Overview
Amazon is an international cloud computing giant and electronic commerce company. It provides an effective marketplace for consumers, content creators, and sellers. The company provides its users with merchandise and content that is purchased from vendors for purposes of resale. The company’s branded websites provide a useful platform on which musicians, authors, and app developers can sell their content. Amazon’s Kindle Direct Publishing allows independent authors and publishers to make their books available in the company’s online book store. Amazon’s website started out as an online bookstore, eventually diversifying to sell video, software, music, electronics, video games, furniture, toys, jewelry, and food. Amazon has the distinction of being one of the large companies to sell products and services of the internet. The company operates through three segments; Amazon Web Services, International, and North America (Team, 2018). The Amazon Web Services segment focuses on the sales of cloud computing services, along with other offerings. The International segment deals in retail sales of consumer products. The segment also focuses on sales of subscriptions through some internationally focused websites. The North America segment focuses on retail sales of consumer products, along with subscriptions through North America focused websites. The company is valued at over $390 billion. The company has employed 341,400 people, with over 244 million active customer accounts. The company was founded by Jeff Bezos in 1994.
Amazon’s External Environment
Given Amazon’s position in the online retail space, it enjoys the benefits of high revenues. However, the online retail market is dynamic and it creates new challenges for the company. As such, the company has to remain resilient and competent in order to address such challenges. There political, economic, technological and social factors that influence Amazon. For instance, increasing government efforts on cyber security is an important political factor influencing its business. Increasing disposable income in developing countries influences the company’s sales in the emerging markets. Increasing consumerism in developing countries is an important social factor that affects the company’s sales positively. Rapid technological obsolescence is a significant technological factor affecting Amazon’s business. It is both a threat and an opportunity (Garcia, 2017). Rapid technological obsolescence makes the company to continuously innovate new technologies to support its business model.
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Current Strategies and Objectives
Amazon has adopted several strategies aimed at ensuring that it maintains a larger market share in the online market. The various strategies that the company has adopted include customer centricity, continuous innovation, cost leadership, global expansion, and strategic partnerships. The company feature unrivalled customer service excellence aimed at enhancing customer loyalty. This has allowed the company to maintain high sales and increased revenue over the years. Continuous innovation has allowed the company to diversify its product offerings in the online market. The company’s website that once sold only books has evolved to let anyone to sell just about anything on it. The company has also pursued a cost leadership strategy in order to outdo its competitors in terms of pricing. Amazon has also focused on global expansion in order to increase its market share in the global e-commerce industry. Given the company’s proactive strategies, it will remain the largest and most competitive online retailer in the next five years.
Recommended Strategies
The online retailing space is not only very dynamic, but also characterized by immense competition. Thus, the company should adopt effective strategies aimed at enhancing its growth and competitiveness. I would recommend various strategies for the company to adopt in order to ensure that it maintains its position in the market. The company should consider making strategic acquisition of rival firms. This will ensure that the competition is significantly reduced. Acquisitions will allow the company to take advantage of the competitive capabilities of the acquired company. As such, the company will continue occupying a favorable position in the market. The company should also continue remaining customer centric in order to not only attract new customers, but to also maintain current customers (Foss & Saebi, 2017). Amazon should also develop strategic partnerships with competitors and other online-based business so that it can continue dominating the e-commerce space. The company can achieve this by allowing other companies to use its platform to sell their products. This way, the company can increase its revenue stream by earning commission on the sales. The company should also focus on developing brick-and-mortar stores in order to increase its market share. The company can effectively meet the needs and preferences of its customers.
Competitor Strategies
Amazon faces stiff competition from both online retailers and brick-and-mortar retailers. The major competitors of Amazon include Alibaba, Wal-Mart, Target, Victoria’s Secret. Alibaba has pursued aggressive online advertising aimed at reaching more customers. The company also makes deliveries to customers at friendly prices. Wal-Mart has an effective strategy of introducing home delivery services in a bid to outwit competitors like Amazon. The strategy is effective as it enhances customer convenience. Target has adopted a segmentation strategy where it serves specific target markets. This strategy may not be effective because the company may not increase its market share in the long run. Other competitors like Victoria’s secret have adopted a strategy involving development of own products. This strategy aims at reducing competition. The company develops and sells its unique products hence eliminating competition. The strategy is effective as it locks out competitors. Amazon can combat the strategies of competitors by pursuing its price leadership strategy and intensifying online advertising. The company can also combat competitor strategies by allowing the competitors to utilize its superior online sales platform.
References
Foss, N. J. & Saebi, T. (2017) 'Fifteen years of research on business model innovation: How far have we come, and where should we go?' Journal of Management , 43(1), pp. 200-227.
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
Team, T. (February 2, 2018). Amazon Continues To Impress With Rapid Growth. Forbes, https://www.forbes.com/sites/greatspeculations/2018/02/02/amazon-continues-to-impress-with-rapid-growth/#2b9caa515cbb
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