STRATEGIC MANAGEMENT FOR AMAZON
In recent times Amazon is the most well-known retail company. The amazon, online retail company try to manage their strength throughout a long time. The amazon.com is unaffected from the external shock, which is termed as dot com (.com) and recession in current days.This report analyse a strategic management plan for the amazon company. Every company need a strategic management plan to achieve the organization’s objective and amazon needs to apply this plan. Strategic management plan is described as the set of plan decision and action of the company which shows as a result in invention and the process of implementation to complete the desire goal of the company. This report mainly focused on the study on Amazon.com. The first section of the report gives a brief description about the background of the company. In the next section, there is a description about the strategies which are used by the amazon.com and their critical analysis. Third section of the report describes the business expansion strategies which are used by the amazon.com. There is a part which explains the competitive advantage of the company. In the fifth part of the report, there is some description about the challenges which are coming in the future on Amazon Company. In the next part, there is a description about the process to overcome from the challenges by using the potential strategies.
Background of the company
In today’s market amazon is the most popular online retail organization. This company started by the Jeff Bezos in 1995. The main motive to start the Amazon company was selling the online books but Mr Jeff develop the Amazon in to a supplier of the different consumers thing similar to the books, electronic products and garment details. The blow-out of the internet surfing, demands of the window shopping and new trends and the development related to this are lower down the barriers to entry in the worldwide market place in 1995. In 1995 there is a chain to sell the books. As stated by (LaudonandLaudon, 2016), the most important thing for the company is to achieve the data about the mandate and the supply capacity, as well as the vertical integration is the good path to achieve the goal.Books are printed by the publishers and via distributor it sold to the shopkeeper. People had to go the shop to buy the books. As mention by (Fitzroy, Hulbert and O'Shannassy, 2016) Amazon marked this process with the internet services. Mr Jeff thought that a large online store would represent a doorstep storefront to all the people throughout all over the nation. Mr Jeff tried to eliminate the distributor media from the supply chain which low down the price of the product helps to build the successful company on this strategy. To continue the control of the company in the market, amazon had to endure to save its grip on to consumers. Amazon also found some threats from the competitors. To grow in the market amazon open a technology that published a book though the kindle technology and comprised it both software and hardware basis. They opened a vast selection of books and taking it in an advantage as to develop the hardware technology. As mentioned by (Ritala,Golnam and Wegmann, 2014), the internet source is not more than a tool however, it is the most powerful to support or damage a company on the basis of strategic positioning and amazon has been intelligent to use the internet successfully.
Analysis of the Strategies used by Amazon
According to (Heizer, 2016), the targets of the amazon are the people who are blessed with internet and familiar to the e-commerce services. Amazon has almost all the middle and upper class customers in a way of paid or non-paid. Maximum of the customers are businessman or the working man who are extremely busy with their job, they mainly find this window shopping by amazon very effective rather than the go to the malls outlet or shop. It save the time as well as amazon offers save the money indeed. As stated by (Percy and Elliott, 2016), amazon also used some strategies to maintain the customers services. Amazon starts with core promise to the customers. They give theirfull attention to the customer’s experiences and the feedback buys the customers. Amazon also builds the corporate culture which involves call centre training for the amazon employees to serve better. Amazon Company also gives the power DIY services which include surface experiences of the product, visually appealing of products and give a healthy shopping experiences to customer’s and their served their specific need. Amazon Company also starts a community of some customers who helps the others with their review. At the time of helping amazon service representatives are handle the customer request with in a short time period. As mention by (Grant, 2016), it is very clear that amazon.com uses the click model for the diversification strategies. Amazon mainly do this when a customers buy a product or order it, they mainly purchase that product from the suppliers and send the product to the customers. Amazon.com mainly able to reduce the bargaining procedure by gives the amazing offers to the customers. The buying power of the customers, increase with the switching to another company to offer new products and services. Amazon Company is also develops a free repair service of electronic products.
Strategies used by amazon for expansion
As stated by (Hill, Jones and Schilling, 2014), Amazon.com started their e-commerce services from the time of 1990 and continuously expands their business in the new market area. The latest moves from the Amazon Company side is Prime Wardrobe program which means the amazon prime customers can try the garments at their home and exchange them in a period of seven days after purchasing. Amazon also started their physical store at the location across the United States to reach the consumers physically. According to (),Amazon also stared a partnership with the Nike which helps them to expand the business. In the past time amazon also purchased the Nike products from the third party retailers. But after the partnership with the Amazon and Nike, will help customers to save the money and create a good brand image to the consumers. Amazon also started a full- featured application for mobile gadgets such as smartphones, personal computers tablets as well as smart watches. These things are designed for the video chat, play games and text which are another part of Amazon services. As mentioned by (Peppard and Ward, 2016), a survey shows that customers are talked about the important features which is massaging. There are some filters for video and photo which offered to kept the chat private. Amazon.com stated a meal kits which being sold to the particular customers through the united stated website. These particular services offered through the paid subscription process. Amazon also offers amazon’s grocery services and Amazon fresh which available to the prime customers. Amazon Company started a partnership with Sears which hep the company to sell the Kenmore appliances. Amazon also sells the smart appliances and home appliance. Many companies like whirlpool lowers best buy dropped the market valuation 12 billion dollar in one day. Amazon Company started with online bookstore and nowadays they sell every product for daily this is the main policy for expanding the amazon business.
