Strategy, Business Information and Analysis - Essay Example

This assertion is supported by analysts who predict Amazon will be the fastest company to hit the US $100 billion in annual revenue by 2015 (Manjoo, 2011). Amazon provides a good case company considering its phenomenal success despite the intense competition it faces in all its markets such as the large physical retailers Wal-Mart and Tesco, large e-commerce sites such as Ebay.com and companies that provide e-services, and other ambitious, multi-market tech companies specifically Google, Apple and Facebook Starting out as an online book e-tailer, with its first sale in July 1995, Amazon on the outside seems to be a company that is spreading itself thin.

It is no longer easy to neatly sum up what Amazon is. Amazon is no longer a web store, as it provides a myriad other products and services such as making hardware (read the Kindle line of products), providing Cloud computing infrastructure and services and even offering social networking services (for example Kindle’s social network that connects readers of the same book). It is within this diversified portfolio of businesses that Amazon seems to be engaged in that Prahalad and Hamel (1990) stated belies a few shared core competencies.

Identifying Amazon’s core competencies Hamel and Prahalad (1996) defined core competencies as those technologies and skills that enable a company to deliver specific benefit(s) to customers. This means that core competencies are not built as commitment to particular market opportunity or product, rather they are built in order to create or improve customer benefits. Products are a result of core competencies. According to Prahalad and Hamel (1990) core competencies can be identified using three attributes: customer value, competitor differentiation and extendibility.

To identify a core competence under customer value, a company must continually ask itself if a particular skill makes a significant contribution to a value perceived by the customer. Secondly, to identify a core competency the firm needs to benchmark what it has against its competitors. Competitor differentiation comes about either where the company has a capability that is completely unique or is not unique but is superior to what the competition has. This implies that core competencies have to be difficult for competitors to imitate.

Finally, the organization will need to ask how the capabilities it has could be used to venture into new product or market arenas. Core competencies need to provide potential access to a wide variety of markets (Prahalad & Hamel, 1990). Looking at Amazon.com two competencies immediately stand out as being core competencies: innovative technology in cloud technologies and online retailing, and consumer analytics. Amazon.com has the largest and most sophisticated collection of online retailing technologies available (Laudon & Traver, 2008).

The company deliberately pursues leadership in online technologies. In its US SEC (2005) document Amazon states that its strategy focuses its development efforts on continuous innovation by creating and enhancing the specialized, proprietary software that is unique to the business, and to license or acquire commercially-developed technology for other applications where available and appropriate. The end products of this focus and core competence include the one-click buying, personalized web pages, software-based product recommendations, Kindle