The development, growth, and maturity of any organization depend on the strategies management employs to keep the company above ground. Each of these strategies aim at attaining a given objective and where external forces counter the strategies in place, reviews are recommended and amendments implemented. Each organization has a history on how it has survived through various economic storms. An example of such a company that has employed specific strategies which have led to its success globally is Amazon.com.
Amazon.com is an organization that utilizes e-commerce and cloud computing when dealing with the supply of products. It was incorporated in 1994 in the state of Washington. The principal offices are located in Seattle, Washington. Jeff Bezos was the founder of Amazon and launched the company in 1995. Since its launch, Amazon has gone through different seasons where it has had to implement several strategies to ensure it stays afloat. With growing investments in online marketing, Amazon being one of the oldest organizations to participate in online sales has had to change all strategies and objectives to meet the ever growing and changing demands of consumers within the online market. The company was started as an online bookstore (Palepu, Bernard, Healy, & Peek, 2007). People would make their order for a particular book online, and have it delivered to their doorstep. During this time, Computer Literacy was the main competition. However, its strategy slightly differed with that of Amazon. The company was only operational in Silicon Valley, whereas Amazon promised to deliver any book anywhere in the world. The company continued for six years before it attained its first streak of profits in 2001 (Palepu et al., 2007). Over the years, Amazon has continued to acquire new businesses and investments as a growth strategy. In the paper, the strategies Amazon.com has utilized over the years is discussed, and the impact on profitability discussed.
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Amazon since its inception has utilized Porter’s five forces model as a strategy for growth and development. One of the strategies has been product diversification. Amazon has been able to shift from the delivery of one product to a multiple of products from books, electronics, household appliances, music, movies and many others. Through the provision of a diversified product, Amazon has been able to keep up with the online market needs and continually compete with other e-commerce based organizations that are rising, for instance, pigiame.com. Globally, the development of technology has led to the growth of other organizations competing for the same market. Amazon through the years has remained afloat by diversifying its products base to ensure it retains a larger base of market share within the global economy (Pratap, 2017).
Amazon has also been keen on the kind of information it issues to the public and other employees. By holding information regarding some of its sales and employee conditions, it can by-pass risks associated with too much talk regarding operations and profitability of the business. For example, Amazon refuses to share information on how many books of a given kind have been sold online. Also, the number of employees it has in Seattle, who are working on the Kindle project is kept as a secret. Withholding such information from the general public lowers the risks of competition getting wind of the strategies in place for a given product (Hamilton, Senauer, & Petrovic, 2011). Through less communication, the organization can achieve an adversarial work environment where people strive on creative conflict as a way to better the products and product delivery. Each seeks to prove their views and ideas as superior to others hence ensuring there is continued diversity in business operations (Palepu et al., 2007).
The business model held by any organization provides a guarantee of whether the organization will succeed or fail with changing economic states. Amazon has maintained a differentiated business model to ensure it can cope with the changing market needs. This has been possible through the use of technology and skilled human resources. A factor that has led to Amazon’s current profitability in the presence of the online model which has made it possible to have a virtual presence but not necessarily a physical one (Amazon, 2016). Leasing space is cheaper than purchasing property required to store products and function as office space. This strategy has allowed the organization to increase its profitability by reducing the expenses it incurs for running the business. In addition to this, profits derived from sales are largely utilized in investments (Amazon, 2016). The business is keen on growth and hence invests in other industrial areas such as technology. The business invests in areas which can cater to its expansion and improve its service delivery, in this manner, it can participate in market penetration and market development through investing in new companies, or industries (Palepu et al., 2007).
In today’s economy, one of the markets that have slowly started participating in cross-border e-commerce is the European market. Amazon has identified an opportunity to improve its sales and profits by penetrating the market to ensure it grabs the larger portion of the market share before its competitors. Amazon has adopted a strategy where it involves more retailers in the European market to reach a wider consumer base (Amazon, 2016). It is continually making new distribution networks and supply chain channels to guarantee it is, able to cover most of the European ground through its sales. Additionally, utilizing technology and e-commerce interfaces that is better understood and preferred in the market has increased its retail sales in the market over the last two years. It can offer a customized e-commerce platform for the European market and draw more consumers and retailers. With this growth, Amazon will be able to provide a steady flow of profits and earnings in the European market as it can tap into an upcoming market.
From the above, it is evident that Amazon has adopted lasting strategies that both meet the organizations goals and continue to guarantee the profitability of the organization. Financial statements of the company show that with continued investments, product diversification, and market penetration, the company is in a position to remain as the world’s best E-commerce retailer.
References
Amazon. (2016). United States Securities and Exchange Commision - Form 10-K (Form 10-K No. 20549) (p. 77). Washington D.C. Retrieved from https://www.sec.gov/Archives/edgar/data/1018724/000101872417000011/amzn-20161231x10k.htm
Hamilton, G. G., Senauer, B., & Petrovic, M. (2011). The Market Makers: How Retailers are Reshaping the Global Economy . Oxford University Press.
Palepu, K. G., Bernard, V. L., Healy, P. M., & Peek, E. (2007). Business Analysis and Valuation: Text and Cases . Cengage Learning EMEA.
Pratap. (2017, July 2). Amazon’s Generic and Intensive Growth Strategies. Retrieved October 22, 2017, from https://www.cheshnotes.com/2017/07/generic-and-intensive-growth-strategies-of-amazon/
