon has
introduced personalised product for their consumers and this is attracting them at large.
Market development
According to McDONALD (2016), finding new markets for existing products is
called market development in Ansoff matrix. Amazon has strategically expanded its market
globally in past few years. Its market development targets to move beyond its immediate
customers. Amazon has its market engagement is more than 13 countries. It has gained new
market exposures in United Kingdom, Canada, India and China. Growing economy of the
developing countries proved instrumental in extension of sales revenue. This company has its
Prime Now facility in more than 50 cities of 9 countries. Moreover, Amazon has availed
“Prime Free One Day” and “Prime Free Same Day” services in 8000 cities.
Diversification
In Ansoff matrix diversification basically means introducing new products to the new
markets. This strategy is considered among one of the most risky in any market condition
(McDONALD 2016). Amazon is not using the diversification strategy to vast extend in its
retailing. Introducing new products in unknown markets involves the risk of product failure
and loss. Amazon recently using diversification strategy in the operations of media,
advertising, hardware and other segments of business.

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Task 4
.Next five years’ Objectives
Specific
 Boosting the market dominance through the promotional and marketing efforts
 Dealing strategically with the controversies that this company has faced globally.
 Entering new markets in the developing countries as the growth opportunity is huge.
 Enhancing security features in cyberspace and networking to ensure customers rights
 Making the operations more sustainable in future
Measurable
 Increasing in the sales of beverage and food merchandise up to 1.5%.
 Amazon could build renewable energy production firms to provide 40% energy
source of their business.
Achievable
 Supply chain of amazon is strong and therefore, the revenue of the company will
increase if the target is explored strategically
 Overcoming the controversies is to be done through developing strong operational
policies
Relevant
 Amazon has vast chain of suppliers and partners in developed countries. The
company could work for including more third party suppliers in developing countries.
Time bound
 revenue reports need to be checked yearly

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 Amazon could have a five years’ time span to fulfil its objectives.

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References
aboutamazon.com, (2019), aboutamazon, available at: https://www.aboutamazon.com/
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business
strategies, operating concepts & business systems. International Journal in Management and
Social Science, 4(1).
Gurcaylilar-Yenidogan, T. and Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix
To Innovation Classification. International Journal of Innovation Management, 22(04),
p.1850039.
Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International
Social Research, 10(51).
Lüttgens, D. and Diener, K., 2016. Business model patterns used as a tool for creating (new)
innovative business models. Journal of Business Models, 4(3).
McDONALD, M.A.L.C.O.L.M., 2016. Strategic marketing planning: theory and practice. In
The marketing book (pp. 108-142). Routledge.
Santos, N. and Laczniak, G., 2015. Marketing to the poor: A SWOT analysis of the Market
Construction Model for engaging impoverished market segments. Social Business, 5(2).
Smith, A.D., Rupp, W.T. and Offodile, O.F., 2017. Amazon. com, Inc.: Retailing Giant to
High-Tech Player?.

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Appendix
Appendix 1:
Figure: Ansoff matrix
(Source: https://www.smartinsights.com/marketing-planning/create-a-marketing-plan/ansoff-
model/)