The world has become more of a global village, thanks to Globalization and advent of Internet. Amazon can also be seen as an entity which was created to reap in the fruits of Internet marketing. Amazon, which was established in the year 1994 has its headquarters in Seattle and is present in more than 12 countries, while the company ships its products to more than 165 countries. The need for common strategy arises at Amazon due to similar socio/cultural trends, demographics, growth and proliferation of digital technology. Amazon believes in creating strong strategic partnership with the sellers and the delivery network, this helps Amazon in striking a balance between the local and the centre. (Kim, Mauborgne,2014).
PESTLE framework is a macro environmental analysis which helps to explain the Political, Economic, Social, Technological, Legal and Environmental scenario to foray into an International market. Amazon uses PESTLE to assess the conditions which could impact its presence in various International markets. For instance, Amazon realized in its initial days that it would not be able to make an impact in China, particularly owing to its difficult political condition. India, for Instance was a market which was one of the fastest growing market, and the political conditions in India were highly feasible and conducive for the business organization (Piercy, 2016).
GLOCAL strategy or as it is called as “Go Global and Think Local” has favoured Amazon significantly, the recent example of it can be seen by the success story it created in India. The company was launched in the year February 2012, reported an earnings of $ 485 Million in the year 2017. India has become the largest and the fastest growing market for Amazon. This is a reflection of the profound success of GLOCAL strategy of Amazon.
As mentioned earlier, Amazon strategy is a reflection of its efforts towards giving impetus to the domestic produce and ensures cultural, ethical and social consideration while formulating the strategy. The company uses plethora of strategic marketing tools to create the strategy for cross border and to enable collaboration on a national and international basis. A couple of tools and methodologies used by Amazon are as follows:
Amazon believes in building strategic partnerships to ensure an efficient delivery network and also to give impetus to the domestic producers. The company also ties up with various consumer goods manufacturers like Samsung, Apple, LG and other organization to offer exclusive deals to the customers. Amazon also partners with various mobile service providers and give consumers a chance to experience Amazon Prime video services. Thus, Amazon strategic partnership is a reflection of its efforts to provide better services and deals to its customer base.
E-commerce has taken the world by storm, and plenty of companies in the present day are going either with only the click model or click and mortal model, both ways, the sector is booming at an enormous rate. Amazon earned revenue of USD 170 Billion in 2017, the figures are not just huge, but they are a harbinger of positive business outlook (Brana et. al., 2015). Some of the opportunities as identified for the future development of strategy are as follows:
Thus, it can be easily said that Amazon’s international expansion strategy or collaboration strategy is based on International expansion strategy, decision making tools, and technological advancement. The strategy thus is the manifestation of its strategic goals and objectives.
In order to succeed in the market place or the industry, each and every organization needs a common strategy. A common or collection strategy can be understood as a collaborative effort among the people at various stages or levels in the company. Amazon here utilizes the synergies of all its operational, marketing and functional departments to add innovation and creativity in its business process and systems.
Collective strategy is formed by Amazon by the virtue of employee empowerment and brain storming activities. Amazon believes that its employees are the biggest strength and thus they involve them in various decision making strategies before foraying into international destination. It becomes pertinent to create collective strategy which has to be in sync with the policies of the organization, administration and key stakeholders, as only then a resolute strategy can be formed(Lehmann,2016).
The important part here is to identify the SMART objectives of goals before formulating the strategy. The SMART goals can be understood as specific, Measurable, Attainable, Realistic and Timeline based. Thus, Amazon creates goals which can be monitored and evaluated on the basis of their feasibility, thus reaching to the creation of resolute strategy to achieve these goals. It becomes important that a strategy is based on the culture of the organization, its policies and procedures so that every stakeholder is able to understand the rationale of the strategy formulation. One of the recent examples of this is the Beta testing of drone delivery to expedite the delivery of its products to the consumers.
The section will critically analyse some of the key policies and strategy which influences its corporate strategy. For instance, one of the hugely anticipated strategies of Amazon is GLOCAL, which helps Amazon to realize the utility and the potential of the domestic manufacturers. Another strategy of Amazon, which is inclined towards providing fastest delivery of services, led it to create Amazon Prime. The company realized the growing potential of the online entertainment sector; this led the company to create Amazon Prime Video to outsmart the competition from Netflix.
Amazon focuses on its 4P’s of marketing while formulating its product, price, place and promotion strategy. For instance, the pricing policy of Amazon is a reflection of the purchasing power parity analysis of the consumers; similarly the company’s product strategy is based on the consumer shopping behaviour. The promotional strategy of company is a combination of both traditional and contemporary tools of marketing. Thus, each and every policy or the strategy of Amazon is created by using different management tools such as PESTLE, Porter 5 forces, SWOT, 4P of marketing and Ansoff matrix.
