Strategic Assessment Project - Case Study Example

Strategic Assessment Report of the of the Table of Contents Introduction 3 Overview of the Company 3 Strategic Plan for Amazon.com, Inc 4 Mission statement 4 Objectives of Amazon.com, Inc 4 Situation Analysis 4 PESTEL Analysis 4 SWOT Analysis 5 Strategy formulation 6 Strategy implementation 6 Marketing strategy 7 Merchant Program 7 Structure 7 Control process 8 Conclusion 9 References 10 Introduction Strategic planning is defined as a process of illustrating what the company is about and deciding upon what is the main concern for the utilization of resources. It is also referred to the process of organization of describing its tactics and making choices on allocating the resources in order to pursue the exact strategy (Abraham, 2012). Strategic planning also helps in setting an unambiguous direction as well as concrete goals and objectives for future. It involves observing the organization or enterprise as a complete body and is mainly concerned with the long term growth of the organization. Developing or expanding the plan entail discussion with various stakeholder groups and it happens over a time period. Different types of plan are developed by the managers such as operational plan, development plan, business plan, and project plan. By setting these plans, they can outline the targets and activities which the company will execute to work in the direction of achieving the objectives and aims, which are mentioned in the strategic plan (Bryson, 2011). Amazon.com, Inc is an electronic commerce corporation having it’s headquarter in Seattle, based in Washington. The company has started its operations by selling the books online, but soon adopted diversification strategy. In the US, it is the leading internet-based retailer (Amazon, 2015a). The main purpose of the report is to develop the strategic plan for Amazon.com, Inc for their international operations. Overview of the Company Amazon.com, Inc is a public listed company and a main supplier of the cloud computing services. It has been instituted in 1994 and sold its first online book in 1995. The company has launched its first global site in 1998 (Amazon, 2015a). Amazon.com, Inc had adopted a diversification strategy and therefore its product portfolio includes DVDs, video games, CDs, VHSs, electronics, software, jewelry, food, apparel, toys, and furniture. It also manufactures consumer electronics such as Fire tablets, Amazon electronic book readers, Fire Phone and Fire TV (Amazon, 2015b). Amazon.com, Inc also provides global shipping of products to some countries. They have separate websites for different countries. The customers of Amazon.com, Inc are sellers, consumers, content creators, and enterprises. Strategic Plan for Amazon.com, Inc Amazon.com, Inc’s strategic plan will be designed by considering its mission statement and objectives. It will be followed by situation analysis, strategy formulation, implementation and control process. Mission statement The mission of Amazon.com, Inc is to become the greatest customer-centric firm, where the customers could find as well as discover anything they want to purchase online, and also endeavors to provide the customers with the lowest probable prices (Amazon, 2015c). Objectives of Amazon.com, Inc The objective of the company includes not providing discount on any of the products for limited time period, but instead providing low prices each day and also applying them broadly on the complete product range. To meet this objective, the strategy adopted by them is to ‘get big quickly’ by investing insistently in new categories of product as well as in new businesses, through spending their money on creating brand awareness as well as getting novel customers (Amazon, 2015c). Situation Analysis Situation analysis has been done to analyze the current situation of the company by conducting SWOT and PESTLE analysis. PESTEL Analysis Political factors: Government policies are promoting competition by means of legislation and e-Commerce promotion. There is an optimistic effect on Amazon.com, Inc because there is a boost in the internet users. This is because internet access became more affordable, better, and faster; and it attracts more national users. There is also rapid growth into the recent markets by means of acquisitions (Donici & Maha, 2012). Economic factors: The Company may think of entering India as well as growing the Chinese marketplace. Internet retailing has seen an incredible growth between the periods 2006 to 2011. Therefore, there are more prospective customers for this company (Donici & Maha, 2012). Social factors: In the recent period, there has been an augmentation in the social media networking. So, the marketing needs of Amazon.com, Inc can take benefit of this fresh channel. The product category risk decrease the online shopping so, the company should look out the ways for overcoming risks in order to increase users (Donici & Maha, 2012). Technological factor: Increased occurrence of utilization of sources such as mobile devices and gadgets help to boost the internet access. The services of high-speed system increases use of the media-rich information. Amazon.com, Inc also benefited from media-rich information as, these are without any difficulty made accessible to the online shoppers (Donici & Maha, 2012). Environmental factors: Generally global warming factor have an effect on the companies. As, the warehouse of Amazon.com, Inc is near the airport so, it involves minimum number of car journey. The companies need to become ecological in order to attract more customers. However, this company has no tension regarding this matter, as it involves more online shopping. They are also modifying the business methods to become more environmental friendly with their packaging and postage methods (Donici & Maha, 2012). Legal factors: Amazon.com, Inc needs to be alert of international as well as domestic laws such as the ‘Data Protection Act’, because it could have an effect on the development of its business operations (Donici & Maha, 2012). SWOT Analysis Strengths: An excellent brand image of the company provides them the competitive advantage and helps to draw more customers. Their focus on the research and growth/development assist them in maintaining a strong position in the market. The customer-centric idea accompanied with the diverse product portfolio help Amazon.com, Inc to achieve its success (Ratnasingham, 2006). Weaknesses: The Company have no physical existence so, it somehow affect its profit margin. This is because they don’t involve any shipping fees, which has also resulted in low cash flows. Moreover, they are not performing well in China (Ratnasingham, 2006). Opportunities: The middle class of India was expected to rise from 200 to 550 million by the year 2015. In India, the eCommerce is also growing rapidly by 30% every year. So, the Company has an opportunity to sell more number of products in India due to the augmented customer spending. Boost in the eCommerce sales as well as expansion of the online shopping in India and China provided opportunity to them to increase their sales in these markets. Amazon.com, Inc has also shown expansion through the acquisition of dpreview.com (Ratnasingham, 2006). Threats: The Company depends on several vendors for their sourcing of stocks. They do not encompass long term contracts with the vendors and therefore the incapability to renovate these agreements at reasonable stipulations may negatively affect their operations. One major threat is the competition from other online sites, physical world retail company, vendors, manufactures, etc. One of its main competitors is eBay.com which is leading the online retail market (Ratnasingham, 2006). Strategy formulation Amazon.com, Inc pursues a generic strategy to develop their capabilities, knowledge, and skills that will permit them to compete profitably and to achieve a competitive benefit by outperforming their competitors (Sehgal, 2010). Cost-leadership strategy: Amazon.com, Inc adopts the cost-leadership tactics by lowering the price of their product each day instead for limited period. They draw customers through their lower price strategy and apply them broadly on the complete product range (Kim, Nam & Stimpert, 2003). Differentiation strategy: Amazon.com, Inc draws customers by providing them distinctive goods in terms of quality and design. They also differentiate their service in terms of convenience of providing the service. The company generates value for their customers by making use of their technology know-how (Kim, Nam & Stimpert, 2003). Focus strategy: Amazon.com, Inc focuses on single set of customers and also produce product of low cost for those customers. They serve each set of customers as a niche by providing them exceptional service instead of serving the whole market as a whole. Each niche encompasses its own requirement and demand. So, Amazon.com, Inc focuses on each niche separately (Kim, Nam & Stimpert, 2003). Strategy implementation It is recommended that Amazon.com, Inc should consider the following actions in order to attain its objectives: Marketing strategy In China, the local brands experienced more achievement in advertising and promotion than the foreign ventures. It is considered that China is a convoluted place to advertise, because there are several promotional channels and region regulations (Ratnasingham, 2006). The consumers of China find most of advertise boring, therefore it is essential for Amazon.com, Inc that any promotion or advertising should be appealing to increase its sales of products. There are various promotional channels which the company can use: Advertising: Amazon.com, Inc can make regional advertising in China, thus making their advertising more fun as well as exciting. Sponsorship: The Company can sponsor their products at the sports events such as China Tennis Open. It will help to draw more customers because Chinese customers may find it more exciting seeing the promotion of the products in such events. Sales promotion: Amazon.com, Inc may adopt the marketing strategy of providing short term offer on products to promote sales, such as discount for limited period only (Ratnasingham, 2006). Merchant Program A mode for Amazon.com, Inc to align effectively with the culture of Chinese customer is to execute merchant program, which already runs effectively in the United States. External companies could purchase square meters of the space of warehouse to grasp their stock. Then Amazon.com, Inc can sell the stock of external company by means of their website. This strategy would beat