Amazon has an effective corporate strategy that has facilitated its growth over the years. The company features a cost leadership strategy. The company has taken cost leadership strategy to the extreme, as it operates with a razor thin profit margin. Amazon has been able to succeed due to large economies of scale, business process innovations, and constant business diversification. The company’s corporate strategy is generally guided by customer obsession, constant innovation, operational excellence, as well as long-term thinking.
Amazon’s corporate strategy is supported by various aspects of its business. Regularly entering into new niches, strengthening Amazon ecosystem, customer service excellence, and focusing on Amazon leadership values are some of the cornerstones of the company’s corporate strategy (Frick, 2017). Although the organization was started as an online shop for selling physical books, it has diversified significantly. Today, Amazon sells anything that can be sold in its online shop. Its sophisticated global logistics has emerged as the company’s main competitive advantage. The organization has also continuously strengthened the Amazon ecosystem. The company’s ecosystem comprises of publishers, reviewers, app developers, merchants, analysts, writers, and journalists. Due to the aggressive expansion of products and services, Amazon’s operations cannot be classified into a particular industry. The company is also well known for its uncompromised focus towards customer service excellence. Being the world’s largest online retailer, Amazon focuses on long term growth as opposed to short term profit. The company endeavors to be Earth’s most customer centric business organization and it does not concern itself with the competition too much. The business also focuses on Amazon leadership values. It is important to realize that Amazon gains maximum contribution from its human resources. This constitutes one of the company’s competitive advantages in the e-commerce industry.
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Amazon’s Functional Strategy
Amazon’s functional strategy lies in its aggressive warehouse and shipping excellence (Garcia, 2017). The company has made significant investments in its fulfillment capabilities with the aim of enhancing customer satisfaction. Basically, convenience is increasingly becoming an important aspect for shoppers, particularly at such a time when retail is shifting to e-commerce. Amazon’s ability to fulfill even last minute shipping needs has made a formidable competitor in the e-commerce space (Kantor & Streitfeld, 2015). The organization is able to provide the efficiency that shoppers are increasingly craving. Currently, Amazon has been able to match the efforts of brick-and-mortar retailers through its dense web of distribution and fulfillment centers, as well as other effective delivery infrastructure. The company sets expectations for things such as ease of shopping, pricing, and assortment. For instance, price has always been an important consideration for consumers. As such, Amazon charges competitive prices for its products and services. Additionally, the company has been able to enhance customer convenience at a time when it is increasingly becoming an important factor in making purchasing decisions. The company’s focus on improvement of fulfillment capabilities is considered an important functional strategy.
Stability Strategies
Stability strategies are generally used by organizations particularly when they are attempting to maintain their current positions. Amazon does not focus on stability strategies as it is constantly evolving to meet new customer needs and preferences. As such, innovation is at the heart of Amazon’s business. Although stability strategies help in mitigating risks of uncertainty, they can limit the company’s potential to grow.
Competitive and Cooperative Strategies
Customer service excellence and effective fulfillment infrastructures are some of Amazon’s competitive strategies. Competitive prices, convenient deliveries, and excellent customer experience make Amazon the most competitive online retailer in the world. Interestingly, Amazon has adopted an effective cooperative strategy aimed at maximizing revenue. The company invited competitors to its business model and created a larger overall market. As a result, Amazon has been able to a bigger market share for itself.
The company has also adopted some internal and external growth strategies. The company has invested in efficient business processes aimed at increasing its market share by attracting more customers. On the other hand, the company has made strategic acquisitions. The acquisitions represent an external growth strategy aimed at increasing market share and reducing competition.
References
Garcia, T. (January 10, 2017). Amazons aggressive warehouse and shipping strategy is paying off. Market Watch, https://www.marketwatch.com/story/amazon-has-taken-convenience-to-a-new-level-and-its-hurting-offline-rivals-2017-01-09
Frick, W. (June 19, 2017). How can companies compete with Amazon? Netflix has the answer, Harvard Business Review , https://hbr.org/2017/06/how-can-companies-compete-with-amazon-netflix-has-the-answer
Kantor, J., & Streitfeld, D. (2015). Inside Amazon: Wrestling big ideas in a bruising workplace. New York Times , 15 , 74-80. https://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html
