Amazon's Growth Strategies: Successes, Failures, and Analysis Report

This report examines the successes and failures of Amazon's growth strategies, analyzing key drivers of innovation, entrepreneurial vision, and business models. It utilizes frameworks such as the Ansoff matrix, Porter's Five Forces, and the Blue Ocean Strategy to evaluate Amazon's strategic decisions. The report explores various aspects, including product and process innovation, market penetration, and competitive rivalry. It also delves into specific successes like Alexa and Prime Video, and failures such as the Fire phone. The analysis provides a comprehensive understanding of Amazon's approach to market dynamics, competitive positioning, and the impact of strategic choices on its global presence. The report concludes by highlighting the importance of innovation and strategic adaptation in Amazon's continued success.

Successes and Failures
of Amazons Growth
Strategies Causes and
Consequences

Table of Contents
INTRODUCION..............................................................................................................................3
MAIN BODY..................................................................................................................................3
Using appropriate frameworks/models, identify and evaluate the key drivers of innovation
contributing to the success of Amazon........................................................................................3
Different approaches undertaken by Amazon to shape its entrepreneurial vision and business
model...........................................................................................................................................5
Bargaining Power of Buyers of Amazon.....................................................................................6
Threat of New Entrants................................................................................................................6
Threat of Substitute Products or Services....................................................................................6
Blue Ocean Strategy....................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
Books and journals....................................................................................................................11

INTRODUCION
Amazon, being an American based multinational organisation working online in global
markets, is considered as the Big Tech company. The company was initially established as a
Book-Store by Jeff Bezos, the Headquarters are located in Seattle, Washington (Schilling and
Shankar, 2019). The brand deals in E-commerce, Digital Streaming, Cloud Computing and
Artificial Intelligence. The closest competitors facing a tough challenge are Facebook, Google,
Apple and Microsoft. Being a globally operated platform the strategies implemented or to be
implemented in future plays an integral role in deciding the success and failures of the brand.
The brand generated a lot of strategic moves among which some were success and some of them
were failures. The consequences are wholesomely dependent upon the strategies made and
proper use of them in the execution. Some of the success strategies are Alexa, Amazon
Marketplace, Prime Video, Amazon Web Services and Kindle. The failed strategies include
Auctions, A9 Search engine, Endless and Fire phone. The report focuses on how the company
follows and executes the strategy.
MAIN BODY
Using appropriate frameworks/models, identify and evaluate the key drivers of innovation
contributing to the success of Amazon
Key drivers of innovation contributing to the success of Amazon
Amazon is an e-commerce company which is well known for the innovation and
provides innovated products to the market that no one even heard off like Alexa, Kindle, Prime,
etc. Amazon follows various techniques to introduce new changes to the market. Innovation
refers to the introduction of new idea, method, product, etc. for the success of the business.
Innovation means changes and change is the rule to survive in the world (Miles and Van Cliea,
2017). Innovation can be done through four direction of changes, it can be explained as four P's
of innovation. That are given below:
 Product Innovation:- Product innovation refers to the changes in the product or service
they offer. In respect of Amazon, it continuously brings changes in their services. Their
update always comes with the new feature and update for the people. They work on the
data they collect from their customers and from other sources. They go through the

complaints of the customer and bring possible changes in their product to make it more
beneficial to their users. They always come with better options for their customers as
when their customer face the problem of delivery charges, they come with the prime
option for their loyal customers to became their members. And amazon provide their
member customers free and fast delivery for the possible product. As they research and
come to know that only the customers who are loyal to the company or deals with the
company very often. In this way only company should identify and evaluate the
shortcomings of their product and services through their own or the complaints from their
previous customers and provide the solutions of the shortcomings of the product with
some innovative ideas and amazon is good at it. An innovative idea can quickly make
smart and creative product through perseverance.
 Process Innovation:- Process innovation refers to the changes made in the process of
making the product or delivering the product. Amazon is a online retail store also offer its
own products under Amazon basics. To make its product better to use and deliver
successfully it takes so many innovative step in the process stage of the company. Before
it was tough to deliver the product in one day only but amazon makes it possible by
delivering their order in one day delivery with proper safety of the product by innovating
the process of delivery. Now amazon is planning to again innovate their process of
delivery by delivering the product through air. Amazon is planning to introduce drones in
the market to deliver the products in 30 minutes only to their customers. It will be the
most innovative idea introduced by amazon for delivery purpose and it will also help the
company to achieve its success. every customer demands for the fastest delivery (Masè
and Cohen-Cheminet, 2018).
 Position Innovation:- Position innovation refers to the repositioning of any established
product or services in a specific content. In respect of amazon, it repositioned its product
whenever needed to be in a more innovative manner such as when they introduce any
product and it won't work in the market then it use the innovative market strategy in order
to promote the use of that product. Taking an example when amazon introduce fire TV
stick and it gets failed in the market then amazon provide the stick to the customers with
a tie up with other companies for free for a month then charge it afterwards on per month
basis and reposition the product to each and everyone's reach. Amazon being innovative

