The following paper describes some elements of Amazons strategic plan. The environmental analysis is accomplished through SWOT analysis, which provides significant insights into both the internal and external markets. The strategy also provides additional information about the companys market niche, product portfolio, corporate strategies, business unit strategies, and operational strategies. It is also important to describe the factors which affect the selection and implementation of the companys strategies, the relationship between the companys strategies and policies. The company has managed to establish a strong strategic plan which is supported by its internal strengths and external opportunities, its unique market niche, along with its strong corporate, business, and operational strategies.
SWOT Analysis
|
Company Strengths |
Weaknesses |
|
1. The company has one of the worlds largest online portfolios 2. Strong presence in e-books 3. Strategic acquisitions and collaborations |
1. The Amazon company has been engaged in a lot of patent infringement lawsuits 2. The companys cloud computing as well as web hosting services have experienced frequent outages. |
|
Opportunities |
Threats |
|
1. Growing trend towards online display advertising 2. The market has been registering a significantly higher demand for cloud computing services |
1. The Amazon.com Incorporation runs the risk of enduring frequent fluctuations of foreign exchange. 2. The company is also under pressure to collect and remit taxes through the sale of its online merchandise. 3. Intense competition
|
Strengths
Amazon is currently the worlds largest online retailer after recording revenues of $135,987 million while its closest competitor, eBay, recorded $8979 million sales in 2016 (SEC, 2016). The company has an operating model which enables it to quickly turn its inventory, thereby helping it to generate more revenues. The format also enables the company to improve its customer satisfaction levels. The companys strong presence in e-Books provides it with a competitive advantage over its peer group while also enhancing the revenues.
Weaknesses
The companys patent infringement issues have continued to the confidence of shareholders. Amazon.com Incorporation is under investigation over a series of infringement of patents. These have continued to affect the companys brand image (MarketLine, 2017). The company has also experienced frequent outages in its web hosting ad cloud computing services. These frequent outages can lead to significant loss of confidence among the business customers.
Opportunities
The online advertising business has been gaining increasing recognition and emphasis over the past years. Such changes and dynamics are expected to enhance the growth of the companys top-line operations. Customers have also shown particular increased interest in cloud computing services. This will enable the company to leverage its demand for the cloud based computing services, which can further expand its business reach.
Threats
There is an increasing pressure on the company to collect taxes on sales it makes online. This may put the companys pricing strategies at a competitive disadvantage. The company also faces the risk of foreign exchange fluctuations. This might cause significant gains or losses in the companys revenues.
Niches
The Amazon.com serves its customers in a retail web marketing niche with a focus on convenience, selection, and price. The company designs its website to ensure millions of products is sold. Operating in online market niche enables the company to save on operational costs, thereby improving its profitability margins.
Portfolio
Amazon.com has one of the largest online product portfolios. The company has a myriad of products and services, all of which are retailed through online channels. The companys products can be broadly classified into books, movies, electronics and computers, home and garden tools, health and beauty products, kids and baby toy products, clothing and shoes, handmade products, automotive and industrial, and amazon music. The Amazon Music products can be further classified into Amazon Music, Prime Music, and open web player. The Amazon automotive and industrial products can be further classified into automotive parts and accessories, motorcycle and Power sports, automotive tools and equipment, industrial supplies, and janitorial and safety products. The home and garden tools can be classified into fine art, pet supplies, kitchen dining, home improvement supplies, hardware, and power and hand tools among many other products.
Corporate Strategies
The Amazon.com Incorporation operates a concentric diversification strategy. A concentric diversification corporate strategy is one which involves leveraging the capabilities of technology to ensure business success by following a cost leadership strategy which aims to maximize value for the customers. The company concentrates its business around its customers by providing an online portal where they can do their shopping. This strategy has propelled the company to greater heights, which explains the fact that it is the worlds largest online retailer. The companys corporate strategy of concentric diversification is controlled by its sources of competitive advantages. The companys corporate strategy is also established around the convenient aspect by providing convenience to the customers when they can simply go the companys website and make purchases that are then delivered at their doorsteps.
