In order to achieve its goal, Amazon implements some strategy during their planning stage, namely cost leadership strategy and differentiation strategy. 2.1.1.1 Cost leadership Strategy Amazon is implementing cost leadership strategy as its core strategy in serving its customers. The company has enormous number of warehouses and processing capabilities, which provide the company physical economies of scale. (ACCA, 2015) Amazon faced a few challenges when it first applied this strategy and as a result, in the late 1990s, the company showed no profit at all after few years of operations. However, Jeff Bezos, the founder and chief executive officer (CEO) of the company, remained optimistic and focused on cutting costs instead of raising the …show more content…
This situation in turn created a service differentiation for the company compared to its other competitors. First, the Amazon.com website has an attractive and customer-friendly interface. Fast and reliable delivery which allow the customers to receive their order within the same day in specific area has also been an incredible feature of the company. A no-nonsense returns policy is being implemented, too. To assist the customers in choosing their order, purchase suggestions based on their previous purchases and webpage viewing are given. Customers can also provide their reviews of the product on the website to assist other customers in choosing the best book. These benefits that can be gained from purchasing through Amazon have brought many loyal customers, while the good services provided by the company encourages them to buy more from Amazon’s website. (Ecommerce digest, …show more content…
Most of the decision made by Jeff Bezos do not have instant gratification, instead having a long term value and bring benefits to the entire company. The development of Kindle, an e-book reader, is a fine example of an idea generated after synthesizing hundreds of data points. (Anders, 2012) 2.1.2.2 Employment practices Amazon chooses its employment candidates by identifying the quality of bias to action and able to work through ambiguity. Both of these qualities help to identify people who can innovate fast and do right by the customer. “One popular question asking the interviewer to create an action plan as brand managers in an area where they lack knowledge of and no budget. Stumped candidates will normally be rejected while others who provide guerrilla answers that are cobbled together usually thrive at Amazon.” (Anders,
The opinion piece published by the Los Angeles Times, “Amazon.com Is a 21st Century Deal with the Devil,” by Amy Koss states her central argument that Amazon is destroying jobs, malls, and stores in the outside world. I strongly disagree with the statement that Amazon is destroying jobs and stores because I believe Amazon brings convenience by allowing people to sell things they might not need that others do. According to Koss,” I also think that it is at the convenience of consumers who have a difficult time going outside because of a medical issue or if they’re just lazy because of the fact that they can order something and have it delivered to them in less than a few days with an even cheaper price tag. Online shopping on Amazon allows others to earn jobs as well because they might work from home and work for Amazon or they might deliver items to the consumer. Some people may even start their own online selling business on Amazon.
The business model of Amazon ensures that the product is available for the customer at the best possible price. The fast shipping strategies also ensure customer satisfaction. These aspects offer an excellent value proposition to the customer. Since Amazon is present globally and is successfully into business for a long time period, the strategies of Amazon are sustainable.
Capacity planning This is the process of knowing the production capacity an organization needs to meet the changing demands for the products. It helps to determine the quantity of the product needed by a firm to meet the demands of its customers. The capacity planning elements for Walmart are; facility, product and service, and human resource.
A firm that utilized cost leadership is Costco. Since Costco is able to purchase in bulk, they can in return pass on the savings to the consumers. With this strategy, they have positioned themselves well according to Porter’s five forces. Rivalry among current competitors: LOW
Today, many people prefer to order products from Amazon instead of going to stores or malls. c. DESCRIPTION OF MY SUBJECT (AMAZON.COM): Amazon (Amazon.com) is the world’s largest online retailer and a prominent cloud services provider. The company was initially a book seller, then later it expanded to sell a wide variety of consumer goods and digital media as well as its own electronic devices, such as the Kindle e-book reader, Kindle Fire tablet and Fire TV, a streaming media adapter (Rouse, 2018).
Many states within the United States have passed online shopping sales tax laws which have been designed to compel Amazon and other e-commerce retailers to collect both state and local sales taxes from their customers. In 2011, it was noted that Amazon only collected sales tax from five states, however in April of 2017, it was said that the company must collect sales tax from consumers in all states that currently have sales taxes. ANALYSIS OF STRATEGIC FACTORS In a December 2011 article written by Forbes contributor, Venkatesh Rao, he states that “the company [Amazon] is nothing if not deliberate and systematic in everything it does.” Rao goes on to say, unlike the other big companies that symbolize our times – Google, Apple, Facebook and Microsoft, Amazon did not rise to power by inventing a new product or service.
