Amazon's Competitive Strategy and Market Expansion Analysis

This case study examines Amazon.com, analyzing its competitive forces and value chain models. It explores how Amazon responds to its competitive environment, providing value to customers through customer service and technology. The study delves into Amazon's evolving business strategy, driven by technological advancements and customer demands, and its expansion into various markets like books, video, music, and cloud computing. It assesses Amazon's competitive advantages in these diverse markets, emphasizing its customer-centric approach and the application of the 5 Ps of marketing (Product, Price, Place, Promotion, and People). The analysis concludes with a discussion on the potential for Amazon's continued success, highlighting its willingness to embrace failures and innovate to meet customer needs.

Amazon case study

Analyze Amazon.com using the competitive forces and value chain models. How has it
responded to pressures from its competitive environment? How does it provide value to its
customers?
Amazon is in the leading position as online retailers (lunden, 2018). The company expanded
during the period 1900 and its products were mostly books, electronic equipment’s, CD’s.
Amazon succeeded in their venture because of high emphasis on customer service. Technology
assisted them because their operations were mostly online rather than physical services. The
company has a lot of competitors starting from reputed brand organizations to small scale online
stores. The company has a better competitive advantage over the rivals. The competitive forces
are:
Bargaining power of buyers: Amazon gives high emphasis on customer service, demands,
superior quality products. Customers are provided lots of opportunities to choose brand new
products or unique used products sold by various users. The bargaining power of Amazon
customers is extremely high.
Bargaining power of suppliers: The power of suppliers can be considered as average. Amazon
takes overall control of quality in terms of supplies. They deal numerous suppliers and puts
restrictions which are bound to be followed by the suppliers.
Threat of substitute commodities: Threat of substitute products and commodities can be
considered as medium. The company faces competition with rival online stores. Physical stores
are a threat but Amazon has huge brand recognition and loyal customers to overcome these
issues.

Threat of new entrants: New entrants won’t affect Amazon. The company has flourished for a
long period of time because of their unique services and response to customer needs. To surpass
this brand will be extremely complex. Loyal customers continuously purchase from this brand.
Threat of Rivals: Threat of rivals is high among online retail firms. Amazon constantly faces
rivalry from both small and large retail companies such as Walmart. Even though the level of
completion rises, Amazon has still maintained top position in the industry.
Value chain model of Amazon includes: Inbound logistics, outbound logistics, operations,
marketing and sales, service (Dudovskiy, 2018). Amazon is facing huge pressure due to
technology evolution. The company is constantly improving new methods to defeat rivals. The
management employees and technicians are constantly upgrading services. Failure to take hold
of online commerce market, the company inaugurated voice command gadget known as Echo.
This gadget provides various services such as listening music, weather updates. Greater
achievement over competitors was evaluated by this gadget initiative. Amazon provides values
by offering unique products and services and meeting satisfaction of customers. Quicker delivery
of products are initiated. Greater commitment initiatives and constant update of technology in
services make the brand loyal to the customers.
Describe Amazon’s evolving business strategy. Why did the company change its strategy?
Amazon’s business strategy was to mature with the evolving changes of technology (Keller,
2018). With the expansion of growth, the needs and demands of customers increased. Amazon
met these needs by providing variety of products. Long term business decisions were taken. The
key to earning profit in any retail business is learning to adapt with the changes. Technology

upgrades are essential as well as innovative ideas. Without proper planning and readjustments of
any company, rivals companies will definitely to take over. In present day, organizations who
volunteer to adapt to changes have better possibilities to survive in the competitive market.
Conduct research and discuss the different markets that Amazon.com is expanding into
(Books, Video, Music, General Merchandise, Cloud Computing, Devices). Discuss the
competitive advantage that Amazon.com has in these diverse markets. Is the competitive
advantage in each the same? Address why or why not.
Amazon started its business initially by selling books and in the present days anything can be
bought from this company. The company expanded from selling books, electronics to latest
devices, technology and variety of unique accessories. It gained competitive advantage in diverse
markets all over the world. The basic reason behind this is, successful relations with the
customers and providing major priority to their needs. Better satisfaction has led to loyalty.
Affordable prices and variety of options to choose from give the company a competitive edge.
The corporate vision of the company is to remain customer centric. It has the kind of advantages
that rival organizations can’t copy or replicate making them the best in the competitive market.
Product Marketing is based upon the five P’s (Product, Place, Promotion, Price, and
Profit). Discuss the Amazon.com approach to each and how this contributes to competitive
advantage.
Product marketing is based on 5p’s which are Product, Price, Place, Promotion and People ("The
5 Ps of marketing", 2018). These 5p’s determine the strength and ways to gain competitive
advantage. Amazon.com approaches each of these and contribute competitive advantage.

Product: Amazon sells variety of products from books to electronic accessories. Customers are
provided with opportunities to sell their products too.
Price: Amazons sells products at cheap prices. Huge amount of products are sold online and it
doesn’t affect the company profit that much. Best quality products are provided to gain customer
satisfaction.
Promotion: Amazon initiates different advertising strategies to gain customer support and
coverage. Lack of physical stores enables them with the opportunity to incur expenses on ads
without thoughts of loss and earn profit from sales avoiding hassle.
Place: Amazon relies on the online market to sell their commodities. Customers are provided
with opportunity to sell products in the website. US Postal service is utilized to deliver products.
People: The technical team and employees of Amazon deal with customers effectively. The
orders of customers are taken as major priority and delivered within the promised time.
Do you think Amazon can continue to be successful? Explain your answer.
I believe that Amazon can continue to be successful with their business ventures. They have
always dealt with threats and failures with confidence and hard work. The CEO of Amazon Jeff
Bezos failures are a good thing and opens up new horizon to succeed in future inventions as well
as profitability (Gilbert, 2019). Most organizations are afraid of failures and never take risks,
always go for the tendency to minimize risks. Amazon is distinctive in this context, they are
willing to take risks and embrace failures to determine future plan of action. This strategy helps
them evaluate what updates and alterations are required for greater customer satisfaction.
Creative ideas, patience and technical innovations is essential for organizational success.

Reference
1. lunden, I. (2018). Amazon’s share of the US e-commerce market is now 49%, or 5% of
all retail spend – TechCrunch. Retrieved 3 October 2019, from
https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-commerce-market-is-now-
49-or-5-of-all-retail-spend/
2. Dudovskiy, J. (2018). Amazon Value Chain Analysis - Research-Methodology. Retrieved
3 October 2019, from https://research-methodology.net/amazon-value-chain-analysis/
3. Keller, C. (2018). Amazon's Business Strategy & Leadership In Online Retailing.
Retrieved 3 October 2019, from https://profitworks.ca/blog/543-amazon-business-
strategy-leadership-online-retailing
4. The 5 Ps of marketing. (2018). Retrieved 3 October 2019, from
https://www.business.gov.au/marketing/advertising/the-5-ps-of-marketing
5. Gilbert, B. (2019). Amazon CEO Jeff Bezos says multibillion-dollar failures are actually
a good thing: 'If the size of your failures isn’t growing, you’re not going to be inventing
at a size that can actually move the needle'. Retrieved 4 October 2019, from
https://www.businessinsider.com/jeff-bezos-says-multi-billion-dollar-failures-necessary-
for-amazon-growth-success-2019-4