Business strategy: Amazon.com from start-up to 2004 - Essay Example

?Amazon.com – from start-up to 2004 Amazon.com is among the success stories of our time. It successfully exists in an environment where there is aggressive and dynamic change daily, the World Wide Web where there is an expected 2,300 percent incredible monthly growth. There is one important significant point in here and that is the presence of change. With this change, Amazon.com should be always on the go to critically consider its entire business and its environment, so as to maintain its competitive edge in the days to come for its entire venture. 1. Pestle analysis Political – For online business, this is a very important consideration most especially that e-commerce is subject to government regulations as determined by the Federal Trade Commission (Belew and Elad, 2011). Any form of amendment in this area would mean a lot to online businesses like Amazon.com for this has to be substantially integrated with their respective business models. Economical – The online business is one of the easiest to start nowadays provided that substantial know-how is ensured along with the start-up process. For various economic considerations, e-commerce has become widely accepted nowadays as a fundamental move towards aggressive growth of a certain firm. Social – Online business is associated with social interaction. The World Wide Web for instance has been aggressively integrated with business communication process as it continues to entice people through communicating substantial knowledge and information. Technology – Without question, the primary contributing factor for the growth of an electronic business is the use of technology as this would ensure that the right information is conveyed directly to the market, and products and services are delivered according to the expected value of customer service. Legal – It’s true that few business laws relate with online business (Belew and Elad, 2011). However, e-commerce should still comply with any available government regulations. Environmental – The prevailing mode of business conducted by Amazon.com since it is via online ensures no environmental waste is necessarily included. Based on the above analysis, all factors in the environmental analysis are necessarily important in the case of Amazon.com, but there is substantial strong weight on technology because e-commerce in the first place must be strongly founded in here prior to the integration of other business concepts or ideas. 2. Porter’s Five Forces Analysis Suppliers – Suppliers have no strong market power considering the fact that Amazon.com has been widely known in the market. Aside from it could substantially demand for the needs of its entire business, Amazon.com also has many suppliers to choose from around the world which in the first place are also looking forward to their financial breakthroughs. This is a great opportunity for Amazon.com to take into consideration in great detail prior to its future investments. Buyers – The buyers momentarily have gained a strong bargaining power considering the fact that competitors of Amazon.com are just a click away. In the first place, buyers have become more adept in using the internet. Substitutes – The traditional book retailers have momentarily become obsolete with their services in the age of internet. Just before they could plunge into the modern market with their product or service offerings, Amazon.com has already positioned itself competitively into the world. Potential entrants – The coverage of traditional book retailers has become limited in the age of technology. They could be potential entrants, but they have to undergo the process of setting up the whole thing once and for all which would mean a way behind Amazon.com. Amazon.com substantially holds the economies of scale and had widely expanded into diversification of product and service offerings by initiating strategic investments in some companies who could provide their target customer value. Competitive rivalry – There is unequal opportunity among the industry competitors because Amazon.com has moved way beyond them all through the implementation of modern marketing techniques, advanced technology and sophisticated business model. This substantially animates the positioning of a certain firm in its industry and clarifies where strategic changes are necessary (Porter, 1998). The bottom line would be the implementation of more innovative strategies within the industry which Amazon.com has not explored or tried yet. 3. Value Chain Value chain is simply a business system or analysis tool emphasising production, knowledge activities and their relationships, value-added activity and rules within or around the organisation (Papadopoulos et al., 2009). In other words, within the value chain are essential components that primarily add value to a certain product or service offering. In-bound logistics – As the nature of its business suggests, Amazon.com does not necessarily produce the products, but what it does is to connect directly with its suppliers or manufacturers around the world and do the necessary retail that at some point does not need so much time for packaging and other things compared with traditional retailing. Operations – The entire internet is the place