Analysing Amazon’s internal environment reveals that cost leadership is a strategic capability. McGraw Hill. On the other hand, the risk can lead to the company holding an obsolete stock that would lead to huge losses. It will account for nearly half of online retail sales in 2018, according to eMarketer, and is laying the groundwork for a physical retail business — equipped with labor-saving technologies like cashier-free checkout that has legacy grocery and convenience chains scrambling to catch up. As large and ubiquitous as Amazon is today, it's difficult to remember that it started in a garage. The purpose of this article is to review Amazon’s strategy development model and the external assessment tools it used in helping it to formulate and select top strategies. All key success factors that has added to the top e-commerce platforms successful journey from being an online book seller to its current diversification, all the while accomplishing its vision of being customer centric. In its filing, the company warns investors that it expects to report "substantial operating losses for the foreseeable future," due to heavy investments in technology and marketing as it seeks to beat back tough competition from bookselling giant Barnes & Noble. Amazon.com has strengths that have continued to help them out throughout the hard times in the economy and in the industry. The strong financial position has enabled the company to strengthen itself in the online retail sector through expansion. Amazon Strategic Analysis. The increasing internet connectivity in developing countries provides an opportunity for growing sales in these countries. Meanwhile, Amazon has moved into almost every imaginable type of product, media, and service. Amazon Growth Strategy Recommendations. Based on the conditions in the company’s internal and external environment, it is apparent the company needs to take some actions to safeguard future success. (Amazon.com Announces First Quarter Sales up 15% to $22.72 Billion, 2015) Current successes in media: Amazon's product Kindle is still very successful. Amazon may finally be able to break into the grocery industry by purchasing Whole Foods for $13.7 billion. Narasimhan, R. & Kim, S.W., 2002, ‘Effect of supply chain integration on the relationship between diversification and performance: evidence from Japanese and Korean firms.’ Journal of operations management, vol.20, no.3, pp.303-323. And when the ultra wealthy aren’t paying them, they’re even more important. But physical capital measured by fixed capital formation was found to have a significant positive impact on output growth. Product development starts with a careful analysis of the market needs with the aim of ensuring that the new products meet the specific market needs (Lilien, Morrison, Searls, Sonnack,&  Hippel 2002). Amazon will grow fast if the economic conditions are positive in the areas where it is operating. Even after the company had built warehouses to store inventory, making it a business with real revenue and real assets, plenty of investors wrote Amazon off as another dot-com fever dream, destined to be gobbled up or wiped out by Borders and Barnes & Noble. Amazon Inc, has been experiencing rapid growth including penetrating different markets across the globe. It happens when a business expands its own operations rather than relying on takeovers and mergers. Amazon said its sales grew 37% compared to the same period last year, to $96.1 billion, and profit increased 197% to $6.3 billion. These threats are a treat to the company’s future as they can dilute the impacts of some strategic capabilities. Save my name, email, and website in this browser for the next time I comment. A literature review on the antecedents of online trust.’ Computers in human behavior, vol.26, no.5, pp.857-869. The Future of Work With These 7 Strategies, Amazon Will Dominate Any Market The unveiling of Amazon's future strategy can be explained in … Amazon senior management decided to adopt a proactive, rather than reactive approach towards external economic factor of cost of labour. If you can't beat 'em, buy 'em. There are four types of diversification, and they are all relevant to Amazon. First, im 55. second, i have no degree. The suppliers form an important part of the online retail sector. The sector is made of both big and small retailers that compete for customers. Amazon founder Jeff Bezos will step down from his role as chief executive later this year and transition to the role of executive chair. Enrolling in FBA is shown to both increase the … At age 35, Bezos is the fourth-youngest recipient of the distinction. Amazon patents the ability to purchase an item online with the click of a mouse. Amazon’s 4 pillars are designed to keep your focus where it belongs: on the foundational principles that spur growth and profits. Amazon ditches plans to build a new headquarters in New York after facing backlash from local politicians and community members. The marketing department should ascertain whether the product meets market needs. Though it started as an online bookstore, its success in its venture spurred it to diversify into selling anything that can be sold online. In a decision that will transform Seattle's real estate market, Amazon makes a deal with the city and a developer to consolidate its scattered workforce into 1.6 million square feet in a gritty industrial neighborhood north of downtown. Shin, H.S., 2009, ‘ Reflections on Northern Rock: The bank run that heralded the global financial crisis.’ Journal of economic perspectives, vol.23, no.1, pp.101-19. - Kindle edition by Grashaw, Kurt. The company should employ other competitive strategies to supplement price strategies. For instance, introducing new types of phones and tablets whose characteristics vary from the existing products would amount to horizontal diversification. Expanding outside of traditional retail and consumer markets is where Amazon will find the greatest opportunities for rapid growth in the next several years. It is technically impossible for a retailer to establish an in-house distribution network spanning the globe and this necessitates strategic alliances with logistics firms. Establishing brick and mortar stores will give the company a competitive advantage over Walmart considering that this competitor has been striving to venture into online retail. And with great scale comes intense scrutiny: Amazon has come under fire from civil rights groups, presidential candidates, antitrust regulators and its own employees on issues ranging from facial recognition technology to its light federal income tax bill. *After adjusting for three subsequent stock splits, the closing price of Amazon's shares on their first day of trading was $1.96. Concerning the opportunity, the company sells phones and tablets among other technical devices implying that the demand for the products would increase as customers seek to acquire more modern devices. Financial resources enable a business to withstand environmental challenges emanation from a changing environment. The fact that the company’s main customer base is in developed countries exposes it to the ramifications of an economic slowdown in these countries. The subsequent return on that investment is impressive. The company has in the recent past tried to introduce new products such as fire phone that were a big flop. Most of the company’s customers are in developed countries, and the political stability experienced in these countries provides an opportunity to grow and avoid losses. The company starts to generate extra income by licensing its platform to other e-commerce sites, like Borders.com and Target.com. Amazon expands its offerings and starts selling CDs and DVDs. Despite attempts to penetrate the shoe market Amazon hadn't been able to catch up with Zappos.com, which provides free returns and overnight shipping. Its stock peaked at nearly $106 a share at the end of 1999, before taking a long slide, pummeled by negative analyst reports. Amazon maintains the minimum stock level, and this makes it necessary to streamline the relationships with the suppliers to ensure timely deliveries. Bezos seems to understand that by staying innovative and collaborating with … Amazon has now moved far beyond books, with offerings that include electronics, toys, kitchenware, and even magazine subscriptions. The brand has continued to see very fast growth and has come a long way since its inception. Although it would survive the dot-com crash, Amazon wasn't totally immune. Bezos says he will pay $250 million of his own money for the financially struggling Washington Post. Answered November 12, 2020. In case you are interested in our services, kindly reach me through Email: sam@blueoceanoutsource.co.ke , Facebook: https://web.facebook.com/samy.rui     Whatsapp: https://wa.me/+254775654998. 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