Strategic Management of Amazon Inc

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION..........................................................................................................................3
MAIN BODY..................................................................................................................................3
Company profile of Amazon..............................................................................................3
Critical Evaluation.................................................................................................................5
Recommendations................................................................................................................7
CONCLUSION...............................................................................................................................8
REFERENCES...............................................................................................................................9

INTRODUCTION
Strategic management refers to the strategic utilisation of the resources of a
business to attain its objectives and goals. It is a reflection of the procedures and
processes of the company along with the external factors like politics and
competition which impact the operations of the company. The company chosen for
the essay is Amazon Inc, which is an American multinational e-commerce company
which operates in regions across America, Europe, Asia and Oceania. The essay
focuses on the company profile by evaluating its market structure, size, global
presence, historical background and analysis of e-commerce industry on a global
level. The major issues for the company are briefly highlighted along with a critical
competitive analysis with Alibaba group in terms of innovation, sustainability,
governance and ethics. Sensible recommendations and conclusion have been drawn
to address the aspects affecting development of the company and the industry.
MAIN BODY
Company profile of Amazon
Amazon Inc is a multinational technology and e-commerce company based in
USA which operates in four major sectors, e-commerce, digital streaming, cloud
computing and artificial intelligence and is regarded as the big four tech companies
along with Apple, Google and Facebook (Galloway, 2017). The company was
founded in 1994 by Jeff Bezos. It was originally incorporated as an online bookstore
and named cadabra inc but was changed to Amazon as it was considered “exotic
and different” and Bezos planned to make the bookstore the biggest across globe.
Since 2000s, the company logo represents A to Z items that are sold on the website
and slowly became a huge player in the online market. The unconventional business
model started making profit margins and by 2010s the company expanded to sell
software, electronics, apparel, food, video games, jewellery, toys etc. By 2015,
Amazon became the most valuable retailer in the US and surpassed Walmart in
market capitalisation. In 2017, Amazon acquired the supermarket chain- whole
foods which increased its business footprint (Kristensen and et.al., 2017). The
company expanded into selling and manufacturing own brand products and
creations like Amazon kindle e-book reader, Amazon prime video, Amazon music
and Audiobooks, Amazon publishing, Amazon studios, Amazon web series and
acquired Twitch, Ring and IMDB. It is world’s most valuable brand with high revenue
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and expansion across the globe. The company has a robust economy of scale,
technological innovation capabilities, high customer base and brand loyalty (Adams
and Williams, 2019). Amazon.com, incorporated in 2005, is the world’s leader in
ecommerce or online marketplace according to market capitalisation and revenue.
Although the company has faced various controversies like overreach of
technological surveillance, tax avoidance, hyper-competitive work culture and anti-
competitive practices. Currently Amazon operates in multiple regions and countries
across the globe, including America, Europe, Oceania and Asia. Amazon has
individual domain names, warehousing, fulfilment and transportation facilities and
customer service across Brazil, USA, Canada, Mexico, India, China, UAE, India,
China, Turkey, Japan, Singapore, Germany, France, Italy, Spain, United Kingdom,
Netherlands and Australia (Hahn Kim and Youn, 2018).
The market structure of Amazon is oligopolistic in the global context and
monopolistic in USA. The oligopolistic structure of Amazon determines that there is
imperfect competition in the market for e-commerce operations while a plethora of
companies exist globally and nationally. The major market share of the e-commerce
industry is captured by Amazon with market capitalisation of $780.14 Billion and its
competitor Alibaba with market capitalisation of $430.44 Billion. Other companies
include Naspers, Ebay, kering etc (Abraham and et.al., 2017).
The global e-commerce industry where Amazon primarily operates has been
dynamic to the way businesses operates in business-to-business, local, global and
retail areas. The internet has changed the way retailing works, with many brick and
mortar companies having online addresses and new companies selling innovative
products. It has become a vital part of the economy and has a wide scope. In 2019,
the size of the global retail market accounted for $4.25 trillion and is expected to
attain a CAGR or compound annual growth rate of 9.4% by 2027 (Dobreva, 2018).
This is primarily due to the availability of smartphones and internet which has led to
the online purchase behaviour of consumers for luxury items as well as essential
products. Other factors are availability of multiple options and alternatives, low
prices in comparison to physical stores, increase in convenience and an efficient
distribution and supply-chain network along with cross-border success (Mäki and
Toivola, 2019).
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