Business Strategy Analysis and Examples

This assignment delves into the world of business strategy, examining key theoretical frameworks and their practical applications. It draws upon a range of academic sources like books by Bloom, Coad, Freiling, Ghezzi, Hill et al., and Peng, alongside contemporary Forbes articles and research from HK Trade Development Council. The assignment also incorporates real-world examples through online platforms like YouTube and Amazon's financial data, providing students with a comprehensive understanding of how businesses formulate and implement successful strategies in today's dynamic environment.

Strategy and Competition
Key
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TABLE OF CONTENTS
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Introduction
Strategic Management has a broad variety of overlapping definitions, with the most
common referring to the process of continuous analyzing, planning, monitoring and
assessment of all that seems to be essential for an organization so as to meet its goal and
objective in an effective and efficient manner. (Chandes and Paché, 2010). The key purpose
of strategic management is to exploit & create new opportunities. It also assists the
company’s top decisions-makers in integrating its managerial and organizational efforts
in and increasingly competitive landscape. To effectively deal with the ever-changing
environment, firms need to create smart systems. In this assignment, I plan to study such
a system within Amazon – an American cloud computing and electronic commerce firm,
established in 1994 by Jeff Bezos, who has played a very central role in transforming the
company to become one of the leading e-commerce players and largest cloud
infrastructure services provider, in the world. The assignment will covers fundamental
characteristics of the e-commerce and retail industries, which affect corporate behavior
and form the basis for new growth opportunities. The paper will also look at the dynamics
that influenced the firm in attaining and sustain growth.
Overview of Amazon:
Amazon is one of the largest online retailers and is considered a pioneer in this sector.
The firm, currently headquartered in Washington D.C, U.S.A, began as an online bookstore
but its early success encouraged the firm’s decision makers to diversify their offering to
include other products that can be sold online. Amazon expanded further by expanding
their reach and coverage to an international level and now operates across the entire
world, through a combination of globalized delivery, and localized portals and logistics
platforms.
As demonstrated in the below chart, Amazon has grown year-on-year by up to 30%
through their focus on increasing their customer base as much as they can. This has
resulted in greater sales numbers and more employees to respond to the increased
customer demands.

(Statistic about Amazon )
Amazon has had to contend with different competitors in different industries, due to
diversification approach. Their main competitors include; Ali Baba, Wal-Mart and eBay.

Amazon strategy is driven by the source of its competitive advantage, which is that the
company emphasizes on technology, actualizing advantages of economies of scale, as well
as leveraging efficiencies from synergies among external drivers & internal resources.
These have been cornerstones of Amazon's business model. (Abu Farha, 2016)
Amazon Fundamental characteristics:
The corporate culture of a firm sets the values and traditions that influence the behavior
of employees. Furthermore, the organizational culture enables the business respond to
the demands of the e-commerce market. (Barberá and et. al., 2012). At Amazon, the
organizational culture pushes the workforce to go beyond conventional and traditional
limits to develop solutions and bright ideas. As a top performing online retailer, the firm
constantly seeks fresh talent to maintain a competent and capable workforce. They also
focus on shaping the development of personnel to maintain long-term advantage in a
competitive market.
The organizational culture of Amazon is a critical success factor of its online retail
business. The firm is known for its culture that pushes workforce to take risks and
explore ideas. Its culture is responsible for the capacity of firm to seek opportunities to
use data intensive processes to administer online retail service in an efficient manner.
Below mentioned are some characteristics of Amazon's corporate culture:
Customer centricity:
Amazon’s vision statement highlights the centrality of the customer to its business. For
instance, Amazon reinforces their employees to emphasize on needs and demands of
customers (Doz and Kosonen,2011). The firm constantly strives to identify market trends
and changing preferences of consumers and apply them to its online retail services
offering. With this approach, the firm has been able to maintain its effectiveness in
fulfilling the needs of customers and satisfying them, which in turn has helped them grow
their business.
Boldness:
Amazon encourages boldness amongst its employees. This corporate culture
characteristic is seen in the way in which the firm pioneered the selling of a wide variety
of products online, from just books, via data intensive IT (Killen and et.al., 2010). Amazon
allows employees to take risks in considering new and innovative ideas to do business.
With focusing on boldness, the firm also supports openness to new ideas on the basis of
organizational diversity policy. This characteristic enables Amazon to determine the best
possible ideas to resolve issues and improve online business.
Peculiarity:

