SG7001 Managing Strategy Operations and Partnerships
Component 2
Introduction
Amazon.com becomes a multibillion-dollar technology corporation that specialises within e-commerce, cloud technology, online streaming, including artificial intelligence. Jeff Bezos launched the company in 1994 as just an electronic bookstore which has now evolved into the multi-service/product e-commerce business (Wells, Danskin and Ellsworth, 2018). Amazon has so far been renowned for providing millions of things at the lowest possible price. Presently, the company aspires to become a leading innovator and to evaluate new concepts in order to develop into previously untouched sectors. In this report, the analysis of strategic approaches of the brand will be discussed. There will be relevant framework, applying for evaluating the strategic aspects of the company along with a strategic proposal.
Analysis of resources: Resource based view
Because fundamental capabilities provide a substantial consequence on a company’s long sustainability or global market opportunities, the report concentrates on Amazon’s strategic capacities from the standpoint of a comprehensive resource-based view or RBV.
Amazon’s primary resources as well as competencies differ depending on business requirements, and all these strategic competencies can be assessed by examining the corporation ‘s structural, economic, including human resources. Commodities (for example digital commerce), warehousing, copyrights (for example One Click Payment System), consumer profiles, and technical foundations (digital storage as well as system software) are all part of Amazon’s physical attributes. To maintain long-term sustainability, each of fundamental physical qualities make a contribution to the association’s operational underpinnings. As per Amazon report, the company currently employs roughly 132,600 people and also has 260 million registered consumers (accounts with minimum one transaction in the previous year). The amount of Amazon’s certified suppliers increased from 159 to 325 during 2011 to 2012 (Cho and Lee, 2017).
Analysis of capabilities: Porter’s value chain
Amazon’s inbound logistics supporting company-owned retail businesses is based on Fulfilment by Amazon or FBA. Furthermore, particularly Amazon inbound logistics, cost savings are a significant driver of value generation.
Amazon has previously depended on the capabilities of overnight shipping companies like UPS, FedEx, as well as TNT. Nevertheless, over the last decade, the globe ‘s biggest online retailer with revenue has made significant investments in its autonomous logistics network. Amazon Prime Air (the drone distribution system) as well as Amazon Flex have both been unveiled by the digital retail behemoth (intra-metro shipping service centred on the gig economy).
Amazon’s yearly international marketing costs have risen steadily over the last 7 years, surpassing 13.8 billion USD during 2018. It comprises advertisements as well as other promotional expenditures, which were 5.0 billion USD during 2016, 6.3 billion USD during 2017, as well as 8.2 billion USD during 2018 (Lincoln and Andrew, 2018).
Regarding the e-commerce as well as cloud computing corporation, excellent consumer service represents a crucial element of value development. Amazon consumers can reach out to the company by telephone, email, chatbot, and social networking sites.
Assess for sustainable competitive advantage: VRIO analysis
The fundamental competences of Amazon were also built on organisational skills and commercial infrastructure that meet all or most of the VRIO requirements (value, rarity, inimitability, and organization). Several of the corporation’s resources and competencies meet just one or even few of these requirements, yet they nonetheless help the organisation flourish. Amazon’s non-core as well as core competencies are summarised inside this VRIO analysis.
Amazon’s expanding brick-and-mortar footprint is listed as a non-core competency inside the VRIO analysis. Such expertise is important and increases the competitive advantage, although it is replicable and not unusual, given that major corporations such as Walmart maintain strong physical presences (Sastry, Katvi and Tourani, 2019).
The fundamental competences of Amazon’s corporate organisation are the source of its long-term competitive benefits. There have been several assets or competencies that constitute the cornerstone of long-term competitiveness throughout this VRIO analysis. Amazon capitalises all over its core expertise by arranging its business across it and leveraging the trademark for a variety of items.
Assess competitive advantage/ strategic advantage
Amazon began in 1997 like an electronic bookstore selling actual books, but now offers everything which can be purchased exclusively at a worldwide scale (Singh and Pathak, 2021). One among the firm foundations of Amazon’s competitiveness is efficient worldwide logistics. The technology behemoth has made considerable use of this edge to diversify its company successfully. As part of its strategic orientation, Amazon has announced Amazon Home Services, an easy method to acquire and arrange regional professional assistance.
