Strategic Management of Amazon

This report evaluates the performance of Amazon, highlighting its competitive strengths, market position, and areas for improvement. It also proposes a strategic plan using appropriate tools. The report reflects on the module and discusses its relevance to career development.

STRATEGIC
MANAGEMENT 5

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Part A (1): Critically evaluate the performance of your selected company highlighting
competitive strengths, market position and areas where improvement across the value chain
may be required...........................................................................................................................3
Part A (2): Using your evaluation propose a strategic plan for the same company using
appropriate tools to explain and justify your strategic choices....................................................4
Part B: Reflect upon the module. . Consider the online learning activities <and in class
workshops>. To what extent will the module support you in your career development and
how?.............................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic management signifies strategic use of resources that help in achieving goal and
objective of organisation. It is considered as a reflection of process of organisation in addition
with different external elements such as politics and level of competition which imposes direct
impact on organisation. In this assignment, the company is named as Amazon. It is an
international organisation that operates their business around different region such as America,
Europe and Asia and so on. In this report, description regarding the performance of organisation
and its competitive strength, marketing position and the area of improvement around value chain
that may be needed. They also provide discussion regarding a strategic plan which helps in
achieving competitive advantage over rivalries at marketplace. In addition to this, the reflection
is also discussed in an improved way (Percy, 2016)
MAIN BODY
Part A (1): Critically evaluate the performance of your selected company highlighting
competitive strengths, market position and areas where improvement across the
value chain may be required
Amazon is an international organisation that operates their business around different
region such as America, Europe and Asia and so on. The competitive strength, market position
that help in increasing performance of organisation in future period of time.
Competitive strengths of Amazon
There are a number of different competitive firms vested with Amazon as they are one of
the largest market selections with huge number of third-party sellers throughout the world. The
growth of Amazon is extraordinary which have made the company second largest retailer
throughout the world. It is one of the major competitive strength of Amazon.
The company is also dealing in low cost structure which helps them to get cost benefits
over its competitors. When using online marketplaces, company can easily sell more unit of
products without increasing the marginal cost in company.Amazon is also effectively investing
in various fulfillment centers which will help them to reduce the time and cost of shipping. This
is helping to providing the products to the customer at a lower price and also bringing benefits to
consumers.
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The marketplace for Amazon is online shopping network which is used by other retailers
to sell their products on the site. There are a number of products which Amazon has to offers in
the market place. The list of products from Amazon also includes various products from different
sites in online market. The Amazon share in US e-commerce market has hit 49%. This is 5% of
the entire amount spent on retail throughout the country. There are more than 12 million products
present on Amazon‘s website for sale. Amazon sells 1.1 million home improvement products
affectively throughout the world. There are also various other memberships such as Amazon
prime membership which is owned by 95 million people in the US. More than 50% of sales
made in Amazon are done by third-party sellers. Amazon is successfully shipping more than 5
billion items worldwide every year. There are 80% of sellers who also sell on various different
platforms other than Amazon (Peppard and Ward, 2016).
There are a number of different ways in which Amazon can increase its value chain for
customers. It is necessary for them to continuously fulfil all the needs and requirements of
customer. It is often seen that online marketplaces are open 24 hours and often overnight
delivery are necessary to lead organisation successfully. Automation is the important part of
shipping and supply chain management in the organisation. It is necessary for Amazon to keep
on automating their functions in order to make sure that they can keep up with demand of
customers in the market. They also require bigger warehouses so that they can manufacture their
products themselves and deliver it in market successfully. It is necessary for Amazon to make
sure that they are efficiently managing logistics system as it is one of the major functions in
organisation. Following all these small steps Amazon can easily bring a number of changes in its
business model in order to increase its value among customers (Greenwoodand Hinings, 2017)
Part A (2): Using your evaluation propose a strategic plan for the same company using
appropriate tools to explain and justify your strategic choices
Porter's five force model
Porter's five Force model is useful to organisation scanning the micro and macro environment
which can be used to achieve competitive advantage over the competitors. This approach
includes five Forces which are threats of substitute, bargaining power of customers, power of
supplier, competitive rivalry and threats of new entrants. All of these factors are discussed below
in relation to Amazon:
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Threats of new entrants: Threat of new entrants is that factor which is directly related to
the entry of new organisation within the market where the organisation is working. Amazon is
working international organisation where the threat of new entrants is low in relation to other
industries. This is because Amazon is dealing in online retail industry where there is large
number of requirement in relation to investment as well as infrastructure.
Threats of substitute: a substitute can be defined as a product within the market which is
available in relation to the product of organisation. This kind of products has similar satisfaction
level in comparison to the products and services offered by the firm within market. In relation to
Amazon, organisation is dealing in highly competitive market where there are a large number of
substitute of products and services offered by the firm. The major substitute of organisation
prevailed in the market such as Flip kart, Wal-Mart and many more. Amazon provides products
and services similar to other competitive firm which can negatively impact on organisation. To
improve the function of organisation and the threats of substitute factor organisation can use the
brand loyalty. This is helpful to Amazon, maintaining customers for a longer period of time by
reducing the threats of substitute (Hill, 2017).
Bargaining power of customers: it includes the power of customer within the market
where the organisation is trading and selling its products and services. Bargaining power of
customer can be defined as a factor which impacts the price change policy of organisation within
market. This is because; if there is a large number of customers within the market then
bargaining power of customer are low and organisation can take charge on their prices. But if
there is the large number of customer then organisation cannot make prices according to it. There
are various other factors which are included in it like buyer switching cost, buyer information
availability and many more. In relation to Amazon, companies working at largest platform which
