Strategic Management Report: Amazon's Business Strategies Analysis

This report provides a comprehensive analysis of Amazon's strategic management, focusing on its corporate objectives, external and internal environments, and strategic choices. The analysis includes PESTLE and Porter's Five Forces frameworks to assess external factors, along with an examination of Amazon's strategic capabilities, resources, and business functions. The report explores Amazon's market segmentation, competitive strategies, and strategic choices, including diversification and psychographic segmentation. It highlights the importance of factors such as human resources, technology, finance, and infrastructure. The report concludes with recommendations for Amazon to maintain and enhance its competitive advantage in the dynamic online retail market.

Strategic Management
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EXECUTIVE SUMMARY
As per the detailed study, strategic management is one of most critical aspects and it
covers various activities that can bring sustainable development for the organization. It includes
planning, monitoring, analysis and assessment. It facilitates in effective accomplishment of
organizational goals as well as objectives. For this report, Amazon is taken into consideration
which is a leading online shopping website which operates its business in diverse geographical
areas of the world. Further, it has been identified that factors of pestle analysis need to be
considered by the management of in an appropriate manner otherwise company can face various
critical issues. Human resource, technology, finance and infrastructure are the essential factors
that can lead business towards the impressive level of success.
However, Amazon can consider psychographic segmentation because it provides better
opportunities in the market. In this regard, classification of customers will be according to the
lifestyle. It is beneficial for further developments and improve the overall strategic
implementation. Diversification is also advantageous for the organisation as it impacts market
share and product development in a positive manner.
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TABLE OF CONTENTS
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................4
CORPORATE OBJECTIVES.........................................................................................................4
EXTERNAL ANALYSIS................................................................................................................5
Pestle Analysis.............................................................................................................................5
Porters five force..........................................................................................................................6
INTERNAL ANALYSIS.................................................................................................................7
Strategic capabilities and resources.............................................................................................7
Business function of the company...............................................................................................8
BASIC OF COMPETITIVE STRATEGY......................................................................................8
Market segment............................................................................................................................8
Business strategy..........................................................................................................................9
STRATEGIC CHOICE....................................................................................................................9
STRATEGY EVALUATION........................................................................................................10
CONCLUSION AND RECOMMENDATION.............................................................................10
REFERENCES..............................................................................................................................12
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INTRODUCTION
Strategic management is referred as an essential process that includes various activities
for effective development of the organization. It covers planning, monitoring, analysis and
assessment that help in the accomplishment of organizational goals as well as objectives (Hitt,
2012). In order to understand the concept of strategic management, present report will focus on
the work culture of Amazon. It is also significant for business firm to analyse internal and
external factors in an appropriate manner. Goals and objectives must be designed according to
the corporate policies and strategies. Current study will also provide information about strategic
choices that management of Amazon can adopt for sustainable development.
CORPORATE OBJECTIVES
Amazon is one of the leading online shopping portals that operates its business in diverse
geographical areas of the world. It is an American electronic commerce and cloud computing
organization. Company operates its business from Seattle, Washington. However, organization
has started its business through online store and diversified their business in different sections.
Classification of products can be like DVD, Blu-ray, Video, Books, etc. (Wheelen, 2011). As per
the structured study of organizational working, management of Amazon is currently focusing on
business expansion to increase its market share and customer base. Business entity focuses on
the development of customer experience by improving its services and products. Company also
considers that formulation of goals and objectives is very significant because it helps in the
effective accomplishment of desired goals and leads business towards the impressive level of
success (Narayanan, 2010). In addition to this, organization also focuses on effective designing
of mission and vision.
Mission: Its mission is to use technological tools and expertise of their employees in
order to provide better experience to their customers. Providing the best shopping experience
through use of internet is also a key motive of business entity.
Vision: Its vision is to become the most preferable company by the customers in the
world and build better place for people where they can experience and discover new things
(Schlegelmilch, 2003).