. Peculiarity refers to an idea or thought of challenging conventions. (Bloom, 2014). At
Amazon for instance, they motivate their employees to view themselves as well as their
work as different or distinct from the conventional ways of doing business. The firm
believes that conventions inflict limits on potential growth of business. Thus, by this
characteristic, Amazon motivates its workforce to think outside the box to bring
maximum potential and ideas to its online business.
In this way, the corporate culture of Amazon reinforces the pioneering efforts of the firm
within the e-commerce space. This cultural characteristic of the company provides
advantage to support innovation.
Porters five force analysis:
Business markets and customers have different features by which they function.
Before, significance was mainly given in understanding business and customers, but in the
era of technological change and globalization, firms cannot afford to neglect competition.
Many firms are lowering costs by outsourcing their production to other countries (Eden
and Ackermann, 2013). It is necessary for Amazon to keep an eye on marketing programs
and strategies undertaken by competitors in order to continuously grow and sustain in
that market. Porter's five force model is suitable or appropriate in determining
competitive forces which influence business in given surroundings. These forces are:
Threat of new entrants:
Creating an online store is not difficult, but to reach Amazon’s level takes considerable
efforts, time and investments. Growth and expansion of digital technology provides many

opportunities in the retail industry. In the e-commerce segment specifically, many players
have entered on a domestic and international level. Extensive investment is required in
distribution, warehousing, marketing, logistics, amongst other requirements. Moreover,
factors like brand reputation and time makes it tough for new entrants to displace
Amazon or grab significant market share (Freeman, 2010). Thus, new entrant threat is
low for the firm. If there are many players in the same segment, and the market has
reached saturation and there is no scope of expansion, then it is difficult for a new
company to enter. If there are few barriers to entry however, then it becomes easy for
firms to penetrate a given market.
Threat of substitutes:
A substitute for a particular product or service is a big thereat that limits the potential of
increasing pricing. If customers have a choice of alternative products to pick from and are
better organized at meeting the customers’ wants and needs, then it can directly create
pressure on earnings and makes the segment unattractive (Hodgkinson and
Healey,2010). Amazon's substitutions include branded outlets like Wal-Mart, stores of
those brands, brick-and-mortar stores, local markets, etc. E-commerce retailers face a
high threat of substitution, as they do not sell something unique. A single awful
experience will lead customers away from their e-commerce platform towards other
brick-and-mortar stores or other e-commerce platforms. All this develops high
substitution threat for Amazon.
Bargaining power of buyers:
The company majorly emphasize on product quality and customer satisfaction. It ensures
that goods are delivered on time & replacement or returns are handled properly so those
first times customers can become repeat ones. Moreover, low switching cost makes it
effortless or easy for potential buyers to shift from Amazon to other rivalry firm such as
Walmart. This is probable because of ample competitors. For instance: Instead of
purchasing product through Amazon online website, customer can easily go to any of the
competitor store say Walmart which are strategically located through the U.S. hey have
strong and high bargaining power against Amazon because of the many competitors it
has.
Bargaining power of suppliers:
Being a successful player in the online retail sphere, Amazon has significant power over
their suppliers and supply chain. Though, the supplier to firm ratio is greater, they still
have to follow some rules and regulations that are laid out by Amazon. Amazon ensures
that their suppliers follow ethical principles of working. No supplier can think of forward
assimilation(Coad, 2014). Amazon's switching cost for suppliers is almost negligible.
Because of its larger sales, many suppliers are ready to supply required products to the
company. So, none of them are in position to affect the product prices of firm. Therefore,
suppliers bargaining power against Amazon is not high.

Industry rivalry:
The rivalry in electronics e-commerce sector is very high. The reason behind this is
increased number of players (Gooner, Morgan and Perreault, 2011). Now, online sales
platforms are also offer by traditional brands, which give competition to e-commerce
retailers like Amazon. Apart from that, many small-scale online and brick-and-mortar
stores are also striving for market share. Some online retailers have gone a step further
and have specialized, targeting specific goods such as auto parts, electronic, apparels etc.
All this leads Amazon to intense rival competition.
Intensive strategies used by Amazon for growth:
Market development:
In its current strategy, Amazon focuses on market development. The main objective of
using this strategy is to enter and grow in new markets. It offers its products and services
in many countries. For instance, it initially provided online services in United states and
now it operates in over 10 countries, including; China, United Kingdom, Canada and India.
Each one of these new countries consists of new a market that generates opportunities for
the firm’s growth due to greater pools of customers. Its strategy allows it to develop
competitive advantage that enables it to execute this market development strategy.
(Freiling and et.al., 2016).
Market penetration:
Main objective of this strategy is to generate high revenues from market where the firm
currently operates. The company grows with increased consumerism. For instance: As
customer develops their interest more in online retailing, referred company will get
benefit from them in terms of higher revenue especially when brand is so popular among
target audience. Market Penetration is mainly responsible for initial rapid development
of Amazon. Inc in U.S. The generic strategy for the company creates higher competitive
advantage which is essential to penetrate market rely on low prices and cost. In addition
to that, the company needs to have aggressive marketing campaign so as to attract large
number of customers. (.Ghezzi, 2013).
Product development:
Amazon Inc. applies product development method as a supporting intensive strategy for
its higher business growth. Developing and providing new product so as to gain higher
profit is the main objective of its intensive growth strategy (Greco, Cricelli and Grimaldi,
2013. They believe in growing partly by offering new products in the market over time.
For instance: Currently, the referred firm is offering Amazon Basic Product and Amazon
Web Services. Moreover, its cost leadership generic strategy support intensive growth
strategy by offering low-cost business process to the company so that they can introduce
new product in an effective manner. The main objective related to this strategy is to
increase R&D investment for product development and release in online retail market.
Key drivers of corporate growth in industry:

