Discuss about the Business Strategy and Management Of Amazon.
The purpose of the following report is to describe about the business strategy of Amazon. The business strategy is a very important thing for the business companies so they can compete in the modern competitive business environment. In this report the analysis of the business strategy for Amazon will be presented. The success strategies of the company will be presented in this report. The market value and brand reputation of Amazon os huge indeed. The product and service diversification is alos a very important factor in determining the business strategies. In this paper, some of the most important things will be discussed like the product diversification strategy; the competitive factors for this organization should be used as well. They have been targeting to capitalize on their market on the basis of their international market expansion. Also one of their most important target is to achieve the household name status. They want to become the market leaders in their industry. This is why they will need to grow their market status properly. They might face some challenges in the future for optimizing their strategies properly. The potential strategies that they might adopt should be discussed here as well. These strategies will help the organization to thrive more in this environment.
The chosen organization for this business report is Amazon. This is a online retail company that was founded in the year 1994 by Jeff Bezos (Amazon.com 2018). They have been serving the worldwide area for their services. They are active in most of the countries. This company began its trading in the year 1995. The headquarters of the organization is located at Seattle, Washington in the United States of America (Amazon.com 2018). The market capitalization has been one of their most important grounds as they had crossed Walmart in this. They are considered as the third most valuable public company by the revenue. This is why they will look to invest in expanding into other countries. They have many subsidiaries working under them. Currently they are trying to invest on increasing their market capital so they can insist in their growth strategies. They have to improve on their strategies so they can gain more customers by the recommendations of their existing customers. (Amazon.com 2018).
Amazon has been a company that has stressed on the market expansion for a number of reasons (Mithas, Tafti and Mitchell 2013). They operate in a certain industry that is highly competitive for the dependence of the customers on internet and the target market of this company is mainly the young people. The competition has been one of the most important things for the Amazon to confront and the internal environment for the organization should be discussed properly (Armstrong et al. 2015).
Strengths
Weaknesses
Opportunities
Threats
One of the most important things for identifying the business strategy of Amazon is the product diversification strategy. Amazon has gone on to concentrate on the diversification strategy so they can get more customers at their disposal within a shorter span of time (Benito-Osorio et al. 2012). At the beginning, Amazon began their business by focusing on the various areas like the selling of the mobile phones, spare parts for the motor vehicles, electric goods, cosmetics, clothes and many things. They will be using the market penetration strategies for increasing their market share. They will strengthen the customer loyalty of their existing markets and focus on creating new customer markets (Coelho and (Henseler 2012). They have also adopted one strategy like sending their customers the gifts that would be helpful for them to promote their new products. This is the way they can raise the motivation among the employees properly. Then only the customers will feel the urge for shopping from online retail platform like Amazon (Lazaroiu 2015).
Amazon has been targeting to sell various new products so they can increase their market share by focusing on their target markets. Now, they are planning to sell various products like pharmaceuticals, houses, insurance policies for the customers and many more facilities. It has been seen that the high-fi corporate people do not have the ample time to buy these things by consulting with the experts. So, they simply prefer the internet mediums properly. Amazon will provide the customers with the better and convenient products for their use (Barney 2014).
Amazon will also like to introduce new products for the developing new markets in the future. They do not want to confine themselves within one array of the business products. They want to be global and focus on selling the diversified products to their customers. The online retail site also offers their customers with the free repair service for their several products. They have been using the conglomerate diversification strategy so they can cater to the needs of several customers from all the levels of the society (Barney 2014). Now they want to focus on new products that are just developing and this is why they want to get the grab on these products. They want to grow into these sections as they will not face any market competition here. If they can grab these markets at one go, this will be highly profitable for them. The aspects of customer satisfaction will be on their target as well. This will pose a positive effect on the minds of the customers and they will feel motivated to complete their shopping from Amazon.
The business model that the organization currently uses is the Clicks model. According to this model they have adopted the Just in Time approach for the customers. This approach means the strategy by which they will provide the special products and services just in time when it is needed. They go on to buy the products from their suppliers and send it back to their customers. In order to do this, they must focus a strong supply chain and logistics support for the customers (Christopher 2016). This proves to be very much beneficial for both the sellers and buyers.