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Objective: Company’s key objective is to offer premium products at low cost so that
customer’s needs can be accomplished in a desired way. Amazon has also an objective of
enhancing its product range in order to conduct future developments.
Moreover, management of Amazon also designs activities in such a manner that provides
better value to its customers. It is also beneficial for enhancing market share in the competitive
business environment. In this regard, organization focuses on diverse key factors while designing
strategies because it is advantageous for gaining sustainable development. Classification of these
factors can be customer obsession, reduced gap among activities, flexibility, innovation, skilled
workforce, etc. Business firm also ensures that pricing factor is properly maintained along with
the convenience factor (Jacob, 2011). It helps in performing various developments and provides
better opportunities in the market. One of the organization’s strategies that company considers is
continuous investment in new product and business expansion in order to meet the expectation of
customers. Management of Amazon is also focusing on high investment activities that help to
create brand awareness in the market. It assists in attracting more customers and leads business
to gain higher success (Doganata, 2009). Business entity also considers various other elements
that enhance trust among customers and force them to repurchase the products and services. In
this concern, elements that can be considered are quality, value, timeless, appropriateness of
products and services, reputation as well as security in e-transactions.
EXTERNAL ANALYSIS
Pestle Analysis
Political: Company is operating its business in diverse nations. So, it is significant for the
management to consider diverse political aspects as per the nature of nation. Improper
consideration of such aspect may influence the business of Amazon in an adverse manner (Hitt,
2012). Internet policies and online market decisions of government can impact the operational
activities of business. Changes in import and export policies can also affect the business of
organization.
Economic: Company is mainly operating its business from United States. Economic
system of America is stable that provides various advantages to the firm. Changes in taxation
policies may influence the business operations of Amazon adversely. Inflation rate also needs to
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be considered in a significant way as it affects the pricing policy of business. Economic
development in India can create better opportunities for the organization (Jacob, 2011).
Social: It is necessary for the management of Amazon to consider social aspect in an
appropriate way because it impacts the needs of customers. Population is more focusing towards
the use of internet that also creates better opportunities for the business entity (Doganata, 2009).
Producing products as well as services as per the customer’s needs will be more advantages for
the company in order to become successful.
Technological: Company is continuously focusing on technological developments in
order to ensure that service standards are well-maintained. With the use of latest technological
tools, management of Amazon has increased their productivity (Narayanan, 2010). It helps in
attaining various benefits that can lead business to higher level of success.
Legal: It is necessary for business firm to focus on diverse legal aspects that can impact
the effectiveness business practices (Narayanan, 2015). In addition to this, there are various legal
policies that need to be followed by the organisation for gaining competitive advantage. For
example, avoidance of data protection act may lead organisation towards the legal issues.
Environmental: Business firm is effectively following the rules and regulations in
respect of maintaining environment safety. If management of Amazon is not considering
environmental policies in an appropriate manner then it may influence its brand image and
impact business in a negative manner (Karagiannopoulos. 2015).
Porters five force
Threat of entry: It has been identified that threat of entry in context of Amazon is high
because to operate new business, individual needs low level of investment. Economic condition
of UK also provides better opportunities to new businesses (Watts, 2008). Availability of cost
advantage also motivates business to enter in the market for gaining competitive advantage.
Threat of substitute: It is low because there are very few substitute products available in
the market that can replace the necessity of Amazon products. Customers also prefer to purchase
small volume of products and services in this sector (Baker, 2011). Therefore, it also enhances
opportunities for the business.
Power of buyer: It has been witnessed that bargaining power of customers is high
because there are more number of competitors that provide same products and services in the
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market at very low cost (Ireland, 2008). It may influence the business of Amazon in a negative
manner.
Power of supplier: Bargaining power of supplier is low that creates better opportunities
for the organisation because there are more number of suppliers available in the market and due
to this, firm has wide range of options (Walter, 2010). It leads business to reduce the cost of
operational activities and enhance the level of profitability.
