Amazon Case Study: An Analysis of Strategic Challenges and Solutions

This case study examines Amazon's strategic challenges, particularly those arising from internet sales tax laws. The analysis begins with an application of Bowman's strategic clock to assess Amazon's market position and competitive strategies, including low pricing, hybrid models, and differentiation. The study then identifies and evaluates Amazon's key stakeholders, including employees, managers, customers, suppliers, and government entities, highlighting the impact of tax policies on these groups. Furthermore, the case utilizes McKinsey's 7-S framework to analyze Amazon's internal structure and capabilities, focusing on strategy, structure, systems, shared values, style, staff, and skills to propose solutions for the challenges. The study concludes by assessing Amazon's strategic capabilities, such as its ability to adapt to changes in the business environment and maintain customer satisfaction. The overall goal is to provide a comprehensive understanding of Amazon's strategic approach and to identify opportunities for enhancing its competitive advantage in the e-commerce market.

Amazon case study
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
1. Bowman's strategic clock........................................................................................................4
2. Company stakeholders.............................................................................................................7
3. McKinsey's 7's........................................................................................................................9
4. Strategic capabilities..............................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCE.................................................................................................................................14
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Illustration Index
Ilustration 1: Bowman's strategic clock...........................................................................................6
Illustration 2: Company Stakeholder...............................................................................................8
Illustration 3: McKinsey's 7's.........................................................................................................10
Illustration 4: Strategic Capabilities...............................................................................................12
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INTRODUCTION
Electronic commerce considers as online transactions of goods and services of any
business organization. It includes activities of exchanging products through electronic medium as
social networking sites and promotes services in attractive ways. The present report is based on
case study of Amazon (world famous online business entity), which facing internet sales tax law
issues. Further, the case is related to tax policy in USA includes charge on online services at state
level. Moreover, the report is able to present different aspects of tools and techniques of sustain
transaction value and connecting link with million customers through producing qualitative
services. In addition to this, relationship between stakeholders and Amazon . Thus, a structural
framework of online transaction activity is framed here in systematic manner.
1. Bowman's strategic clock
Amazon activates electronic transaction in Washington and collects tax only in state. As
per the given case, New York passed internet sales tax law in which company has to charge tax
for purchasing products. Therefore, Amazon faces problems to end up of relationship with other
business industries of other states like North Carolina, Hawaii and different states of USA.
Further, it indicates downwards position in competition market for electronic transactions.
Analysis of online retailer position during facing tough situations is done through Bowman's
strategic clock tool (Whish and Bailey, 2015). It presents sustainability and market value of
Amazon products. Therefore, it is beneficial to take advantage of recognition of marketing
research which generates ideas for further strategic plans.
Bowman's strategic clock focuses to determine marketing position by facing competition.
The model is related to dimensions like price and perceived value of Amazon products (Amazon,
2016). Thus, strategic clock of the model involves various factors like low price and low added
value, monopoly pricing, focused differentiation and risk level. Furthermore, there are eight
strategies of Bowman shows various levels of product value includes hybrid, raise in prices and
risk level to face challenges.
 Low price and low value added:- This strategy shows little value and low prices of
products. Therefore, company approache to low pricing as well low value added to make
position in competitive market.
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Applying this strategy for Amazon, it covers bargain strategy under which competition seems to
be inexpensive and expects like other entities cannot undercut value products of Amazon.
 Low price:- Cost minimization strategy considers to be required to apply low price factor
of Bowman's model (Helfat and Peteraf, 2015). Further, low cost increases demand for
products at large stage.
Therefore, profit on each and individual product indicates at low level but generates high volume
of Amazon entity's products. Moreover, application of the strategy proceed to affordable cost of
products.
 Hybrid:- Bowman approaches to use this planning tool to make place in market. Hence,
organisation can maintain product's value in highly competitive market.
Thus, stratrgy leads to sustain effective competition strategy Amazon can be apply results to
present good value of product differentiated. Marketing strategy seems to be increased as well
elements of reasonable pricing planning is obtained.
 Differentiation:- Bowman expresses that differentiation strategy is able to sustain brand
products value (Harrison and John, 2013). Furthermore, differentiation leads to generate
proper make proper decision and management system for production and supplement of
products.
It is considers like loyal customers of Amazon will demand for quality products even surviving
in cut throat competition market. Therefore, brand awareness leads to sustain online transaction
increasing level worldwide.
