Amazon Company Strategic Analysis

DISCUSSION
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Assignment
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DISCUSSION
THE BEST FIRM FOR THE FINAL TERM
I have selected Amazon organization for the final paper because it is one of the most successful
and efficient organizations working online. The organization’s main focus is to enhance the
concept of online business that has become important in different parts of the world. The most
significant benefit that I can gain by selecting Amazon is that I can determine recent and modern
trends in the market according to the need of the business. Amazon is successful and getting
competitive advantages from other organizations due to using advanced technology; therefore, I
have selected this organization. The organization’s popularity is undoubtedly indisputable
because it leads to the significant ranking of most famous shopping applications, especially in
the United States. The research has claimed that almost 150.6 million mobile users access
Amazon applications until September 2019. A lot of information is available for this
organization because it is found as a developed organization in the case of technology. Different
factors are helping the organization in getting success in the market, from which one of the most
significant includes trust of the customers with organization. It has been found that the
employees of Amazon have made a significant link along with customers so that products can be
made according to the needs and requirements of the customers because they are the major target
audience. Furthermore, other organizations such as IKEA have also gained motivation from
Amazon and started an online business, showing that Amazon is giving new technology to the
employees (Garnelo, 2020).
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DISCUSSION
Reference
Garnelo, L., Parente, R.C.P., Puchiarelli, M.L.R., Correia, P.C., Torres, M.V. and Herkrath, F.J.,
2020. Barriers to access and organization of primary health care services for rural
riverside populations in the Amazon. International journal for equity in health, 19(1),
pp.1-14.
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DISCUSSION
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Assignment
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Porter’s Five Forces
Porter’s five forces analysis holds significant significance in the current era as it helps the
company to understand the fare of the company and its products within the marketplace. Michael
porter has provided the specific model of five elements that helps to indicate the areas in which
companies can investigate to understand the threats and opportunities. These models support the
business managers identify the potential strategies that assist them in gaining competitive
advantages efficiently. The primary purpose of this study was to determine Porter’s Five Forces
analysis of the Amazon Company and the industry in which it operates. The Amazon industry
refers to the market or group of companies in which the company operates; one of the significant
industries of amazon includes the retailing sector (Dobbs, 2014).
Rivalry
This is one of the paramount models of Porter’s analysis that efficiently assist Amazon
Company. It is the specific source of threat and central common place where threats of the
company can be assessed with the competitors present in the industry; this place price and
quality of the product and service is the most common and typical source to gain the advantages
effectively. By assessing this model, the company can analyze the effect of competitors and test
the services they provide to their customers that assist the company in understanding
competitors’ methods. The competition is likely to be dangerous when the company has the most
potent competitors with a strong brand profile within the market with excellent quality and
prices. The company wants to stay in such an industry and make its compelling brand profile
within the market; it has to provide a superior product quality with the intelligent and essential
quality of innovation that helps its customers attain (Bakan, 2012).
DISCUSSION
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The purchasing power of customers
When the company has a big competition of customers and price, then the company’s
customers demand the deep discount. This would be crucial for a company to have professional
people who have excellent sales experience; they would have professional buyers who know
how to negotiate. This assists the company to attain big customers while big customers demand
product customization and innovation. When there is severe price competition, quality
improvement must focus on cutting costs of products like reducing parts and simplifying the
process. This course sustains the overall quality of the product.
Bargaining power of suppliers
Suppliers significantly impact the company as Porter’s Five Forces model states that
suppliers also have power over the company, especially when the demand and supply balance
favours suppliers. If these are the suppliers of only one significant part, they can control the
whole process. The company also has to manage the quality of suppliers that helps the company
to maintain or enhance the quality of its products (Stenbacka, 2012).
Threats of New Entrants
Entering a new market can be expensive as it needs significant investment to enter a new
market. There are various things that a company have to be installed in the new market, such as
innovation. Still, the company that enters the new market with the significant investment and
innovation can become the cause of threat for the other companies present in the market share. In
this case, the best approach is often to develop the high barriers and make it expensive to join the
market; for instance, if the company is the market leader, the company has to compete constantly
itself drive up the quality of products and down its costs on the constant basis. The company can
DISCUSSION
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also tie up the market channels and suppliers, making it difficult for the new entrants to attain
these significant resources.
Threat of substitutes
The threat of substitutes is the fifth model of Porter’s five analysis that occurs when the
company is forced to compete with industries substitute’s services and products. In this model,
companies are concerned that the products or services of reserves may replace their own. This is
one of the significant threats for the company as well as its threat will be high when the
industries present the outside of the company have a strong brand profile and offer the more
attractive services or products at lower costs. For instance, Amazon competes with the threat of
substitutes in the online retail market. While this has been concluded that it put a practical impact
on the success of Amazon, some of the elements of reserves of Amazon includes the Low
switching cost, high availability of substitutes, Low cost of the replacements.
