Business Strategy

 

  1. Business Strategy


    1. Five Forces Analysis of Amazon:  Amazon continues to lead the online retail market as a result of integrating business challenges, such as the ones identified in the five forces of Analysis, into the firm’s strategy development. The external factors define the conditions of the e-commerce industry environment, with focus on the online retail market.  

      1. Competitive Rivalry: High (Strong Force)

      2. Threat of new entrants: Low (Weak force)

      3. Bargaining Power Of Suppliers: Low (Weak- Moderate Force)

      4. Bargaining Power of Buyers: High (Strong Force)

      5. Threat of Substitutes: High (Strong Force)

    2. Competitive strategies employed by Amazon

  • Cost leadership/ Customer centricity

   1. Amazon’s business strategy is guided by four major principles:

      1. Customer Obsession

      2. Commitment to operational excellence

      3. Passion for innovation

      4. Long term thinking

  • High Margin/Low prices

  1. Range, price and convenience are placed at the core of Amazon’s competitive advantage. Amazon is able to have a very thin profit margin and succeeds due to a combination of economies of scale, innovation of various business processes and a constant business diversification. 

  • Amazon uses the following four points as the foundation of their business model

    • Regularly entering into new niches and segments: Amazon started out selling books in 1997, and now you can find basically anything at the click of  a button. Amazon recently launched Amazon Home Services, which was a clear representation of their diversification strategy. Amazon Home services allow you to buy and schedule professional services to your home.

    • Strengthening Amazon EcoSystem: 

Ecosystem is placed at the core of Amazon corporate strategy. Amazon’s ecosystem consists of merchants, writers, reviewers, publishers, app developers, and the information market of commentators, analysts, journalists and feature writers who get the word out about opportunity on the Amazon platform.

  • Customer Obsession

Amazon focuses on long term growth rather than short term profit. Their ultimate goal is to provide everything that customers want and need, which will in turn, monopolize e-commerce. Customer obsession to them means that they’re not focused on competitors, they are more focused on what customers are asking for and providing it to their doorsteps as fast as possible. Convenience is key.

  • Focusing on Amazon Leadership Values

Gaining maximum contribution from HR is another source of Amazon’s competitive advantage. Amazon prides themselves of their standard and level of work, and ensures that from the top-down, professionalism is maintained. 


    1. Amazon Information Systems and how it supports their strategy

      1. Operates on a two-piece information management software--that comprises the Simple Storage Service that is connected to its integrated database and Amazon Web Service that promotes access to E-Comm.

      2. Amazon transaction processing system: 1 click purchase

        1. Amazon brings 1 click ordering, personalized shopping services and easy to use card transactions, email communication with customers and direct shipping to their consumers around the world. 

        2. Secure Debit/credit card payment

      3. Intelligent Recommendation System

        1. Amazon also uses an Intelligent recommendation system which recommends items to the customer based on their previous purchases and searching data. 

      4. Supply Chain Management

        1. Automated warehouse and automated supply chain management.

          1. Enterprise Resource Management

          2. Customer Relation Management 

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