Strategic Management of Amazon Inc

This article discusses the strategic management of Amazon Inc, including its company profile, critical evaluation, and recommendations. It explores the market structure, global presence, and historical background of Amazon, as well as its competition with Alibaba. The article also highlights issues related to innovation, sustainability, governance, and ethics. Expert study material on strategic management is available on Desklib.

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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Critical Evaluation
Amazon being the largest e-commerce corporation, deal with multiple
challenges like keeping up its growth, international performance, brand equity,
keeping rivals at bay, dealing with more intense scrutiny by the government.
Examples include Biden questioning the payment of corporate taxes, President
Trump investigating Amazon’s post-office deal, Amazon pulling back from the
Chinese marketplace, publicly opposing the proposal of head tax, internal
organisational politics. In UK, due to post Brexit referendum the sourcing and
procurement of Amazon could be impacted while British custom regimes could
affect Amazon’s logistics and distribution network (Lai, Liu and Xiao, 2018).
Amazon aims at relentlessly focussing on customer experience by offering
convenience, low prices and a wide range of items and merchandise. According to
Adaji (2017), Amazon performs outstandingly in terms of innovation, corporate
social responsibility, governance and ethics. To increase its innovation capabilities,
the company is striving hard in terms of creating a better measure of health, a new
tool to improve social wellbeing, working on a Project for Kuiper satellite
constellation and solving real world problems through technological innovations.
Amazon launchpad is introducing cutting edge products from entrepreneurs around
the world. As per Wu (2018), Alibaba, its competitor is performing equally well by
creating lucrative online ecosystems, creating real world shopping experiences, new
payment platforms, connecting its largest shopping site Taobao to middle class for
selling wide range of products. Alibaba is inculcating cloud based computing and
streaming processing platform for efficient processing of orders. According to Shetty
(2020), in terms of sustainability, Amazon has created 175,000 jobs in the Covid -19
crisis. Along with that, it aims to power its operations using renewable resources by
2025, making huge investment in climate pledge fund of $2 Billion, purchasing
100,000 electric vehicles, investing $100 million in forest restoration, aiming to
reduce carbon emission by 50% by 2030 and making its operations net carbon zero
(Vaidya,2020). On the other hand, its competitor Alibaba is supporting rural
development in china, contributing to environment, initiating charity and poverty
relief programs, and has created 26 million direct and indirect job opportunities
(Zhou, Chen and Li, 2018). In terms of ethics and governance, Amazon follows a
transparent and diverse organisational culture with established policies regarding
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health and safety, workplace discrimination, insider trading policy, price fixing,
bribery, recordkeeping and financial integrity etc. Alibaba follows its code of ethics
including obligations towards employees, stakeholders and corporate governance
guidelines (Du, 2020).
The discussion above however presents only the positive aspects that have
been illustrated by the company but there are significant amount of factors or
issues that the company has faced in its onset towards success (Venkatesan, 2017).
There are various controversies in which Amazon has been found to be involved and
these can be segregated on the basis of innovation, strategic innovation, CSR,
governance and ethics in comparison with its competitors.
The innovation has been the key to success for Amazon who was able to
identify the opportunity of online selling and internet before the remaining world
identified them. It can be said adequately that the facial recognition technology
which was utilised by the management in negative manner where they provided
these facial specifications and other details to the law enforcement and this led to a
wide degree of disarray amongst its customers (Hahn, Kim and Youn, 2018). EBay
on the other hand denied the use of facial recognition technique because it was
against the legislative acts protecting the right to privacy of its customers.
The strategic innovation was also implemented in the company where it
received incentives worth 102 million from the Metropolitan Council of Nashville and
Davidson county and this was a major issue again because locals argued that big
companies taking incentives does not lead to the benefit of the local companies. Its
competitor Microsoft also argued that the bigger corporations do not require funds
from the local offices and this rather seems more like a case of money laundering
(Shao, 2019).
In terms of CSR the company has been held responsible multiple numbers of
times where they have been held responsible for the sale of the unsafe and
discarded items or in some cases even the counterfeit products have been sold by
them. The Apple which although is not their direct competitor, sued the company
when it was found allegedly that Amazon was not just selling but even sourcing the
counterfeit products of Apple which was resulting in their loss ultimately (Collins,
2017). Along with this, due to the sale of unsafe items on their website, Jeff Bezos
was also charged with similar ruling where it was asked from him to take correct
action quickly.
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Amazon can be held responsible in governance issues as well where the
company failed to pay federal income taxes and despite the non- payment they
received refunds allegedly of millions of dollars despite the fact that they were not
paying any particular amount of taxes and also the fact that they were recording
billion dollars of profits every year. This was highly criticised by the public as well as
the key competitors of the company where they argued that this was direct
advantage that company was taking of the provisions that were allowed to the
company in the years when they were making profits (Galloway, 2017). Various
political parties also criticised the activities of the company stating that this does
not indicate the makings of a good governance system in the company that is
operating at such a wider scale.