helps organisation in maintaining customer base. This is helpful to firm in achieving goals and
objectives as well as a competitive advantage over competitors because of large number of
customer.
Bargaining power of suppliers: it is also a factor which impacts on organisation directly
under this sector organisation have to identify the bargaining power of suppliers within market is
trading. If there is large number of supplier in organisation gets the power to bargain with its
supplier. On the other hand, if there is low number of supplier in organisation then supplier of
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the organisation is higher powers. This is because, large number of suppliers facilitates
bargaining power to the organisation in relation to the goods and services supplied by the
suppliers. If there is low number of supplier in organisation loses its power in relation to
distribution channel switching the supplier to save cost (Bermanand Evans, 2018).
Competitive rivalry: The last factor of porters five Force model which is related to a
competitive rivalry of the organisation within market where it is trading. Under this factor of
porter's five Force model, organisation is to identify the power of competitors in the market and
its competitive rivalries. In relation to Amazon, there are various competitive rivalry operate
their business within online selling platform. The most common rivalry of organisation is with
Wal-Mart. Both the organisation are operating within online selling platforms where they also
provide the associated products and services related to Amazon and impact the selling and
distribution channel of Amazon within the market. This act as a low competitive advantage to the
firm because both of the organisations are operating with higher level of investment and better
infrastructure facilities related to supply chain management it employs and many other factors
which impact on organisation performance within the market (Jing and Van de Ven, 2016)
It can be evaluated from the above that porter's five Force model is effective Framework
which can be used by the organisation like Amazon to identify the competitive advantages and
different factors within the market. This help the organisation in achieving its objectives within
market by identifying various factors involved in porters force and take decisions according to it.
Porter's generic strategies
It can be defined as a Framework which is used by the organisation to use a proper
strategy which is helpful to the firm in achieving a separate market image and attracting the
customers to achieve goals and objectives. Under porter's generic strategies, there are different
kinds of strategies which can be adopted by the organisation to fulfil its objectives in a target
market. It involves cost leadership, product differentiation and focus (Moutinho and Vargas-
Sanchez, 2018). All these strategies are discussed below in relation to Amazon.
Cost leadership: cost leadership can be defined as strategy which can be adopted by
organisation to achieve competitive advantage in the market on its competitive rivalries. Under
this strategy, management within Amazon can use to minimise the cost of products and services
offered by the organisation by using cost effective techniques. This is helpful to organisation in
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attracting the customer by offering affordable prices of products. This will also demoralize
competitors of the organisation within the market because of price competition.
Product differentiation: it is also strategy and the Porter generic strategy which can be
used by the organisation while working within the market. Under this strategy, organisation can
use different kind of products and services which are completely different from its competitor’s
product and has no substitute within the market. This will help organisation in attracting the
customer because of product differentiation as well as charging higher prices of products for
improving the profitability. This will also help the firm in serving quality product to its
customers and returning them for longer period of time. In relation to Amazon, it can also use
cost effective techniques which are helpful to the firm in achieving the goals and objectives.
Focus: under this factor, organisation can use both cost effective techniques and product
differentiation strategies which are helpful to the firm in achieving a separate market image by
attracting customers.
In addition to Amazon, organisation can use both cost effective techniques and
differentiation strategies which are helpful to the firm in minimising cost of products and using
different products within the market to attract customers in larger quantity. It can be evaluated
from the above that organisation can use porter's five Force model and porter generic strategies
which are useful to achieve goals and objectives in relation to identification of competitor and
achieving the objectives within the target market. The best suitable strategy which can be
adopted by Amazon is using cost leadership within the market where it will offer the products
with lower cost to the customer for attracting them and retaining them for a longer period of
time.
Part B: Reflect upon the module. . Consider the online learning activities <and in class
workshops>. To what extent will the module support you in your career
development and how?
After working on the project it analyses that there are various aspects within the project
which are helpful in developing different kind of skills and abilities. These skills are associated
with development of analytical skills, theoretical skills, leadership skills and many others. After
performing on this module, I also identified that Amazon is working within online selling
industry. It can also see that organisation is performing in an effective manner by achieving its
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goals and objectives. I also identified that using appropriate strategies important for the firm to
achieve the goals and objectives and managing the business in an effective way. There are
different kinds of tools and techniques which can be used by the organisation to achieve
objective. The cost leadership is the best strategy to be adopted. It can be seen that using these
strategies will help Amazon in managing successful operations by attracting the customers in
larger quantity. Therefore, there are various skills such as communication skill and critical
thinking ability helps me in boosting my career in future period of time (Homburg, Jozić and
Kuehnl, 2017).
CONCLUSION
On the basis of above mentioned report, it has been analysed that strategic management is
the use of resources in an appropriate manner that helps in accomplishing goals in improved
way. In this report, description regarding the performance of organisation and its competitive
strength, marketing position and the area of improvement around value chain that may be
needed. They also provide discussion regarding a strategic plan which helps in achieving
competitive advantage over rivalries at marketplace. In addition to this, the reflection is also
discussed in an improved way.
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REFERENCES
Books and Journals
Berman, B. and Evans, J.R., 2018. Retail Management a strategic approach. Pearson.
Greenwood, R. and Hinings, C.R., 2017. Understanding strategic change: The contribution of
archetypes. Academy of management Journal.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Homburg, C., Jozić, D. and Kuehnl, C., 2017. Customer experience management: toward
implementing an evolving marketing concept. Journal of the Academy of Marketing
Science, 45(3), pp.377-401.
Jing, R. and Van de Ven, A.H., 2016. Being versus becoming ontology of paradox
management. Cross Cultural & Strategic Management.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Percy, L., 2016. Strategic advertising management. Oxford University Press.
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