Amazon.com is an electronic retail company that was founded in 1994 by Jeff Bezos. The company stands as one of the largest online retail superstores in the world. Amazon has an intriguing history having developed from a mere garage business to an international commercial that offers employment to a huge number of employees. In this regard, this paper focuses on conducting an environmental scanning for the company to examine internal and external environments in which the business exists, the competitive advantage of the company, strategies adopted for the competitive advantage, and the measurement guidelines the company uses and their effectiveness.
Internal Environment
On Amazon’s internal environment, Amazon possesses a mature technological framework, expert staff, and a brand image that portrays value. The organization demonstrates great customer relationship management that results in an efficient brand image. The highly complex technology connects suppliers and distributors in the market. The company keeps tabs with the current technology trends to implement them in their business strategy. Apart from observing the implementable technologies, Jeff Bezos is ahead of the competition through the art of embracing innovative approaches incorporate by other companies and the efficiency that comes with collaborations formed therein. Notably, Amazon’s websites are user-friendly to enable easy access from all over the world. Understanding the needs of easing their interface interaction is an internal strength that Amazon’s developers have used to capture massive clientele.
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Although Amazon possesses firm internal structures that benefit their business strategy, there are notable setbacks. The company embraces product diversification, which could act as a drawback, especially on electronic business retail. This as well, negates the principles adopted in the mission statement of the company that it seeks to be earth’s most customer-centric company on three primary operations: consumer customers, developer customers, and seller customers. Amazon offers a variety of shipping services even with the prevalent slow economy where specialization suffices ( Kantor & Streitfeld, 2015 ). The company needs to address their main priority to inhibit the likelihood of jeopardizing their market and financial position.
External Environment
Amidst an era of internet globalization, Amazon has various opportunities to tap as well as threats to combat for long-term sustainability. The developing countries are being enrolled in electronic commerce, and Amazon is positioned to exploit these markets. This includes the possibility of expanding their partnerships in various territories for smooth business operations through different cultural orientations. As business experts state, in a fast technologically-driven industry, the company with the best technology gets the lion's share of the industry. Amazon has sufficient funds to explore markets within its reach than most electronic commerce businesses. However, according to Porter's five forces analysis, there is the threat of new entrants in the electronic retail business, which poses an indisputable threat to Amazon’s existence. In this regard, the bargaining power of Amazon’s buyers is high at the moment, but the certainty of this power existing in the future cannot be guaranteed since buyers can easily switch from Amazon to another retailer. Amazon has good bargaining power for suppliers because of its extensive framework that offers a good trading platform. This implies that suppliers highly depend on Amazon for the company’s major revenue proportion and the vigor of exploiting global markets for their products.
Competitive Advantage
The most notable competitors of Amazon are eBay, Walmart, and Google ( Ritala, Golnam & Wegmann, 2014 ). Also, Brick and mortar retailers are commendable contributors to the rivalry in the industry. Amazon enjoys a competitive advantage on the robust funding mechanism of the company. Since its incorporation as a public entity, the organization operates revenue totaling $177.866 billion ( Ritala, Golnam & Wegmann, 2014 ). This provides immense leverage in the ability to expand to external markets globally. Being a technological-driven organization, uncertainties are expected in any operating year, and only the companies that are financially stable can offset any challenges that may accompany the transitions.
Strategies for Competitive Advantage
Diversification is a great strategy that Amazon uses to earn a competitive advantage on its competitors. The company adopts related and unrelated diversification. Related diversification arises when a company acquires other firms with similar product ranges. Unrelated diversification refers to when a firm acquires other firms with product ranges that are different from that of its products. Moving from a sole book retail business to extensive wide-ranging product types, Amazon attained sustainable competition strategy. Notable engagements are Amazon’s DVD and Video stores, acquisition of toolbar company, Alexa Internet, Toys “R” Us, and Amazon.com join alliances ( Ritala, Golnam & Wegmann, 2014 ). Amazon pursued related diversification on the formation of an alliance with a chain of bookstores as indicated with the announcement of Borders Group Alliance.
Measurement Guidelines of Strategy Effectiveness
Amazon counts on data metrics to ascertain its market efficiency ( Muthyala et al., 2017). Having invested profoundly in technology, the company has a quick grasp of the trends that their business is taking alongside the analytics that defines their competitors’ positions. In recent developments, Amazon has created fulfillment centers where customers can purchases products, and the company picks, packs, ships, and provides the necessary customer service needed for the products. Apart from the detectible customer flow in Amazons websites, data-driven approaches can be used to better sales figures within the main line and the subsidiary companies ( Muthyala et al., 2017). . Data metrics are also key for Amazon’s promotion and marketing strategy, where the organization can direct efforts to the areas with most needs and establish markets that were non-existent.it is necessary to note that Amazon is customer oriented and any engagements within the companies mandate aims at improving customer relationship and satisfaction standard. Through their customer feedback metrics, the company knows where to focus on the gradual fiscal and strategic planning.
Efficiency of the Measurement Guidelines
Data-driven approaches are the modern business game changer because they give a precise outlook of what can underlie a business (Aldehayyat, 2015). This is through the use of a business’s descriptive to examine the prescriptive and predictive indicators. Even better, Amazon’s data metrics are entwined with the effort of establishing absolute customer satisfaction. Jeff Bezos is known for his curiosity in understanding what customers require and a zealous commitment to metrics. Amazon adopts over 500 measurable goals of which 80% represent the objectives of the customer. This demonstrates the immense dedication to fulfill customer needs above any other indicators. Apart from holding customer objectives upfront, the company is keen to take quantifiable risks and weed out customer turn-off that may affect the flow of business.
References
Aldehayyat, J. S. (2015). Environmental scanning in business organisations. Management Research Review, 38 (5), 459-481. doi:10.1108/MRR-02-2014-0032
Kantor, J., & Streitfeld, D. (2015). Inside Amazon: Wrestling big ideas in a bruising workplace. New York Times , 15 , 74-80.
Muthyala, R., Wood, S., Jin, Y., Qin, Y., Gao, H., & Rai, A. (2017, November). Data-driven job search engine using skills and company attribute filters. In Data Mining Workshops (ICDMW), 2017 IEEE International Conference on (pp. 199-206). IEEE.
Ritala, P., Golnam, A., & Wegmann, A. (2014). Coopetition-based business models: The case of Amazon.com. Industrial Marketing Management , 43 (2), 236-249.