Amazon has achieved many milestones from starting in the founder’s garage in 1994 to the growth in revenue to US$147.8 million in 1997 and then to the revenue growth of US$177.866 billion in 2017 (Amazon, 2018a, Amazon, 2018b and Jurevicius, 2018). These milestones were achieved through tenacious focused strategies of meeting their customers’ needs and wants. These strategies have maintained and expanded their customer base locally and internationally and have increased its market shares and profit over the last two decades. In addition, projection for the company’s growth and expansion for the next three to five years looks positive as it predicted to grow at the same rate with its expansion internationally and continued focused in satisfying consumers’ wants (Amazon, 2018a). Although, some factors such as governmental policies, legal issues and natural disasters could pose a threat to Amazon’s growth plans, the management team led by the founder and Chief Executive Officer (CEO) are working on mitigating the risk (Amazon, 2018a).
The suppliers have low bargaining power since the company is large and can compel the suppliers to offer discounts for the popular titles. v) Entry by rivals Although rivals can enter the market of Amazon, the company has already reached the biggest global marketplace and there are many visitors to its website. b) Value chain model analysis Value chain refers to the activities which create value and competitive advantage for a company. For Amazon, these activities are shown in the model below; Amazon value chain model by Dudovskiy, J. (
Competitive advantage is when two or more firms compete within the same markets, one firm possess a competitive advantage over its rival when it earns (or has potential to earn) a persistently higher rate of profit. There are three types of competitive advantage. a) Cost leadership strategy occurs when a firm a delivers the same services as its rivals but at a lower price. b) The differentiation strategy occurs when a firm delivers greater services for the same price of its rivals. c) Focus strategy is a focused approach requires the firm to concentrate along one specific segment either a cost leadership or a specialization strategy.
Walmart has succeeded in achieving the leading position in the retail industry. Walmart now stands as the biggest retailer in the world. However, the external factors constitute pressure on the company that must be address carefully. By analyzing the five forces of external factors we will define the nature and power of our rival power in the market. The five factors are competitors from rival, potential new entrants, substitute products, supplier bargaining power and customer bargaining power all of these competitive forces affecting Walmart position.
Investors in Wal-Mart were aware of the obstacles that the giant retailer would face due to the changing consumer preferences and behaviors. However, the financial reports showcased that its online strategy was successful. At the end of the second quarter in 2017, Wal-Mart reported revenue of $123.4 billion, which was an increment of about 2.1% over the previous year quarter. There was also an increase in comparable sales by 1.8% year over year. Wal-Mart has significantly focused on structuring its online sales, while using its already well-established brick and mortar stores and excellent supply chain and logistics to its big advantage.
“An organizational strategy is the sum of the actions a company intends to take to achieve long-term goals (Johnson, 2016)”. Organizational strategy is derived from a company 's mission, which tells why an organisation is in business. There are three important aspects of organizational strategy such as resources, scope and the company’s core competency (Johnson, 2016). As Johnson (2016) postulated that top management produces the larger organizational strategy, while middle and lower management adopt goals and plans to satisfy the overall strategy. Germano (2010) states that leadership has a significant impact upon organisation and its success, whereby leaders determine values, culture and employee motivation.
Amazon is a domination force that all other retailers have to compete with and they will only get better. When they began to dominate the market, some retailers followed suit and increase their online presence like Walmart and EBay. They even began to lower their prices to compete with Amazon. This resulted in several other retailers, who did not
The company also promote aggressiveness among employees and because of that, the employees consider each other as competition and not as a team. Since the social context is becoming really important, Amazon is forced to change their corporate culture. Their culture had brought a lot of success to the company, but it is now however time to change towards a positive environment and a positive culture that
Online shopping has nowadays become a widely spread way of shopping among people on different continents and in different countries. Its popularity is constantly on the rise considering the spread of Internet technologies and the increasing share of online shops in the retailing business. Online shopping activities are gaining wide spread as far as they tend to provide the consumers with numerous benefits and increase the convenience of buying without leaving the house. The popularity of online shopping grows due to a range of reasons, including its convenience as well as time- and money-saving potential.