The last aspect is ethics and regarding this as well, it is widely illustrated that
the employees at Amazon are not treated properly which contradicts the ethical
values of the company. The working conditions and the rules that are implemented
on the workers there are too stringent and inhumane which has been revolted
against many of the former and current employees of the company as well as
various media houses (Colby and Dennett, 2017). FedEx another competitor of UK
made very bold statements in this respect stating that they were not supporting
such practices and would like to support all the employees who have been
estranged from amazon in this context.
Recommendations
Based on the findings that were identified above and the analysis that was
conducted of the company, there are certain aspects that need to be researched
and evaluated. In this regards, certain recommendations can be made for the
company:
 Amazon can develop an altogether better culture and environment where they
can encourage employees to perform in a better manner and also develop
strategies that can be categorised as ethical so that their brand value can be
build up ultimately (Wu and Gereffi, 2018).
 Another major recommendation can be that the overall operating structure and
the management strategies that are adopted in the company needs to be
improved where it is essential that they collectively present a broader outlook
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which helps the company in increasing their representation amongst the public
and improve the governance that they have implemented in their company.
CONCLUSION
The research conducted in the report above helps in clearly identifying that how
the implementation of the strategic management can improve the overall
positioning of the company in the industry. The report first identified the presence
of the Amazon on a global level and its targeted segments, market structure, its
presence etc. The report further identified that what are the keg issues that have
been faced by the company and how they have been able to succeed in their
operation as compared to their competitors i.e. the strategies that were adopted by
the company have been critically analysed in both positive as well as negative
aspects. Lastly, based on the findings of the report, appropriate judgement was
given for the company where few recommendations were made.
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REFERENCES
Books and Journals
Abraham, J., and et.al., 2017. Global Ecommerce Report 2017. Ecommerce
Foundation: Amsterdam, The Netherlands.
Adaji, I. and Vassileva, J., 2017, April. Perceived effectiveness, credibility and
continuance intention in e-commerce: a study of Amazon. In International
Conference on Persuasive Technology (pp. 293-306). Springer, Cham.
Adams, B. and Williams, K.R., 2019. Zone pricing in retail oligopoly. American
Economic Journal: Microeconomics. 11(1). pp.124-56.
Colby, G. and Dennett, C., 2017. Thy will be done: the conquest of the Amazon:
Nelson Rockefeller and Evangelism in the age of oil (Vol. 25). Open Road
Media.
Collins, E.E., 2017. Does the Tin Man Have a Heart?: Organizational Rhetoric and the
Public Debate Over Precarity in the Amazon-New York Times
Controversy (Doctoral dissertation, University of Colorado at Boulder).
Dobreva, K., 2018. Global E-Commerce trends and statistics.
Du, Y., 2020. Who will win in the future digital market-Competitive Analysis between
Amazon and Alibaba.
Galloway, S., 2017. The four: the hidden DNA of Amazon, Apple, Facebook and
Google. Random House.
Galloway, S., 2017. The four: the hidden DNA of Amazon, Apple, Facebook and
Google. Random House.
Hahn, Y., Kim, D. and Youn, M.K., 2018. A Brief Analysis of Amazon and Distribution
Strategy. The Journal of Distribution Science, 16(4), pp.17-20.
Hahn, Y., Kim, D. and Youn, M.K., 2018. A Brief Analysis of Amazon and Distribution
Strategy. The Journal of Distribution Science. 16(4). pp.17-20.
Kristensen, M., and et.al., 2017. Company Synopsis for: Amazon. com, Inc.
Lai, G., Liu, H. and Xiao, W., 2018. 'Fulfilled by Amazon': A Strategic Perspective of
Competition at the E-commerce Platform. Available at SSRN 3270958.
Mäki, M. and Toivola, T., 2019. GLOBAL ECOMMERCE DEVELOPMENT–JOINING THE
RESOURCES OF UNIVERSITIES AND ENTERPRISES FOR NEW MARKETS.
In INTED2019 Proceedings (pp. 3630-3636). IATED.
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Shao, Y., 2019. Discuss the Similarities and Differences of Amazon and Alibaba with
Respect to Cross-border E-commerce. Science Journal of Business and
Management, 7(6), p.159.
Shetty, D. and Moorthy, S., 2020. A study of Corporate Social Responsibility (CSR)
by E-commerce companies with reference to Amazon & Flipkart. Studies in
Indian Place Names. 40(75). pp.9-14.
Spindler, G., 2020. The standardization of the internet and the international
harmonization of ecommerce. In The Role of the EU in Transnational Legal
Ordering. Edward Elgar Publishing.
Vaidya, S.V., 2020. “CHANGING DYNAMICS OF E-COMMERCE AND ITS SUSTAINABLE
DEVELOPMENT.”. Studies in Indian Place Names, 40(4), pp.362-369.
Venkatesan, R., 2017. Executing on a customer engagement strategy.
Wu, X. and Gereffi, G., 2018. Amazon and Alibaba: Internet governance, business
models, and internationalization strategies. International business in the
information and digital age, 13, pp.327-356.
Wu, X. and Gereffi, G., 2018. Amazon and Alibaba: Internet governance, business
models, and internationalization strategies. International business in the
information and digital age, 13, pp.327-356.
Zhou, Q., Chen, X. and Li, S., 2018. Innovative financial approach for agricultural
sustainability: A case study of Alibaba. Sustainability. 10(3). p.891.
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