Business Units Strategies BUS / Business Level Strategies
Amazon defines its business units as comprising of product sales, services, publishing, fulfillment, advertising, co-branded credit cards, and digital content subscriptions. Consequently, the companys business level strategies can be classified into internet services, online retail, and kindle ecosystem. The companys online retail business unit includes the products and services which are positioned under low cost retailing in the traditional retailer segment. The companys internet services business line describes the significantly intertwined standalone businesses. This business strategy is also operated under low cost strategies and has led to multiple losses.
Functional Strategies
The Amazon.com Incorporations functional or operational strategies are pegged on convenience strategies. According to Barney (2014), convenience has become an important factor of consideration for many shoppers across the world as the business environment shifts to e-commerce. One of the reasons the company has become such a formidable competitor is because it has pegged its operational strategies on providing convenience to its customers through its website. Customers only need to visit the companys website and make purchases, then their products will be shipped to them at low cost.
Factors impacting the selection of the strategy that will be implemented
There are many factors which influence the selection of strategies the company will implement. First, the company must take into consideration the external risks to its business. The external risks that are likely to affect how it implements its strategy include the product liability claims, government contracts as well as related procurement regulations, its relationships with suppliers, and additional income liabilities. Amazon must also consider its company culture that stresses the significance of innovation. The company encourages the implementation of strategies which are creative and innovative, as well as those which can lead to competitive advantages. Amazon has an uncompromising attitude towards change as indicated in its motto. The company has reveled in intensity and toughness to change and the implementation of its strategies must take into account a dystopian workplace which encourages employees to have fun.
Relationship between company policies and its strategies
Amazon is guided by four main principles. First, the company stresses the need to commit to operational excellence. Second, the company stresses the need for long-term sustainability. Third, the company has specific attention and passion to invention. Finally, the company puts more focus on its customers rather than spending more time concentrating on its competitors. One of the relationships between the companys policies and strategies is that they are all made at the top level of the companys management (Hill, Jones, & Schilling, 2014). For example, after establishing strategies to join new markets, the top managers then proceed to establish policies which can help employees to align with this new business strategy. Within these new market strategies, the top management can develop policies to govern human resources and define customer relationships.
The Who, What and How of strategy implementation
Amazons strategies are implemented at both the corporate and operational level. The companys CEO, Jeff Bezos, stresses that every employee in the company should be involved in the implementation of strategies (Streitfeld & Kantor, 2015). While it is the top management that is usually engaged in implementing the corporate strategic goals, the companys lower level employees are highly encouraged to take part in the implementation of business unit and operational strategies. The company implements its strategies only after consulting with its employees and establishing their consent to new change. This involvement of employees has significantly eliminated any instance of employees resistance to change.
Why Amazon has been successful
The success of Amazon is pegged on its ability to uncompromisingly innovate and embrace changes coming its way. The companys business platform and model enable it to do its business and become successful (Shaughnessy, 2012). The Amazon marketplace provides the vendors to sell their products and services while also taking any digital rights management issues. The ability of the Amazon marketplace to reach a large number of customers and retain them is an important success factor for the company.
Amazon.com Incorporation has managed to build and sustain a strong strategic plan which has propelled it to be the worlds largest and the most innovative online retailer. The company has benefited from a strong leadership which has promoted innovation, invention, and strong impetus to change. In fact, the company has achieved much of its success as a result of being one of the most innovative companies with capabilities to leverage the power of technology to deliver value and generate revenues. The companys strength majorly relies on its capability to command a string but loyal customer base, a strong and large product portfolio, and ability to exploit external opportunities such as the strong demand for online products. As a result, the company has identified itself as an online retailer which it has successfully made its niche in order to serve customers who need high level convenience values. The company is majorly known for operating a string concentrative diversification corporate business strategy. The company also operates diversified business level strategies while its functional strategies are pegged on a desire to give its customers convenience. The company, however, should be wary of its weaknesses, such as frequent infringement of propriety rights as well as the external threats which arise from strong competition and dealing with fluctuating currencies.