where the whole Amazon.com operation evidently gives a significant value for its customers. It attempts to implement superb customer experience by investing in the enhancement of its online stores that would be more convenient to use by its customers. Out-bound-logistics – Fast delivery of online-ordered products is what Amazon.com guarantees to its customers to ensure them with excellent experience with its offered services. Thus, it is crucial for Amazon.com to have local partners around the globe for the continuity of its business at a fast pace. Marketing and sales – Amazon.com is a picture of a firm employing modern marketing techniques to ensure volume of sales while trying to provide high level of customer experience and satisfaction. Service – Amazon.com is not only good at making sales but on the after sales services by instituting on-time delivery at a higher speed possible, online feedback mechanism and support to its customers. The value chain depicts the fact that Amazon.com is not only good at making sales, but in determining a higher quality of customer service through excellent move towards maximizing the value of product or services that their customers paid for. 4. SWOT SWOT analysis evaluates if company’s internal resources and capabilities, and external possibilities matches altogether (Bensoussan and Fleisher, 2008). Strengths Technology Executive team Low price/Profitable Outsourcing strategy Retailing strategy Innovative ideas Logistics Supply chain Online store Customer relationship management Renowned global brand Weaknesses Business categorization (may risk its brand, as it adds new category to it) Focus Shipping costs (Some local counterparts offer free shipping) Opportunities Increasing credential to tie up with other companies Business with public sectors Opportunity for expansion in other countries Threats - Competition - International competitors - - Product seasonality 5. Cultural Web Cultural web characterises some aspects of the culture of an organisation through the following factors such as stories and myths, rituals, power systems, control and organisational structures (Lynch, 2006). Based on the paradigm, customers or people can tell what they exactly perceive about Amazon.com in general. In great detail, Amazon.com may be an informal company but most likely serious about its business. In line with this, Amazon.com is having substantial amount of motivating force coming from its customers. There are three essential things that matter a lot to Amazon.com: customers, website improvement, and system to get orders to customers quickly and reliably. With these three considerations, Amazon.com was able to develop powerful organisational structures handled by experts from different fields in order to ensure success in the implementation process, one way is hiring executives that are experts in their fields due to substantial amount of experience. In here comes a strong power structure. Control on the other hand remarkably comes out from experience and as a way to evaluate how to improve further customer experience and prevent from eroding them. 6. Bases of the competitive advantage – “the strategy clock” The entire point of the strategy clock is based on price and the perceived value of product or service to the customer (Needle, 2010). As can be observed, Amazon.com has been so obsessed with finding customers and as a result it would love the idea about taking volume of orders. With this, it tries to entice its customers with substantially low-priced products, but with a promised of high added value, because of its ability to pursue excellent customer experience through improve website, and the goal to get orders to the customers quickly and reliably. Therefore, Amazon.com has the potential to either use a hybrid or focused differentiation based on price. It can substantially do so knowing the fact that it has the idea. One of its executives is Jimmy Wright, a former Wal-Mart executive and is now under the logistic management department of Amazon.com. Wright is substantially expert how the company can eventually cut cost of the final product by optimising its supply chain. This is the same trend used by a renowned retailer Wal-Mart. However, Amazon.com is a different story because it is way beyond the traditional retailing activity. It was able to maintain less inventory cost, and low-cost maintenance of its online store. Thus, it could definitely make necessary adjustments with the final cost of its products, which might be highly differentiated at some point if necessary. References Belew, S., and Elad, J. (2011) Starting an Online Business All-in One for Dummies. 3rd ed. Hoboken, NJ: John Wiley & Sons. Bensoussan, B. E., and Fleisher, C. S. (2008) Analysis without paralysis: 10 tools to make better strategic decisions. Upper Saddle River, NJ: FT Press. Lynch, R. L. (2006) Corporate strategy. 4th ed. Indiana: Financial Times Prentice Hall. Needle, D. (2010) Business in Context: An Introduction to Business and Its Environment. 5th ed. Andover, Hampshire: Cengage Learning EMEA. Papadopoulos, G. A., Wojtkowski, G., and Wojtkowski, W. (2009) Information Systems Development: Towards a Service Provision Society. New York, NY: Springer. Porter, M. E. (1998) Competitive Strategy. New York, NY: Free Press. Read More