The research has determined that the government is also a significant threat for the
company that has a crucial impact on the companies and their competitiveness, such as through
taxation and legislation.
DISCUSSION
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References
Dobbs, M. E. (2014). Guidelines for applying Porter’s five forces framework: a set of industry
analysis templates. Competitiveness Review.
Bakan, I., & Doğan, İ. F. (2012). Competitiveness of the industries based on the Porter’s
diamond model: An empirical study. International Journal of Research and Reviews in
Applied Sciences, 11(3), 441-455.
Stenbacka, R., & Tombak, M. (2012). Make and buy: Balancing bargaining power. Journal of
economic behavior & organization, 81(2), 391-402.
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Resources and Capabilities of Amazon
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Resources and Capabilities of Amazon
Resources
Online businesses are growing at a fast rate in the world. Amazon is one of the most
efficient and successful online business organizations globally. Moreover, Amazon has grown
into a vast online business with a huge share of the online market. The papers describes the
capabilities and sources of competitive advantage that amazon possesses to have a huge share of
the online market globally. In terms of resources, the organization possesses unique resources
that facilitate effective and efficient operation. The company has unique resources ranging from
physical, human, intellectual, and financial resources. The company has managed to employ and
recruit skilled and experienced employees who are able to execute all tasks within the
organization. The company also generates a huge amount of financial resources that support the
operation and implementation of the new technology. Physical resources such as buildings and
equipment are available in large numbers, an aspect that enhances effective and efficient
operation.
The organization has invested greatly in its success and capability. Firstly, Amazon has
created brand equity. According to Baboola (2021), brand equity refers to consumers’ awareness
of the brand and their perception of the brand. Amazon has created a positive brand winning its
consumers’ trust. The consumers’ high trust is built by providing good quality products and
customer services. The good brand quality has led to an increase in its revenue and a good
market share.
Secondly, Amazon has a high technological innovation. Amazon has implemented an ecommerce platform for its consumers to access its services and products. The platform has
increased its popularity leading to more demand for its products and services. Moreover,
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Amazon has a wide range of cloud-based services for enterprises and web developers. Cloudbased services have encouraged research and developments among people, which has increased
the popularity of online service providers.
Thirdly, Amazon possesses a global presence. Amazon can offer its services and products
in nearly every place of the world. The company has managed to present its services online and
also established warehouses around the world, thus enhancing its delivery process. Moreover, the
company allows sellers worldwide to sell through their e-commerce platform. These have
created an impressive and strong worldwide presence and thus high revenues.
Competitive Advantage
Amazon has several competitive advantages that have influenced its capabilities in the
market. Foremost, its strategies and leadership. Amazon has unique and experienced leaders who
make informed decisions on the company’s growth, making it have competitive capability over
other companies. In addition to this, Amazon has good financial strength. The financial strength
allows it to make investments in many areas. Furthermore, the company’s financial strength helps
grow new distribution channels and introduce new products and services. This financial strength
also ensures there is stability in the company.
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Reference
Baboolal-Frank, R. (centric. Analysis of amazon: Customer-centric approach. Academy of Strategic
Management Journal, 20, 1-16.
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Management
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Business level strategies are mechanisms that business entities deploy to gain competitive
advantages over their rivals. Amazon company implements a cost leadership strategy where it ensures
the prices for its goods and service cost less than those of its competitors in the market. To ensure the
effectiveness of a low-cost leadership strategy, the products of Amazon focuses on a broad base of
customers. For instance, the products are differentiated so that they meet the requirements of every
market segment in the broad geographical area. The brand name has facilitated the enrichment of its
customers in every market segment (Haque et al., 2021). In the cost leadership paradigm, the high
purchasing power of consumers due to price differences compared to my competitors, who offer
relatively high prices, have substantially influenced the strategy in place (Haque et al., 2021). To
achieve the goal of the high volume of customers with culminated purchasing habits, the company
deploys value addition prospects that consumers perceive to be more reliable than the original product.
The outcome of value addition where consumers firmly believe the augmented product grants a lot of
added advantage concerning satisfaction and health-wise enhances customers’ buying habit and loyalty.
Moreover, Amazon inculcate the aspects of technology innovations to enhance production
efficiency like sorting and packaging machines to enhance the credibility and confidentiality of then
consumers along the chain. Outbound and inbound logistics of Amazon has also been improved
through improving of it technologies and innovation that enables it offer low prices in relation to its
rivals. Customers’ services have been improvised by collecting feedback and making conforming
changes in relation to their views. Additionally, offering extra services to customers such as inviting
customers to celebrations and granting gifts to them at every anniversary and the success the business
celebrates (Kano, 2018). Technically, low-cost leadership anticipates many benefits to the business
when effectively executed. It inhibits new entrants as my prices are low, which may not favor the prices
they intend to offer, and this strategy shields out new sellers. Cost leadership strategy will allow my
business to survive in a competitive market where superior customers are eligible to lower prices in
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order to purchase your products. This aspect has deterred many businesses from continuing with their
operations.