Nowadays Amazon Company rules the online retail business world throughout the United States. As stated by (Madsen and Walker, 2015), it is found that amazons are serve the lowest price offer to the customers. Amazon.com also developed the delivery network and the supply chain process with the warehouses. Amazon achieved a massive scale partnership with the vendors which help the best possible price to customers, where Wal-Mart gets the same thing in selected areas. Wal-Mart physical store’s product prices are huge than the warehouse price. Where amazon can fix a little bit profit margins and make huge money by selling the maximum product. As mention by (Frynas and Mellahi, 2015) Amazon does not have physical store in all the area, they just doing the delivery business with the exciting price of the product due to the partnership with the company. Amazon Company also blessed with the advanced software technology. Amazon Company has a partnership with the United States postal services that helps them shipping every edge of the world. As opined by (Rothaermel, 2015), every site need registration for purchasing through the credit or debit card. They need to fill their card details in the website. Amazon is the well-known company and kept the costumers data safely. As well as amazon show the seller description under the product link. So there are no trust issue from the customer side. Amazon Company invested a big amount of money in the online model because there is an attack by the biggest rival of the company. It is next to impossible in some area to giving the lower price compare to the amazon company. Amazon.com delivers some product with taking the shipping charges. Shipping charges of the amazon company are very nominal, however other compotator of amazon are high with compare to the price of the product plus their delivery charge. As mention by (Luthans and Doh, 2018), amazon also have some good investors all over the world. It is a big advantage for the amazon.com amazon company opened up for the recommendation of new brand stock.
Challenges for Amazon in future
Amazon Companyrunning their business successfully due to some reasons, because there are no other organization which can able to compete the market of amazon in online marketplaces. As stated by (Lasserre, 2017), few days back there is another Chinese company name Alibaba expresses which are trying to beat the amazon company. In the newest brands global power list the Chinese e-commerce company made their debut in the 12th rank which worth 66 billion dollar where amazon placed the rank in the global power list is 13th with the valuation of 62.2 billion dollar. There is another problem for amazon is profitability. In the passing year amazon earned near about 88 billion dollar but there I some loss of 240 million dollar due to their delivery infrastructure. As opined by (Peppard and Ward, 2016), Amazon will face a big problem when they started to expand their business in other countries. Because the coding in other language is little bit difficult to run and their business model does not work in the other countries. Amazon Company ignore the most of the competitors which gave a result that amazon buy the product to the competitor with a very large price. Business model by the amazon company will depend on heavy where shoppers are comfortable with the budget friendly products. As stated by (Percy and Elliott, 2016), day’s amazon products are very common and available to the entire group. However, some of the people are trying to go with the unique and extra ordinary things. There is big problem for amazon company by the ignorance of supply chain, that their website are fill with the fake product, if this thing will be continue, customers does not trust the amazons brand image. The quality of the products are getting poor day by day and it will show a result that customers will returned the product and customers will give the negative comment in the website. According to (Ritala,Golnam and Wegmann, 2014), Amazon’s delivery services are handling the product very badly and the worker of the company giving half product information. These mistakes will create a big problem or the amazon company to seating their image to the customers. Amazon continuously does some mistake and without fixing and apologising the problem they run their business. The main problem of the amazon is that public choices wills shift from the amazons due to upper discussed reasons.
Potential Strategies to Overcome the Challenges
The amazon company has a lot of issues in their future. According to (Frynas and Mellahi, 2015), amazon.com need to manage their supply chain process. They need to hire the right person with the basis of skills and knowledge. Amazon Company should hire some people with the expertise in different localities. Amazon needs to forecast the sales at the critical time because products are moving to other places so they need workers who handling the products carefully. Amazon Company needs to improve their business plan and model according to place, customer’s expectation an mainly the time because demands of the products are changes with these things. Amazon need to implement a new supply chain software and take the advantages of new technology because modern software tools are track the product, manage the order process and supply process and many more. This software may help to prevent the mixing of fake product with the original product. Amazon Company needs to improve their B2C model and interact more with the customers. As stated by (Luthans and Doh, 2018), Amazon.com needs to maximise the productivity using some cognitive technology. The company need to plan the proper time required to deliver the product and after calculating the time amazon disclose the time of delivery to the customers, because late delivery harm the brand image mostly. To maintain the position in brand global power list they have to solve all the payment issue, security information, delivery problem and incomplete information of the product and seller. They also need to minimise the communication gap in other countries and run the program according to the local language of the country which understand by everyone. As studied by (Hill, Jones and Schilling, 2014), amazon need to design and deliver the value of proposition to their customers by divide the customers in different segment and deliver the product in correct time. Amazon needs to look the customer’s experience to avoid the future problem.
From the above report it can be concluded that a proper strategic analysis of Amazon is carried out which will help the company in future. The company should take into consideration about the important factors which can give them competitive advantage in the market and it is essentially necessary for them to consider these factors. Furthermore, in order to expand in the market, Amazon should make proper analysis of the foreign market before investing. They should also focus on hiring skilled employees along with implementing advanced technologies that will not only help them to grow but also will help them to achieve their desired goals in the near future. Their mission and vision statement should be clear and they must consider the challenges that can harm the company’s future in the market. Along with this, one of the most important things that need to be considered is that they must focus on the external factors.
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