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 Focused differentiated:- The strategy is helpful to gain high profit margin and good
relationship with buyers and also remains helpful to face case issue. It proceed to set
targets and positioning value of goods in cut throat competitive market. It is valuable tool
to pull customers effectively.
Amazon concentrates on long term stability of electronic business transaction by using this
strategic plan. Thus, applying focused differentiation, consumer can demand at high level due to
high perceived value of company's goods and services (Rothaermel, 2015).
 Risky high margins:- Acceptance of risk and their solution is considered through margin
process. Therefore, Bowman provides tip to face challenges through margin strategy
during risk reduction.
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Illustration 1:
Bowman's strategic clocks
(Source: Bowman's Strategic Clocks, 2016)

According to strategy, Amazon decides high prices for products therefore, less chances sustain
products value for other states business organizations. Thus, it remains highly risk level to offer
services in competitive market (Hill, Jones and Schilling, 2014). It is one of the tough task to
activate transaction for price premium through facing high level of challenges.
 Monopoly pricing strategy:- The strategy proceed to regulate to protect company and its
value regarding price determination. Proper utilization of production and supplement is
considered here through the strategic-positioning-bowmans-strategy-clock.
There is single option to face competition as well Amazon can determine pricing whatever it
wishes. Thus, monopoly strategy proceed to regulate to protect company and its value regarding
price determination.
 Less of market share:- It is useful strategic plan to increase quantity demand and other
state business industry will desire to take advantage of online transactions. It leads to
improve awarness of society and community towards electronic shopping.
The strategy approaches to decide price of Amazon product at medium level (Tilman and Clark,
2014). It remains beneficial for sustain position as well affordable prices of services are useful
for customers to take advantage of product stability in country.
Although strategic clock model is able to present market position of Amazon and provides ideas
to sustain value but critical evaluation identifies that strategies seems to be biased and clear
concept is absent. Further, low pricing strategy and hybrid indicates to reach out achievable
position and does not provide satisfaction to apply these strategies (Lang and et.al., 2012). Thus,
profit margin impacts at flexible level. Hence, Amazon requires to set clear vision to maintain
value and create positive attitude and perception of customers from other sates to increase
productivity at large scale.
2. Company stakeholders
According to internet sales tax law, Amazon is suffering from changes in tax policies. It
affects electronic transaction of books, MP3, videos and games negatively. Thus, Amazon and
other states businesses affect financial efficiency of country (Bell and Morse, 2013).
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Stakeholder includes customers, employees, creditors and business entities including agents,
wholesalers and other country's business organization. These are internal and external
stakeholders who plays essential role to present market position of online retailer (Whish and
Bailey, 2015). Moreover, political factor as tax rate, which is beyond control for Amazon effects
production and profitability level.
 Employees:- Workers of the organization terms as employees. Further, their performance
plays great role to accomplish tasks. Employees coordinate each other to manage
uncertain plan.
Amazon seeks to perform better through good performance of workers in the entities. They
coordinate each other to meet effectiveness and provide high quality goods to makes place of
organization in competitive market. Supportive role of Amazon employees influences
effectiveness of online marketing.
 Managers:- Top level professionals of Amazon as manager makes strategic plans to
handle situations. Therefore, managers plays great role to convert setting goals into action
plans then its implementation. Further, it proceed to evaluate the activities.
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Illustration 2: Company Stakeholder
(Source: Company Stakeholder, 2014)

Stakeholder as manager of Amazon makes planning and forecasts for further activities to solve
out the issue. Hence, managers of marketing and various departments of industry makes
structural framework to make products more attractive.
 Owners:- Operator or creator of the entity considers as internal stakeholder analyses past
activities and performance ( (Tilman and Clark, 2014). After that, step forward to activate
further activities.
Amazon presents industry's goodwill with useful reputation of its owner's name. Owner plays
role to make policy and decision for production and profitability of company. Generating idea to
run business is done by head of entity. Suppliers:- Production and distribution activity of clothing as well textile goods are
handled by suppliers of Amazon. Thus, marketing activity related to production and
profitability performs utilization status of resources.
 Society:- Online marketing of fashion products impacts positive perception of society
(Helfat and Peteraf, 2015). Hence, modern society and communities get attracted towards
products. On the contrary, some societies go against online marketing and believes in
offline transactions.
Amazon awares society to develop online marketing. Case related to transaction inter states
remains to be solved out by producing sservices effectively. Therefore, safe and secured products
increases interest for taking advantages of electronic shopping in modern market.
