Organizational Learning Ambidexterity And Strategic Flexibility

The Product-Market Expansion Grid

Discuss about the Organizational Learning Ambidexterity and Strategic Flexibility.

Amazon, also called Amazon.com is an electronic commerce and cloud computing Corporation situated in Seattle, Washington, in the USA.  Just like other companies in various other industries such as Google, Apple, and Facebook, Amazon.com is an outstanding collector of consumer information. The organization knows quite a lot about their customers, what they may be looking for to purchase, and what is going on in their lives.

Recently, Amazon has confirmed that this year it will establish warehousing and distribution in the Australian market. For the citizens of Australia, Amazon’s strategy will mean cheaper access to a wide array of products, but unfortunately, it might be at the expense of other retailers in this market. Australians can now access a wide assortment of brands from this world’s biggest retailer at promising reasonable prices and at faster delivery times. This company might introduce a new service called Amazon Prime, which enables buyers to pay an annual fee of approximately $100 for quick and free delivery. In addition, the firm may as well launch a service called Amazon Now, which delivers commodities such as groceries in a period of one hour. However, as Mr. Woolford, the Citi’s managing director and head of consumer sector research said, it is not easy to say that Australian retailers are actually prepared to accept Amazon and as such their success in this market will depend entirely on marketing strategies to be employed (Hobday, 2017). 

 In reaction to Amazon’s strategic move, competitor companies in Australia might augment their marketing stratagems and pose a significant challenge to this firm almost forcing it out of the market. This essay will provide the marketing personnel in Amazon with an apparent breakthrough how the organization can establish itself successfully in the Australian market.

The Product-Market Expansion Grid sometimes referred to as Ansoff Matrix is a strategic management approach which was created by Igor Ansoff. This marketing stratagem is known to have been used by many leading multinational corporations such as General Electric, IBM, and Philips (Senecal and Nantel, 2004). The Product-Market Expansion Grid is one of the major contributions of Ansoff that is significantly applied by organizations intending to develop approaches to grow and advance their business transactions (Krstic, and Ivanovic, 2011).

Fortenberry, (2013, p.269) defines Product-Market Expansion Grid as a tool applied to augment business expansion stratagems by assessing the relationship between the existing and new products, current and new markets, as well as the peril linked with every possible relationship. Ansoff Matrix as supported by many academics assists in business growth plans by the introduction of new or existing commodities, in new or existing marketplaces. Ansoff Matrix is premeditated such that as the corporation schemes its current and fresh commodities and marketplaces, the magnitude of peril connected to that particular approach matches its location on the model. Growing stratagems through current commodities and markets is truncated in terms of the peril associated, but with new brands and marketplaces, risk upsurges (Hunter and Chen, 2011). 

Market Penetration Strategy

The Product-Market Expansion Grid provides four primary recommended approaches, namely: market development, marketplace penetration, brand diversification, as well as development. In the subsequent sections of this paper, these four marketing tactics suggested by Ansoff will be expounded in the light of Amazon Australia, and particularly how the Company can implement them to succeed in this competitive market. Ansoff’s grid is presented diagrammatically as follows;

1.      Market penetration strategy	3.      Product development strategy
2.      Market development strategy	4.      Diversification strategy

Market Penetration Strategy which falls in quadrant 1 generates development by concentrating on launching current brands to an existing marketplace. In such cases, potential buyers might be aware of the commodity, but due to some reasons they are not consuming it (Sudo, n.d.) Amazon can use this strategy to accomplish various objectives. The Corporation can, for instance, increase usage of its brands among the existing customers by offering special incentives and loyalty schemes. In addition, the organization can force major competitors out of the market through aggressive products pricing coupled with extensive promotional campaigns. Moreover, Amazon.com can implement this strategy to secure dominance by recognizing specific market segments offering the best prospects for new products at their disposal. Ultimately,  this Ansoff’s strategy can significantly aid Amazon in growing or increasing its Australian market share by implementing outstanding marketing schemes such as pricing, advertisements, rigorous product promotions stratagems as well upsurge in sales exertions (Manion, and Cherion, 2009).

The Market Development Strategy which falls in second quadrant is applied whenever the brand is a current one, but then the marketplace is new. In other words, this approach is employed every time a firm has recognized new arcades which were beforehand undisclosed, or the moment it intends to advance its souk coverage.  Competitors might be taking dominance in the new market or in some instances; it might transpire that the fresh firm might be accepted in an extremely positive manner. In whichever way, there exist various strategies a company for example Amazon can apply to go in and improve its novel Australian bazaar for its commodities. Amazon.com is able to concentrate on introducing its brands in new and untapped geographical regions. This move can aid the firm in circumventing stiff competition in the already established markets where the majority of the buyers go shopping. In addition, Amazon can introduce new pricing mechanisms purposely to attract new target groups to purchase their brands. By doing so, the organization will be able to secure its loyal customer base to sustain it even during unfavorable economic conditions. Moreover, innovative delivery networks can be generated to provide commodities in firsthand approaches as well as to new buyers (Robinson and Lundstrom, 2003). Again, this strategy will help Amazon in standing out in the industry since it enables the company to present its operation mannerisms in a unique fashion.