now opening a physical store to sell its product and give them a position in the market as
people will be able to buy their product after verifying physically.
Paradigm Innovation:- Paradigm innovation refers to the changes in the underlying
model which works in the working of the organisation. Amazon works on the different models
applied on any organisation like maslow's model to motivate their employees, operations models
etc. And they put innovation in that too with given period of time or when needed in the
organisation (Voytolovskiy, Pogodina and Ivanova, 2020).
As discussed above that innovation is necessary for every organisation's success. They
gave them an opportunity to fight with their competitors. It is the innovation of amazon that it is
on each and every mouth and fight with competitors like Flipkart, Ebay etc.
Different approaches undertaken by Amazon to shape its entrepreneurial vision and business
model.
Amazon works too hard to help to shape its entrepreneurial vision and business models by
deeply analysing them through various theories and model to achieve success. Some of the
models which help them to analyse it is Ansoff matrix, porter's five forces model, Porter's
generic strategy, etc. These are explained below:
Ansoff matrix on Amazon:-
Ansoff Matrix is a strategic tool for planning helps in increasing the market reach by
either exceeding the product range reach or diversifying the market portfolio as well and
enhances the future growth by creating ways to enter the new market. It incudes:
Market Penetration: There are several policies and strategies which Amazon is
implying to create a more powerful impact. Amazon use innovative techniques to develop its
product in same market by providing more services on the existing product to attract more and
more customers. The company provides discounts on bulk purchase, offers fast delivery, giving
quality services and products.
Market Development: Before entering the market, Amazon study about the market first,
so that products can be launched accordingly otherwise it would be failed. This even helps in
building trust among the existing market and the customers there (Zhao and Ma, 2017).
Product Development: Bringing change and new products in an efficient manner always
attracts the customers. Amazon introduce new products in the market very often as recently they
introduce alexa to the market.

Diversification: Amazon is an online retail shop. But it is offering prime membership to
only 17 countries. Amazon can diversify its business by introducing prime benefits to more and
more countries with more featurews of taking the membership.
Porter's Five Force Models:
Impact of Five factors of external market are examined in Porter's Five Force Model i.e.
competitive rivalry, threat of new entrants, supplier power, buyer power , and threat of
substitutes on Amazon.
Bargaining Power of Buyers of Amazon
Bargaining power of buyers of Amazon is high as there are so many competitors in the
market. As buyers can switch on the other website to purchase their product. But on the other
hand i8t has products which are sold by amazon only on that amazon has low bargaining powerc
of buyers (Walls, 2019).
Competitive Rivalry
Amazon operates in a very competitive market as itr is a online store and customer needs
a click only to switch over to another store, so amazon works under high pressure. Price wars
launched by competitive companies affects profit of Amazon. Amazon is doing hard to tackle
this competitive market.
Bargaining Power of Suppliers of Amazon
Bargaining power of Suppliers of amazon is very low as amazon has a lot of number of
buyers and it has option to switch over to other. On the same, amazon also launch its own
product through amazon basics which reduces the bargaining power of suppliers.
Threat of New Entrants
Amazon is free from the threat of new entrants as to compete with amazon any
organisation needed a huge investment to invest in the business and practically it is not possible
to invest and that amount and create a brand image like amazon.
Threat of Substitute Products or Services
There is a threat of substitute product in the market as the products offered by Amazon
already have high competition in the market. But on the other hand its product comes with a
unique feature which is hard to compete (Naiying, 2017).
Porters Generic Strategies

If Amazon do not work on these three strategies then there will be a risk of wasting its
business's precious resources, so it is very essential to apply these strategies as they basically
targets at cost leadership which aims at cost minimisation, differentiation which is a product
differentiation strategy and focus which is a market focus strategy. These strategies focuses at
providing a new and innovated product to its customer with more focused team with best lower
prices. They are explained below:
Cost leadership Strategy: Amazon target its customer in most and all the segments of its
products and try to lower the product prices to attract more and more customers. So the amazon
is following the Cost leadership Strategy as it is important to it to sustain in the competitive
market.
Differentiation Strategy: Differentiation strategy is to differentiating its product or
service from other competitors with lower prices and amazon always follows innovative
techniques with low prices which helps them in innovating new products which provides the
customer a different product with new services and the company can attract new customers
towards them (Xie and Ran, 2016).
Focus Strategy: Focus strategy refers to focusing on one or a few segments for the
success of a business. Amazon also uses focus strategy by focusing on cost leadership and
differentiation strategies together. As it focuses on providing new and innovative products to its
customers with lowest possible cost which helps amazon to generate its brand image.
Amazon in the present time is catering the needs of all category age sectors which will
enhance its entrepreneurial abilities and result in bringing innovation in its working sector. As
entrepreneurial traits focuses on running the business in a more organised manner giving good
gains to the organisation. Being a online platform the chances of more innovation are
automatically enhanced.
Blue Ocean Strategy
The strategy gives an idea about the market in which there are huge profits and there is no
or very less competition giving good position to the brand. Amazon started as In context to
Amazon it can be seen that the new services brought by the brand such as Amazon Prime, Alexa
are the innovative services that are leading the markets as no other brand is offering such
services and in future if they will, then also there are huge chances of recognising those services
with the name of existing amazon services only because Amazon has created a benchmark