the competition coming from rivals of domestic Chinese market. On the whole, this strategy will allow the company to become more locally approachable. Structure As companies go global, their strategies should address two different scopes of the global business perspective. Should the companies configure their processes, resources, and structures in order to adapt towards the global diversity encountered; and to beat the restrictions imposed by different national structures, systems, and behaviors? Considering the present confrontation faced by the Amazon.com, Inc especially in China, for example strong market competition as well as unsuited payment and banking system, the strategy of market penetration will exploit the internal expertise to adapt towards local challenges or confrontation. Structuring of the Amazon.com, Inc will play a significant role in internal synchronization of responsibilities and functions in order to attain the competitive boundary in the market of China (Allred, Smith & Swinyard, 2006). Integrated network model: This model is proposed to structure companies where the country subsidiaries encompass close connections with global headquarters and also have great associations with other subordinates. The advantage for Amazon.com, Inc in adopting this model is that they will be able to balance the requirement for international standards and decentralizes decision making. Adopting this model will also facilitate in enabling huge flow of resources, information, best practices, and people (Frels, Shervani & Srivastava, 2003). Control process Control mechanisms and key processes that can facilitate the strategies and structures to be executed are explored. To implement the strategic objectives, control processes or mechanisms could either be utilized as outputs or inputs and indirectly or directly. Below mentioned table shows which processes should be controlled to implement or execute the above structures. Direct supervision as part of ‘direct-input’ method is not suggested because Chinese employees have enough knowledge of the local/regional markets and therefore they have the power to take suitable actions. Thus, it is recommended that cultural process and self-control as part of ‘indirect-input’ process must be emphasized. However, because of the international nature of strategy execution, the planning process should have ‘direct-input’ as well as shared viewpoint so that the processes could be standardized and budgets and accounting system could be consistent. This minimizes the misrepresentation risk, errors and miscalculation by commission. Intercultural awareness and training and growth are also essential inputs need to be managed so that employees of Amazon.com, Inc should have some shared norms. The use of internal markets and performance targets as the controlled outputs will rely greatly on the initial success of strategy (Johnson, Scholes & Whittington, 2008). Conclusion Strategic planning assists to analyze the external and internal environment and considering how to compact or deal with the future transitions and changes. The report has examined the external and internal environment of Amazon.com, Inc, which has helped in the formation of various possible strategies. It is recommended that the market penetration in the Chinese market is the appropriate, acceptable, and feasible decision based on the opportunities and core competences of Amazon.com, Inc in the industry. Implementing strategy and managing can be extremely exigent in a continuously changing international environment. Thus, Amazon.com, Inc will require integrating or incorporating its competence and resources across various functional regions. References Abraham, S.C. (2012). Strategic Planning: A practical guide for competitive success. United Kingdom: Emerald Group Publishing Ltd. Allred, C.R., Smith, S.M., & Swinyard, W.R. (2006). E-shopping lovers and fearful conservatives: A market segmentation analysis. International Journal of Retail & Distribution Management, 34(4), 308-325. Amazon. (2015a). History of Innovation. Retrieved from http://www.amazon.jobs/history. Amazon. (2015b). Amazon. Retrieved from http://www.amazon.com/. Amazon. (2015c). About Amazon. Retrieved from http://www.amazon.com/Careers-Homepage/b?ie=UTF8&node=239364011. Bryson, J.M. (2011). Strategic planning for public and non profit organizations. New Jersey: John Wiley & Sons. Donici, A.N., & Maha, A. (2012). E-Commerce across United States of America: Amazon.com. Journal of Economy Transdisciplinarity Cognition, 15(1), 252-258. Frels, J.K., Shervani, K., & Srivastava, R.K. (2003). The integrated network model: Explaining resource allocations in network markets. Journal of Marketing, 67(1), 29-40. Johnson, G., Scholes, K. & Whittington, R. (2008). Exploring Corporate Strategy: Text and Cases. Harlow: Prentice Hall. Kim, E., Nam, D., & Stimpert, J.L. (2003). The applicability of Porter’s generic strategies in the digital age: assumptions, conjectures, and suggestions. Journal of Management, 30(5), 569-579. Ratnasingham, P. (2006). A SWOT Analysis for B2C E-Commerce: The Case of Amazon.com. International Journal of Cases on Electronic Commerce, 2(1), 10-22. Sehgal, V. (2010). Supply chain as strategic asset: the key to reaching business goals. New Jersey: John Wiley & Sons. Read More