A very significant thing for adopting the perfect marketing strategy is indulging in building a proper marketing mix. However, it has to be said that Amazon has been able to expand the size of the market as they have improved their marketing position than their potential substitute online retailers (Gordon 2012).
Product
Amazon has been expanding their business by selling various types of products like the books, DVDs, latest and exclusive mobile phones, jewelry, clothes and many other things. This huge range of products has benefitted them a lot by increasing their customer base. They are aiming to enter many new products into their inventory for catering to the needs of diverse customers (Gordon 2012)
Place
The brand value of Amazon is so high that it has saved the company from being drowned in this competitive environment. They are present in most countries. The R&D technology they use has become a very important part of their supply chain and logistics process. The employees of Amazon are generally very friendly and they mitigate all the problems with smiling faces all the time. The customer service for Amazon is present in most of the countries.
Promotion
As Amazon is a e-commerce site, the most useful way for promoting their business is digital marketing or social media marketing (Tuten and Solomon 2017). Amazon has also taken up the strategies like spreading the uniqueness of their products by the television commercials. The advertising strategy for Amazon is very much web based indeed. They also use the advertising networks online. This is why the customers see the same products on some other websites as well (Gordon 2012) They are also keen on getting their name on the high up on the search engines like Google. This will help them to get the most useful reactions from the users. This is why the name of the company begins with ‘a’. The word of mouth promotion activity has been used by Amazon for getting more users as well.
Price
They use the competitive strategies in terms of setting the prices properly. They have many employees all over the world (Gordon 2012) This is why they use the premium pricing method so they can pay their employees on time. The competitive pricing of the company should benefit the company from many angles. The company uses the online payment system so this system is very convenient for them.
Amazon has targeted the international expansion for several reasons. They want to build up a distribution network so they can get a wide range of customers all over the world. The millions of customers would help them to gain the best profits. The intensity of global expansion of Amazon is huge indeed (Penrose 2017). This is why they will need to focus on strengthening their customer base in a better way. They want to expand their market overseas in the markets of Asia and Europe. They want to capture the Asian countries like China and India. The huge population of these countries will help Amazon to succeed as well. Most of the European countries like England, Germany, France and Italy have been much updated with technology. This is why the Europeans will get the advantages of using the Amazon prime benefits.
Amazon has been facing many challenges in their business operations. These challenges will act as the backdrops for getting the profits within their business operations.
Some recommendations could be given in order to solve these issues. These recommendations can really be helpful for designing the working environment and reshaping the business operations in a better manner.
Conclusion
This paper can be concluded by saying that Amazon has been the best online retailer in the world right now. The business strategies of the organization have been discussed here. The different business strategies and business models they have adopted have been described here properly. Some of the important things that have been discussed here are the marketing mix of the company, different issues like the product diversification strategy, internal environment and other things. The product diversification strategy has been very much important for them to be the market leaders in the online retail industry.
References
Amazon.com (2018). Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & more. [online] Amazon.com. Available at: https://www.amazon.com/ [Accessed 20 May 2018].
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
Benito-Osorio, D., Ángel Guerras-Martín, L. and Ángel Zuñiga-Vicente, J., 2012. Four decades of research on product diversification: A literature review. Management Decision, 50(2), pp.325-344.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Coelho, P.S. and Henseler, J., 2012. Creating customer loyalty through service customization. European Journal of Marketing, 46(3/4), pp.331-356.
Ford, J.K., 2014. Improving training effectiveness in work organizations. Psychology Press.
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Gordon, R., 2012. Re-thinking and re-tooling the social marketing mix. Australasian Marketing Journal (AMJ), 20(2), pp.122-126.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
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Lazaroiu, G., 2015. Employee motivation and job performance. Linguistic and Philosophical Investigations, 14, p.97.
Mithas, S., Tafti, A. and Mitchell, W., 2013. How a Firm’s Competitive Environment and Digital Strategic Posture Influence Digital Business Strategy. Mis Quarterly, 37(2).
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Penrose, E.T., 2017. Foreign Investment and the Growth of the Firm 1. In International Business (pp. 33-48). Routledge.
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