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References
Haque, M. G., Munawaroh, M., Sunarsi, D., & Baharuddin, A. (2021). Competitive Advantage in Cost
Leadership and Differentiation of SMEs “Bakoel Zee” Marketing Strategy in BSD. PINISI Discretion
Review, 4(2), 277-284.
Kano, L. (2018). Global value chain governance: A relational perspective. Journal of International
Business Studies, 49(6), 684-705.
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Amazon Management
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Amazon Management
Amazon deals in a wide range of products. These products range from health and personal care
items, groceries, gourmet food, software, videotapes, DVD, videos, music CDs, books, game studios,
beauty products, consumer products, musical instruments, sporting, tools, automotive items, industrial
and scientific supplies, kitchen facilities, luxurious clothing, to baby items (Menéndez Torre & Yadav,
2021). The company is well-diversified and flexible. Amazon deals with a variety of products from the
product line. For example, the company deals in apparel products, technology, farming items, sports
products, and entertainment instruments. This line of products articulates that the company deals in
multiple product classes with many industries. Specifically, the company has various retail shops
dealing with a distinct line of products.
For instance, Amazon Studios is a division that develops movies, comics, television shows, and
feedback from crowd-sourced settings (Menéndez Torre & Yadav, 2021). Another retail line with the
credit division is Amazon games studios. Amazon developed games for PC, Mac, and Kindle e-Readers
with the brand name of industries (Reflexive and Amazon Digital Services). Amazon also created a
platform called Amazon Video Direct that mandates video creators to rent or own the site. They receive
50% of the revenue earned from sales or rental of the videos by Amazon.
There are potential linkages between various classes of products. Amazon uses banners to
promote and advertise its products to link up different categories of products. It applies this concept on
special occasions such as back to school to promote various products using graphics of different sizes,
messages, and shapes. The banners may display pictures of bags, books, uniforms, shoes, and bicycles.
The company still has some industries to expand its operations (Menéndez Torre & Yadav, 2021). In
particular, the company has an opportunity to connect between product and voice gadgets. For
example, when a customer uses a microwave to pop the popcorn, they will say pop that popcorn and
the device will recognize the voice and how many time it is uttered is the interval microwave uses.
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Therefore, this is an opportunity that the company deploys to increase the customers’ loyalty, which
eventually grants the customers ample time to engage in other production.
Reference
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Menéndez Torre, C. A., & Yadav, R. K. (2021). Definition of a methodology to analyze the Product
Portfolio Management: Example analysis of the cloud computing market PPM.
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Management
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Amazon Company
Amazon is an e-commerce retailer located in America and operates locally and internationally.
Amazon is ranked among the top five most successful global companies. Its success has attracted
many competitors to offer the same products deploying the same strategies to offer value proportions
with the aim of acquiring a higher market share (Hahn, Kim & Youn, 2018). Amazon has a multitude
of product lines that faces competition from specific rivals. For instance, the e-commerce firm faces
stiff competition from Walmart, Alibaba, and eBay. On the other hand, Amazon’s Prime Video firm
also faces stiff competition from Netflix, Hulu, and Disney plus. Amazon Web Service (AWS) firm
also faces high competition level from Microsoft Azure, Google Cloud, and IBM.
All competing firms have their strengths and weaknesses regarding quantity, quality, cost, and
many other services in gaining consumers’ confidence (Hahn et al., 2018). For example, Walmart’s
Strength is based on its financial capacity as it is the biggest retail company in the world. Its weakness
is that it offers a limited quantity o products. Alibaba’s company strength is based on its brand name
in China and the international market, forcing Amazon out of the Chinese market. The weakness of
Alibaba is its disreputable name in the production of counterfeit products, and this affected its
international market. eBay’s strength is based on its accessibility, while its weakness is its limited line
of products. Netflix’s strength lies in its quality of services, while its weakness lies in the low quantity
of products (Hahn et al., 2018). Hulu offers live TV services that Amazon doesn’t offer; hence its
strength is based on this. The weakness of Hulu is its weak brand name. Disney Plus has the strength
of owning many production houses (stores). The company is young and has a weaker brand name in
the international market. Microsoft Azure offers a wide range of computer services and targets lowlevel customers. Its weakness is its low prices, making it gain lesser profits compared to Amazon.
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Google Cloud has good pricing and high-quality services as its strengths, and its limited
features compared to Amazon Web Service (AWS) form its weaker base. As the oldest company, IBM
enjoys the benefits of its brand name and a wide length of product lines as its strengths, while its high
cost on services and software solutions forms a concrete base for its weaknesses.
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Reference
Hahn, Y., Kim, D., & Youn, M. K. (2018). A brief analysis of Amazon and distribution strategy.
Journal of Distribution Science, 16(4), 17-20.

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