Amazon’s business strategy prioritises the environment. Retailers, scholars, critics, editors, application developers, as well as the knowledge market of experts, researchers, reporters, and article writers who spread the information about opportunities within the Amazon network make up the Amazon environment (Grover, 2019). Amazon’s top management is focused on getting the most out of every element of the corporation’s ecosystem while also increasing the connections between them.
Compared to many other retailing e-commerce platforms, Amazon provides its customers with a more user-friendly experience. Improved searching and query, suggestions based on previous purchases, one-click purchasing at check-out, various customer reviews, as well as, very importantly, dash buttons enabling automatic re-purchasing, are all major differentiators. Whenever integrated with Prime membership, Amazon does have a 360-degree perspective of its customers, including information on digital purchases, frequency of purchases, entertainment choices, and geographical characteristics.
The substantially lower cost that drives its Marketplace programme and many supplier possibilities is a crucial benefit. Amazon had already prioritised long-term development as well as “customer value” above high returns (Wirl, 2018). This also benefits from economies of scale including spending on infrastructure as well as transportation, which have enabled it to launch Prime Now, which provides one-hour shipping on a significant portion of 25,000 products across 30 cities.
Identify potential opportunities/ threats
Increased warehouse touch-points throughout every region as well as a broader distribution network are two ways to enhance the distribution network so that this penetrates further into the least visited geographical regions. The increased requirement for last-mile shipping is indeed a major obstacle to anticipate and meet.
The disease outbreak has resulted in explosive growth in certain industries, like as healthcare, as well as continuous development across FMCG and vital products. Whereas Amazon has entered the food market through Amazon Fresh, a hyper-local industry approach used by businesses such as Dunzo has allowed Amazon to take advantage of its extensive distribution system (Sadq, Sabir and Saeed, 2018).
Additional digital retailing sites have opened, as well as the epidemic has expedited the migration to digital, making things harder for Amazon. Amazon currently binding strength in India’s total e-commerce business, with only a few localized, provincial, and nationwide firms, like JioMart, possessing the ability to threaten the behemoth (Alshmrani, 2021).
The company is well-known for the pricing methods and regulatory oversight involving fairness and anti-competitive behaviour. Unfortunately, the company will not be financially viable any time shortly because of lawsuits as well as significant expenses, and also limited activities due to many scandals.
Prioritise the issues
The critical priority involves a task that should be completed effectively within a certain length of time, regardless of the circumstances. An endeavour which can produce a considerable significant effect on performance, from the other extreme, is indeed the high priority. An attempt wherein assets and timing are both different factors called the desired priority. For prioritising Amazon’s strategies, the high priority method should be applied for better productivity and sustainable achievements.
Develop strategic options
Amazon has worked hard to establish as being among the main e-commerce businesses. To grow their operation, they formed partnerships with popular e-retailers such as pet.com, fabric.com, and others. They’ve also released their own gadget, the Kindle. As they began as an electronic book store, it was a significant triumph for them, because buyers appreciated the product’s affordability and portability. Additionally, they were effective in their market expansion plan since they were capable to diversify the business. They also operate distribution centres throughout India, where it’s among the major online companies, competing alongside Flipkart, the country’s biggest online retailer. Furthermore, the company has successfully improved the consumer experience by offering new and diverse offerings such as AWS, Netflix, as well as other cloud-based services (Cook, 2018).
Assess options
Amazon sought to extend their operation throughout the fields of entertainment and protection after being among the major online retail companies. As a result of the preparation and discussions, they developed a new commodity: Amazon Web Services (AWS) alongside Netflix. AWS becomes a cloud-based solution that delivers on-demand online computing web service (Cook, 2018). It is a programme that allows users to create virtual servers employing virtual interfaces. The other offering is Netflix, that is a charged entertainment subscription. Any person can use this to subscribe for a membership to films, TV shows, and other media. Ultimately, each of these offerings have increased Amazon’s revenue significantly.
Create a strategic proposal
Amazon’s proprietary brands should be developed further and marketed to the company’s loyal consumer group. The strategic engagement in offering their own trademarked commodities through the Amazon site will add towards Amazon’s low-cost competitiveness. Through its accelerator programme, Amazon obtains accessibility to a number of businesses which they can buy and rebrand as their own. Amazon.com can generate more income if it can offer more private label companies on its platform and outsell other commodities. Enhance the grocery operation by using existing business skills to create a more effective grocery delivery service for Amazon consumers. Presently, Amazon provides two grocery-based facilities: Amazon Fresh as well as Amazon Go. It would necessitate a greater physical presence.
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