Amazon.Com (Strategy)

Topics: Amazon.com, Online shopping, Electronic commerce Pages: 7 (2586 words) Published: February 15, 2012
Analyze the internal configuration of Amazon applying appropriate framework(s) from the class materials. Consider the following proposition and develop an argument to support one side or the other: Amazon should follow the trend to widen its business beyond online book selling and continue to move away from its original vision of "becoming the world's biggest and best online bookstore". Defend your position focusing on the aspects of resources and strategic capabilities of Amazon.

Amazon.com started its business as an online retailer of books. In order to accomplish their company goal –‘to become the world’s largest online retail store”-, it diversified its operation to include the retailing of toys, electronics, music, and other consumer goods. Through this paper, we first aim to analyse the internal capabilities of Amazon as an organisation and discuss a sustainable future trend for the organisation to follow. The analysis which follows is aimed to first identify Amazon.com’s internal strategic capabilities explained as ‘resources’ & secondly ‘competencies’ (which will be aimed to summarise the manner in which the identified resources are deployed to effective use). 2.1 The ‘Resource Based View’ will be used as the strategic tool to hence sum up the firm’s internal strategic capability. Strategic capabilities of a firm would be defined as its resources & competencies to survive and prosper in the business environment. We will first begin by identifying the tangible & intangible resources of Aamzon.com. Typically, its resources can be considered under the following broad categories – Physical resources – Amazon’s many fulfilment distribution centres were strategically located near the main airports of the cities it operated in. Such choice of strategic location of distribution centres not only improved efficiency but also effectively lowering the operating costs thereby enabling the company to offer lower prices to its customers. Other non-tangible resources can be differentiated into two, Internal non- material: continual enhancement of customer experience on the website through continuous Software and technology development External non-material – this included the positive image of the Amazon’s brand name as a result of a customer base running into millions and the company’s Associate Program. Human Resources – Amazon always took a tactical approach to employing its staff. Amazon’s global work force comprised of 20,700 employees. Its top brass management included names such as Richard Dalzell (previously Vice- President of Wal-Mart) who bought in expertise in supply chain management, international retailing, data mining systems and merchandising & logistic systems. Other senior managers had been recruited from various companies such as Apple, Microsoft and AlliedSignal, whom added value with their various skills & capabilities to the firm. The founder of Amazon, Jeff Bezos himself was a Princeton graduate with previous experience as the Senior Vice-President of D.E.Shaw, a Wall Street hedge fund firm. From which he exploited the information he garnered about the incredible growth of the internet retail industry which was predicted to grow at a mammoth 2300% per month. Financial Resources – By 2008, Amazon had a market capitalisation of $29.4 billion with its net profit growing from $190 million in 2006 to $645 million in 2008. Amazon was also able to maintain a strong cash flow position to enable the company focus on its ‘Long term sustainable...
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