The key policies and strategical issues which play an important hand in influencing strategy are goals and objectives of the organization, Policies and procedures of the organization, culture of the organization and feasibility study on the strategical objectives. It is important to understand each element in depth to understand the elements which influence the strategy(Luthans & Doh, 2018).
Goals and objectives define a clear path for the organization, based on which the strategy for the expansion is created. For example when Jeff Bezos created a goal for the Amazon to cater to the growing needs in the Asian market, based on it he created strategy to enter the market and achieve the position of a market leader.
In the similar manner, Amazon Prime Delivery, Millions of Product in its offering, customer success team, sentimental analysis of social media is the reflection of organization policies and procedures to be customer centric in nature. Thus, the company after defining its policies and procedures implements operational strategy in sync with it(Kaur & Wadera, 2018).
Culture in an organization plays a very important role, more so, when the organization is truly global in nature. An example of it is, decentralisation is the culture at Amazon, and thus the company creates strategies to ensure that decentralization is maintained in all of its offices.
As explained earlier, strategy is a cumulative factor of various forces which are internal and external to the organization. According to Richard Rumelt, a good strategy is defined as a coherent mix of policy and actions designed to surmount a high stake challenge. Forces such as Strength and weakness which are internal to the organization help in identifying the strength and then leveraging the strength to attain a competitive edge in the market. Besides this there are certain forces which are external in nature and the company cannot do anything about it, however it can create a risk management strategy to prevent the damage done from such forces (Snee, DeVeaux & Hoerl, 2014).
Porter 5 forces framework is another tool or the methodology which influences the strategy of any organization. The porter 5 forces model determines the market attractiveness and the industry rivalry based on the 5 forces. A thorough analysis of Porter 5 forces helps the organization to come up with a strategy to use the factors to its advantage.
In the similar manner, media and religion also has a strong impact on the business organization. For example, Amazon cannot sell any such product on its website, which might affect religious sentiments of its consumers, thus company has to create a strategy to prevent the same. For example, in the UK, Amazon has to concur with electronic commerce (EC Directive) regulation act 2002.
Tension and conflict in an organization are inseparable; moreover conflict helps in identifying the lacunae in the company’s policies and procedures which lead to conflict in the organization. These tension and conflicts among the stakeholders and the teams should be seen in a positive light and efforts should be taken to carefully handle the conflict (Raford, 2015).
Many theories in the past help in solving the tension in the organization, to a large extent the four strategies can be used in conflict handling, which can be seen as:
Strategic intelligence can be understood as collection, processing and analysis of information pertaining to the market, industry, country and the competitors with the view of creating a strategy to achieve sustainability in the business operations and cycles. Strategic intelligence is a very important concept and organizations use this data not only to collect information, but they overlook all the information and based on it come to a decision (Smither, Houston & Mclntire, 2016).
Strategic intelligence is collected by intensive marketing research, interviews and questionnaire with third party sellers and surveys, all this information helps Amazon in listing products which are not sold by other parties or based on the consumers interest related to the product. Amazon uses advanced data analytics to identify the customer buying pattern, on the basis of which the company creates a curated shopping list of tis customers. Amazon effectively uses the data from the customer insights to remarket or retarget the product towards which the customers showed initial interest. Further to this, the strategy is also used to collect valuable data from social media platform by doing sentimental analysis. This helps Amazon to understand the pain points of the customers, which are then addressed by the company by tweaking its business policies and procedures (Ristoski, Bizer & Paulheim, 2015)
Thus, the strategic intelligence is used to create strategy to stay upbeat in the market and not get affected by any competition, also it helps the company to come up with the product which customers desires the most. An example of business intelligence can be linked with creation of Amazon prime. Amazon identified that the online shoppers value the organization that ensures the delivery of the product in the fastest possible time, it was one of the factors where the company sleeked improvement. Amazon thus came with the idea of launching Amazon prime, which would not only provide fastest delivery, but also gave benefits providing value to the customers. For instance, Amazon Prime customers are the first ones to get onto the exclusive deals at Amazon, and the customers are also given additional discounts on its product offering.
As mentioned earlier, strategy is a combined result of market research, strategic intelligence, business environment understanding and the industry knowledge. Based on all these collected information strategy is created at Amazon. However, there can be certain addition to the process, which would give a creative angle to formulation and development of company’s strategy.
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