Market Development Strategy

Often Product Development Strategy, in quadrant 3, is employed when a corporation is introducing a new product in an existing market. This might take place because the firm’s goods and services are not retailing frequently or may be it has spotted a fresh market segment that it had untapped previously and hence intends to launch firsthand commodity to upsurge its trades. At this point, the entity may be impelled to have new competencies and skills in order to develop its products successfully. Besides, as pointed out by Wei, Yi, and Guo, (2013) this strategy might be more expensive than market engrossed approaches and also needs more time. Amazon, for instance, requires to place more emphasize on detailed assessment of consumer needs and wants, exploration and development, coupled with early introduction to ascertain that commodities are first to market. The corporation can implement various methodologies to stimulate growth in the Australian market. For example, it can consider adding new features to its existing brands to attract more customers. Besides, groundbreaking and novel expertise can be supplemented to Amazon’s products to develop them and thus become more appealing in the eyes of the buyers. These two tactics will not only enable the corporation to develop its commodities, but they will also go a long way to aid it in acquiring a competitive edge in the foreign market (Skilton and Bernardes, 2014).

Diversification Strategy is predominantly employed whenever new commodities are presented to novel souks. Chen, Jiang, Wang, and Chung Hsu, (2014) coin the perception that diversification in the Ansoff grid is the riskiest of alxl strategies. This approach needs the greatest degree of investment of various capitals such as time and resources. Therefore, Amazon should be adequately prepared concerning finance, and other necessitates before launching its commodities in Australia. Even though this approach seems the most costly, it will provide Amazon.com with a security advantage such that in case of deterioration in a particular segment, the corporation is able to depend on an alternative. Ansoff emphasizes that this approach could allow an organization to gain newfangled skills, facilities, and even operating techniques. Outstanding viability studies and research are vital to ascertain a winning plan. In our case scenario, Amazon Inc. can consider various diversification strategies. They include conglomerate diversification, horizontal diversification, and concentric diversification.

In attempt to explain the aforementioned diversification approaches, Daidj, (2015) uses an example of a corporation that manufactures glass materials. Through concentric modification, the company renowned for producing glass jars for the industries dealing in foodstuffs can enter the building arcade by the production of cut-glass blocks. Amazon Inc. is known as among the leading firms dealing in electronic gadgets such as DVSs, CDs, audiobook downloads, and video games. Therefore, in accordance to Daidj, (2015) Amazon can venture into the film market mainly through the production of movies. 

Product Development Strategy

Through horizontal diversification, glass jar producer realizes the opening to provide specific cement commodities through which it can use to make goblet brick bulwarks. In our case scenario, Amazon may see an opportunity to offer specialized movie shooting software in the Australian market.

And finally, through conglomerate diversification, the company handling glass materials can acquire the producer of colored dies which it can use in coloring the glass products it makes. Amazon, therefore, can obtain the producer of movie animations or computer graphics with which it can use to improve the quality of its films.     

In order to benefit a lot and make the best out of Product-Market Expansion Grid, Amazon needs to comprehend where its unsurpassed prospects are in regard to the current position. The amount of resources the company can expand, as well the magnitude of risk it is capable of sustaining. This means that Amazon should first grow its competencies and resource base in order to enter the Australian market successfully. In the same breath, it is advisable for Amazon.com to employ various risk evaluation tool and gauge the amount of risk it can carry (Hagelin and Pramborg, 2004).

While Ansoff Matrix is quite expedient for comprehending how to perceive various commerce development approaches, it hardly clarifies what necessary schedules Amazon ought to take. As soon as the corporation has recognized its position in the lattice, what its interior abilities are in addition to the magnitude of hazard it is able to carry on, the next step is to carry out a thorough market research. Adding in a well-thought-out market analysis will transform the content of this model from just a mere theory to resourceful information that Amazon can take action on (Connor, n.d.).

Conclusion

As Amazon purports to enter and emerge the game changer in the Australian market, local retailers in this industry have vowed to fight it and as a result, the firm may be making lots of sales but booking no profits. Amazon thus needs to reinvent its business success frameworks to fend off the local threat, and as supported throughout this essay, automation is the key. There are many tactics and strategies which Amazon can use to take root, expand, and compete favorably with other retail companies in Australia. In the contemporary business environment, the most commonly applied strategy which Amazon.com can as well use is market penetration. This approach has emerged the commonest in today’s business world for the reason that the marketplace is gradually appearing a jam-packed setting with commodities being presented every day in current market subdivisions. Nevertheless, to secure control and dominance in the foreign market, Amazon needs to implement other strategies such as diversification, market development, and product improvement strategies to get ahead of the competition in the international market.

References

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Connor, J. (n.d.). “Evolving Research on Price Competition in the Grocery Retailing Industry: An Appraisal.” SSRN Electronic Journal.

Daidj, N. (2015). Developing Strategic Business Models and Competitive Advantage in The Digital Sector. Http://Search.Ebscohost.Com/Login.Aspx?Direct=True&Scope=Site&Db=Nlebk&Db=Nlabk&An=878601

Fortenberry, J. L. (2013). Nonprofit Marketing. Burlington, Ma, Jones & Bartlett Learning.

Hagelin, N. and Pramborg, B. (2004). “Dynamic investment strategies with and without emerging equity markets.” Emerging Markets Review, 5(2), pp.193-215.

Hobday, L. (2017). ABC News. Can Australian retailers survive in the Amazon jungle? [Online] Accessed on 25th March 2017. Available at: https://www.abc.net.au/news/2017-03-22/amazon-to-launch-in-australia-as-local-retailers-vow-to-fight/8376936

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