 Government:- Changes in government rules and regulations of policy plans impacts on
Amazon goodwill in both manner. Increasing in interest and tax rates impacts negatively.
While, decrease in interest and tax rates effects positively in monetary terms (Harrison
and John, 2013).
Thus, changes in government policies impacts on Amazon in both manner. As increasing in tax
rate imbalances entity's financial position. On the other hand, decreasing in tax and interest rate
impacts company's efficiency for more production and supplement of online services.
 Creditors:- These are those external stakeholder who impacts goodwill of any
organization in competitive market. Therefore, issue of ending relations with other state
industries occurs because of tax charge during purchase of company's products within
states.
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Hence, relations between Washington company as Amazon and other state like Hawaii, North
Carolina and Rhode Island remains disturbed. ((Kirzner, 2015). Therefore, good relationship
establishes between company and its creditors.
 Shareholders:- Capital of entity depends on its shareholders. Thus, share capital of all
shareholders presents financial profile of the organization. Including this, shareholders
position and their capital parts attract or repulse other entities for sharing.
Hence, shareholders plays great role to present company's position in market for clothing and
textile items. It indicates sustainability power of Amazon for facing competition. In addition to
this, increasing in investements considers through attractive planning policy for Amazon entity.
 Customers:- Stakeholder theory identifies effect on customer, employees, suppliers and
state to state as well nation to nation transactions. The theory generates idea to manage
position and sustainability of products in competitive market.
Thus, management of various stakeholders' position leads to reduce issue. Sales quantity and
relationship with other state organizations adversely effect on goodwill of online retail industry.
Hence, strategic planning related to customer satisfaction leads to pull consumers for online
shopping at large scale. As buyers play key role for Amazon position in market therefore, it plays
supportive role in optimum utilization of resources.
Regarding market structure, increasing in tax rates reflects company's financial position
negatively. While decreasing in tax rates positively influence transactions of goods and services.
Although it results beneficial for government to monetary stability of nation but highly
effects on country's state transaction (Gary and Julian, 2016). In addition to this, on behalf of
pricing stability, company sets low price for selling products which indicates positive influence
for customers but financial position of Amazon reduces.
Impact on different stakeholders emerge differently due to dynamics and adopting
challenges of new techniques . Hence, online retail company requires to establish new stores in
other states and improvement of relations with several businesses. Moreover, there are two
aspects for Amazon to apply and expand business activity.
Relationship of Amazon with other state organization can be effective for long term
sustainability of online services. Customers would be satisfied by facilities in Washington by
focusing upon time consuming strategy and producing safe as similar to qualitative services.
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3. McKinsey's 7's
Case related to Amazon retail industry for online transaction of goods and services from
state to state. Company is facing issue for electronic business due to internet sales tax law.
Changes in rules and regulations for online business activity requires to manage the issue and
increase the potential of Amazon (Mayer, Melitz and Ottaviano, 2014). Therefore, solution for
the problem can determined by apply McKinsey's 7's model. Retail industry manages economic
stability by applying 7S model includes hard elements and soft elements.
Hard elements are strategic elements helpful in management to bring positive effects
involves strategy, structure and systems. It influences business activity in planned manner. While
soft elements are intangible involves factors like shared value, skills, style and staff. Hence, all
elements are useful for improving strength of company to sustain product value in market. It
implements strategy and evaluation of technological changes can be examined by applying these
elements to create positive environment.
 Strategy:- It builds strength to take advantage of competition and plays role to maintain
quality to satisfy customers. Moreover, strategic plans to manage uncertain changes
occurs in competitive market proceed to accomplish tasks and further increases efficiency
of the organization.
Target and strategic plans leads to enhance product value and Amazon gets strength to sustain in
competitive market (Scitovsky, 2013). It develops and maintain online transaction value in
market.
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 Structure:- A structural framework regarding targets and planning process implements
company's reputation. Further, it is beneficial to present clear vision to manage
transactions of firm.
Amazon sets goal to create structural framework for business activities and coordination of
employees with retail industry. Hence, structure of organization like functional, strategic and
matrix leads to solve out the issue within state transactions.
 Systems:- Proper balance between production and supplement of books, videos, movies
and games comes under system element. It is helpful tool to allocate systematic excahnge
of goods and services of the organisation. Therefore, proper balance consists between
planning and evaluation system.
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Illustration 3: McKinsey's 7's
(Source: McKinsey's 7S Model, 2016)