Management:
The founder’s leadership and management style at Amazon is one of the main factors for
the company’s success and growth ( Coad 2009 for a survey). As the CEO, Jeff Bezos is
always looking towards the future and planning for the coming 5 to 7 years’ (Jeff Bezos,
2017). This vision and methodology give Amazon an edge from the competition. Bezos
famously emphasized that if anyone “thinks that way for the future it will affect your life
style and how you are going to spend your time and your plans” (Jeff Bezos, 2017).
Innovation:
Innovation act as a catalyst for the success and growth of business, and also assist the firm to
grow and adapt themselves in the market in an effective manner. ( NESTA 2009). It also refers
to a process of translating ideas to products and services that create value for customers
for which they are willing to pay. Though, Amazon was not the first e-commerce retailer,
it is the most innovative (Grewal, Janakiraman and Tolerico, 2010). The success of
company was initiated with the online selling of books but the CEO of firm had a clear idea
that it would become an “everything store” and worked towards it accordingly. By the
introduction of the Kindle, the company became more popular. There are various
innovative products and services that are in the pipeline, which business insiders are
reporting, one of them being a service named Amazon Locker, which is a secure service
for Londoners and New Yokers. Basically it is a kind of serf-service parcel delivery
service which is offered by online retailer i.e. Amazon. Cuts9omer of Amazon can select
any of the convenient locker location as per their delivery address and find their order by
entering unique pin-code on the touch screen of Locker. These type of services mainly
design so to addresses the concern related with lost, stolen or mission parcel. (Grosse,
2014).
Customer services
“Customer obsession is not just listening to customers but inventing on their behalf, as it
is not their job to invent for themselves and we need to be inventors and pioneers” (Jeff
Bezos, 2017). Providing good services to customers assists the firm in attaining high
growth and gaining customers loyalty. This assists in satisfying consumers in better way.
Amazon emphasize on the satisfaction of customers, ore than their competitors. The most
critical factor of Amazon's success is its customer service strategy. It consistently ranks
high in lists of satisfaction. Company attains high growth and success because of its good
customer services. (Hill, Jones and Schilling, 2014).
Execution of orders:
At the time of executing orders of customers, Amazon has got things right. They select
goods and services according to the needs of customers. Their distribution centers are
located across the globe, which help them to quickly ship their products, and allowing
them to achieve a 1-hour delivery approach. Furthermore, Amazon has good relationships
with their vendor, allowing them to offer discounted prices to customers. (Peng, 2015)
Diversification:

Amazon is a collection of its principles and approach to different activities. Starting from
an online bookstore, the company now offers everything from nuts to soup. Amazon now
carries goods across the following categories; electronics, music, grocery, books,
automotive, health, beauty and clothing. The organization’s success is lies in relying on
the fact that Amazon is not afraid to sell any product. Diversification is one of the key
factor that assists firm in attaining growth. (Smith, 2013)
Technology:
The cornerstone and main success factor for retail brick-and-mortar] industry is the
location. For the e-commerce industry however, the main success factor is technology.
(Ghezzi, 2013)
According to Jeff Bezos in one of his seminars, he mentioned that Amazon has invested lot
in technology, starting back in 1997. According to him, it was the highest investment
among other investment factors, reached USD$800,0000 (Jeff Bezos 2004).
Technology is also an important aspect that highly contributes to the sustainability and
growth of the company. Amazon uses highly advanced technology in their business
processes, such as executing orders of customers and delivery of products on time
amongst other things. All this will help the company in securing their customers
satisfaction and gaining their loyalty. It also helps the firm in bringing innovative
products. (Schilling, 2016)
All the above-mentioned points are key factors of corporate growth in the e-commerce
industry and as discussed, were behind the high growth and sustainability of Amazon. In
order achieve corporate goals and objectives in better and more differentiated way; it is
essential for enterprises to formulate a clear and effective strategy as compared to the
competition. It is essential for an enterprise to consider various factors which impact
business operations, such as strategy used by the competition and the various dynamics
that exist in the business environment (Hill, Jones and Schilling, 2014). This allows the
firm in taking better action and making sound decisions, which contribute to the overall
growth. One of the main reasons why some enterprises are more successful in
comparison to others is because they are focusing on realizing a growth strategy by also
maintaining flexibility in business actions. This help the referred firm in making decisions as
per the dynamic changes that take place in business environment. Therefore,it is essential for
business enterprises to formulate effective strategy so as to achieve success and generate
higher profits over their rivals.
CONCLUSION
Based on the above, it has been concluded that the process of strategic management is important
for firms as it assists in its growth and sustainability. Companies formulate strategic plans and
strategies in order to gain competitive edge over competitors. It provides direction for firms and
allows them to determine future courses of action. Various strategies are used by organizations,
which assists them in attaining high sales and revenues.

Jeff Bezos stated in one of his interviews ‘you need to identify your big ideas and it’s the role of the
senior leader to enforce the execution of the big ideas. The 3 big ideas for Amazon are, low prices,
fast delivery and vast selection. It’s very hard to maintain the obvious big ideas without distraction’.
Amazon’s growth strategy relies mainly on the management and leadership style by following the
above strategies to develop and grow the organization.

REFERENCES
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