Rivalry: Amazon is facing high ratio of competition in the market that influences growth
ratio in an adverse manner. E-bay is one of key competitors of Amazon which creates barriers in
the international market.
INTERNAL ANALYSIS
Strategic capabilities and resources
It is necessary for the management of Amazon to focus on number of capabilities and
resources that lead business to impressive level of success. There are various resources that need
to be allocated by the organisation in an appropriate manner for getting more opportunities.
Classification of resources can be as human resource, technology, finance and infrastructure. In
this respect of human resource and finance, it can be asserted that these two are the main
resources (Webster, 2010). With availability of skilled workforce, management can easily
accomplish their goals and objectives. If employees are not skilled and knowledgeable then
company may face various issues. Financial resources are also essential for business firm
because it provides support for operational activities. Without consideration of these two factors,
management can face various critical issues at their workplace (Barksdale, 2012). Further, it has
been identified that human resources and effective flow of finance are key competencies of the
organisation and these help business in attaining various advantages.
On the other side, technology and infrastructure are also major elements that lead
business to sustainable development. By using technology in an effective manner, productivity of
the firm can be enhanced (Angelo, 2009). Various technological changes are considered by the
organisation that enhances the level of delivery system and helps management to accomplish
their goals in an appropriate manner (Hedman, 2013). Infrastructure also facilitates in effective
development of supply chain so that market share can be improved.
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Business function of the company
In order to meet the organizational goals and objectives, management of Amazon has
developed its own business model. Company is currently focusing on various factors such as
online retail, internet services and kindle ecosystem. In online retail system, organization focuses
on selling of products and services with meeting daily needs of society. Further, business entity
offers wide range of retail products at very low cost that attracts more and more customers
towards business (Johnson and et.al., 2014). Amazon maintains its standards in various aspects
that leads business to sustainable development. Another part of its retail strategy is to serve as a
channel for other retailers to sell their products. Company also provides its services under the
name of Amazon prime (Marren, 2009). It has been identified that on demand video streaming is
also one of key services that creates an opportunity for the organization.
Moreover, Kindle ecosystem is considered as a service that is more acknowledged among
travellers. Company is expanding its business through manufacturing and distribution of Kindle
tablets (McGee and et.al. 2010). It is a well-designed electronic book reader that also works as a
tablet and media device. It increases the profit margin ratio of firm and leads business towards
success.
BASIC OF COMPETITIVE STRATEGY
Market segment
As per the structured study, it has been witnessed that management of Amazon needs to
focus on market segmentation. It helps business firm to target customers in an effective manner
and lead business to sustainable development. In addition to this, organization can classify its
market on the basis of different factors such as age, gender, lifestyle, etc. (Narayanan, 2015).
There are number of segmentation approaches that can be adopted by the organisation such as
geographic, demographic, behavioural and psycho graphic. Management of Amazon can focus
on psychographic segmentation for gaining more opportunities in the market. In this, company
can attract more and more customers on the basis of lifestyle. Citizens who have a busy life and
prefer to spend less time on shopping can be the best target segment for the firm
(Karagiannopoulos. 2015). It considers the way through which people spend on retail goods and
other products that are offered by Amazon. It will create better opportunities in the market and
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leads business towards success. Factors that impact the lifestyle of person need to be considered
in an appropriate manner.
Business strategy
There are number of strategies that can be adopted by the management of Amazon in
order to enhance the number of opportunities and lead business to sustainable development. In
this respect, organization can focus on porter’s generic strategy such as cost leadership,
differentiation and focus strategy. In cost leadership, business firm needs to focus on decreasing
the cost of operations so that more profit can be attained (Watts, 2008). Pricing of products can
also be reduced as compared to competitors in the market so that company can represent brand
name as cost leadership. In differentiation, management of Amazon needs to bring some
different and creative features in its products and services so that more and more customers can
get attracted towards it (Baker, 2011). Furthermore, effective sales and marketing strategies can
be designed by focusing on the factor of differentiation.