already. The success of Amazon depends upon the detailed following of the Blue Ocean
Strategy. The strategy briefs about the systematic follow up of the cost, profitability and human
resource. It bothers about creating a win situation for all the parties associated with the business
whether buyers, shareholders, company itself and the employees. The strategy focuses the brand
to create new services rather than focusing on competitors. To launch any of the services and to
maintain the sustainability in the environment, the external factors of the surroundings are to
considered utmost. The analysis of external factors can be made on the basis of PESTEL as :
Political Factors: The political external factors for an E-commerce organisation that
considers to be mandatory for developing the brand name can be categorised as political stability
of countries, support of governance, enhancing government efforts to increase cyber security
etc. these steps of government has helped amazon to sustain. On the other hand the same external
factors create competition for the company like involvement of Chinese online retail firms which
are expanding their operation (Liu, 2020).
Economic Factors: Performance of Amazon varies on the critical condition of the
economy and the economic external factors like the growth rate, inflation, employment rates,
wages, rate of interest which affects the company and economic stability of the developed
markets and increasing disposable incomes. On the other hand potential economic recession in
china is a threat for the economy.
Social or Socio-culture Factors: Amazon deals in different markets having vast cultural
conditions faces various social changes like lifestyle changes, habits of buying, ratio of educated
and non-educated potential consumers, income level, family size which needs to be verified. It
can create opportunities for the company like increasing online buying habits of the customer
and increase in consumers in developing countries. But the way wealth disparity is increasing
day by day it is a threat for the company as it can result in breaking the customers (Huifang, Jie
and Zhenning, 2018).
Technological Factors: Amazon has a central control of technology in business line, so
advancement directly affects the company. As efficiencies of the IT resources are increasing day
by day which is an opportunity for Amazon to grow but on the other hand cybercrimes are also
increasing which can be a threat for the company (Zhou and Zhang, 2016). It also faces a threat
of rapid technological obsolescence which impose pressure on company to develop its assets but

it can also became opportunity in optimising business. Discussing the above mentioned services
tells about the technological advancement of Amazon.
Ecological or environmental factors: Even Amazon has an online business then also
environmental factor affect their business. Rising interest in environmental programs, rising
emphasis on business sustainability and increasing popularity of low-carbon lifestyle is an direct
opportunity to the business as it provides time and waste management. The factors like weather
conditions, population growth, and health care facilities affect the business of Amazon as well.
Legal Factors: The legal external factors can create opportunities for the business of
amazon as every country have their own legal terms and conditions which can prove as a great
help in rising product regulation intensify the efforts of amazon in reducing counterfeit sale.
Changes in export and import Regulations Company has opportunity to grow. Moreover,
Amazon can strengthen its brand image in rising environmental protection regulations on
businesses (Demidenko and Malevskaia-Malevich, 2019).
Accordingly the tools of Blue Ocean Strategy can be implied on Amazon as:
ERRC Grid: The Eliminate-Reduce-Raise-Create (ERRC) Grid is a mandatory tool of
the Blue Ocean Strategy developed by Chan Kim and Renee Mauborgne that makes Amazon to
focus on elimination of the current initiatives and resources, reduction of the negative factors like
waste, time and cost. The rise in profits and opportunities can exceed the growth of Amazon and
at last the creation and execution of different programmes and activities focuses on building a
good market overall the globe. The follow of this strategy appropriately gives rise to a new blue
ocean market. One such example of the strategy is Amazon Kindle Fire which is the multi touch
screen developed to ease the reading of online readers, facilitating the multi-tasking consumers
and giving a better product in the market (Weiguang, Lei and Hongmin, 2017).
3 Tiers of Non-Customers: As developed by Kim and Mauborgne, there are three kinds of
customers in the market who know the brand but are not willing to give commitment for
becoming the customer because of their perceptions. Customers being a vital element in the
industry are important to be known and kept engaged. These non-customers are mandate to be
understood and converted in the customers to build a good market cap. The kinds of non-
customers are a) soon to be non-customers who are on the line to be converted as customers after
change in prices or quality b) refusing non customers who are not willing to buy the product
because of their prepared mind-set regarding the image of Amazon and other relative factors c)