STRATEGIC CHOICE
In order to have further developments, management of Amazon can focus on Ansoff
strategy as it provides more opportunities to the business. In this, organisation needs to focus on
four key aspects such as market penetration, new product development, new market development
and diversification. In market penetration, business focuses on growth through using its current
product line in the existing market. It is all about advancement in market share in regard to
market situation (Ireland, 2008). It can be accomplished through decrease in price, better
promotion, acquisition of competitors, etc. Market development means organisation focuses on
business expansion in a new market. Existing product line is offered in new market according to
the needs of customers (Walter, 2010). It requires proper segmentation and uniqueness in the
products and services so that goals can be accomplished in an effectual manner.
Moreover, product development means there is requirement of effective designing of new
product so that business can have impressive level of success. In this, Amazon needs to develop
new products that can meet the needs of existing market in an appropriate manner. This involves
extending the product range available to the firm's existing market (Webster, 2010). In this
respect, organisation can focus on various activities that can improve market share and customer
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base. Company can invest more in the advancement of research and development of department.
Distribution channel also needs to be improved for gaining better opportunities in the market.
Other than this, business firm can also focus on diversification strategy for better
achievement of organisational goals and leads business to impressive level of success. In other
aspect, it can be stated that diversification is all about putting an effort that improves market
share though introducing various new products and services in a new market (Barksdale, 2012).
It is referred as one of the most risky strategies that can help in getting more opportunities. It is
essential for the management of Amazon to consider product and market development as a
critical aspect. Company can have different types of diversification such as concentric
diversification, vertical integration, unrelated diversification, etc. (Angelo, 2009).
STRATEGY EVALUATION
As per the detailed study of Ansoff’s matrix, management of Amazon can focus on
diversification because it provides better opportunities to the business. It is one of most suitable
strategies as it renders various number of benefits to the firm in regard to monetary and non-
monetary aspects. It is also acceptable because it helps in attaining more profit and enhancing
market share (Walter, 2010). With an assistance of diversification, company can consider
product and market development as a critical aspect. It allows employees to bring various
innovative ideas that can improve working environment and leads business to sustainable
development. Product line can also be improved with an assistance of diversification which will
attract more and more customers towards brand.
CONCLUSION AND RECOMMENDATION
As per the above study, it can be concluded that strategic management plays a vital role
in the success of organisation. Therefore, management of Amazon must ensure about
implementation of strategic management at their workplace. It is also essential for business entity
to conduct internal and external audits so that business strategies can be designed in the most
desired form. Pestle and five forces analysis can be used to identify about various factors
available in the business environment of company. There are various strategic choices that can
be adopted by firm such as cost leadership, differentiation, etc.
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It can also be recommended that detailed analysis of stakeholders can help business to
achieve its goals in an effective manner. Organisation can develop new products and services by
focusing on differentiation strategy. For example, introduction of innovative delivery system can
enhance opportunities for the business entity. It is beneficial for improving market share as well
as customer base.
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REFERENCES
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Learning.
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Schlegelmilch, B. B., 2003. Strategic innovation: the construct, its drivers and its strategic
outcomes. Journal of Strategic Marketing. 11(2). pp.117-132.
Walter, D., 2010. The Decision Making Process: The Four-Step Decision Making Process as
simple way to arrive at rational decisions. GRIN Verlag.
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Watts, G., 2008. Ansoff's Matrix, pain and gain: Growth strategies and adaptive learning among
small food producers. International Journal of Entrepreneurial Behavior & Research. 4(2).
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Webster, R., 2010. Management of risk: guidance for practitioners. The Stationery Office.
Wheelen, T. L., 2011. Concepts in strategic management and business policy. Pearson Education
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Online
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