unexplored non customers who are non-aware about the brand and are not having any interest to
be in future. These non customers are mend to be changed in customers by observing their weak
points and working on the same to create a new blue ocean market (Maulina and Dewi, 2020).
CONCLUSION
On the basis of above report it can be concluded that Amazon has developed appreciable
ratio of customers in last 1.5 decades with its marvellous success strategies. Amazon has
identified the key factors for success by capturing the needs and trends which has allowed in
reducing the costs and creating more sales from existing customers and generating potential
customers from non-customers. This has enhanced the brand name to be more stronger and
delivering the quality services to the potential customer-centric. The unique business model has
helped the organisation in creating a blue ocean market and becoming a huge market creator
giving very tough competition to the existing competitors and making it difficult for the new
entrants as well.
There are some strategies which are failure because of lack in some policies and their
compliance. The strategies followed without disruption helps Amazon in building more loyal
customers, increasing the repeated purchase by giving them subsidies and discounts. The
satisfying of needs by the team has generated a name in giving quality service and products. Jeff
Bezos has maintained the work environment in such a manner that major sectors of the strategies
are followed in an accordance manner, which only has resulted in developing Amazon from a
small Book-Store to a multinational and well renowned E-COMMERCE sector dealing in almost
all the products and services.

REFERENCES
Books and journals
Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Miles, S.J. and Van Clieaf, M., 2017. Strategic fit: Key to growing enterprise value through
organizational capital. Business Horizons, 60(1), pp.55-65.
Masè, S. and Cohen-Cheminet, G., 2018. Repetto, a Paris-based craft enterprise growing into a
global brand: design-driven innovation and meaning strategy. In Product Innovation in
the Global Fashion Industry (pp. 113-142). Palgrave Pivot, New York.
Li, Y., Research on Enterprise Culture Innovation in the Age of Internet Economy. Academic
Journal of Humanities & Social Sciences, 2(1), pp.43-47.
Voytolovskiy, N., Pogodina, V. and Ivanova, M., 2020. Management strategy for innovation and
investment activities of an enterprise. E3SWC, 164, p.10051.
Zhao, W. and Ma, H., 2017. Research on the Management Mechanism of Enterprise Service
Innovation. American Journal of Industrial and Business Management, 7(12), pp.1346-
1360.
Walls, A.J., 2019. The Innovation Cascade: A Five-Level Framework for Building Enterprise
Innovation Systems.
Naiying, W.A.N.G., 2017. Technical Innovation and Patent Strategy of Technology-based New
Enterprise. China Invention & Patent, (3), p.5.
Xie, Y. and Ran, R., 2016. A Study on Enterprise Technological Innovation Capability
Evaluation with 2-Tuple Linguistic Information. Journal of Computational and
Theoretical Nanoscience, 13(10), pp.7347-7350.
Huifang, G., Jie, Z. and Zhenning, Y., 2018. Innovation Performance of State Owned Enterprise,
Market Environment Change and Policy Shock: Based on Regulation Effects of
Innovation Strategy and Political Embeddeness. Technology Economics, (3), p.3.
Demidenko, D.S. and Malevskaia-Malevich, E.D., 2019, May. Digital Approach to Determining
the Strategy of Innovative Production in the Enterprise. In International Science and
Technology Conference" FarEastСon"(ISCFEC 2019). Atlantis Press.

Maulina, A. and Dewi, M.P., 2020. Innovation Strategy of Small Medium Enterprise (SME)
Through Public-Private Partnership in Depok City. Majalah Ilmiah Bijak, 17(2),
pp.230-235.
Weiguang, W., Lei, Y. and Hongmin, Z., 2017. The Research of Enterprise Technology
Innovation Ability of Non-core Enterprise in the High-tech Industrial Innovation
Network——Taking Shenyang as an Example. Science & Technology Progress and
Policy, (2), p.7.
Zhou, Y. and Zhang, Q.P., 2016, August. Enterprise Disruptive Innovation Risk Evaluation---A
Case Study on Yu’ebao. In 3d International Conference on Applied Social Science
Research (ICASSR 2015). Atlantis Press.
Liu, H., 2020, July. University Enterprise Innovation Cooperation Platform Construction
Considering Computer Multi-dimensional Dynamic Innovation Mode. In Journal of
Physics: Conference Series (Vol. 1578, No. 1, p. 012056). IOP Publishing.