Business Strategy of Amazon

Topics: Management, Strategic management, Online shopping Pages: 8 (2447 words) Published: May 12, 2010

With the advent of the information technology, specifically the internet, it is said that more and more companies are existing in the online world. The changes in the business market also allows customers to change and become more dependent on online stores and online shopping than go and find something in shopping malls or retail store. One of the existing and considered as the largest and competitive online shopping in the world is Amazon. In this report, the goal is to analyse Amazon based on the case study provided. The analysis includes the discussion of Amazon’s s strategic intent, main resources and capabilities. In addition, this will also include analysis of the resources and capabilities that give sustainable competitive advantage and the recommended future strategy for the company.

Overview of Amazon

Amazon has been considered as one of the largest bookstore and online store in the global market. The company has been able to thousands of customers in over 150 nations. Amazon’s main website offers millions of DVDs, music, books and videos not to mention their products from household, electronics, apparel and clothes, cosmetics, drugs and others. Thought the company has highs and lows, they are able to manage the companies and sustain their competitive advantage. The company has also used some strategies to ensure that they will outgrow their competitors like Ebay.

Accordingly, Amazon is a company that truly popularized the context of online shopping by having the largest product supply online. In addition, it is one of the first industries to sell products deep into the long tail by having them all in their numerous warehouse as well as distributing products through their partner companies.

The founder of the company, which is Jeff Bezos, started the company without the assurance of being profitable. Unlike any other websites, Amazon grew in a slow manner and had their first quarterly profit at the end of the year 2002. From the on the company has been able to sustain the competitiveness in the online market.

Amazon Strategic Intent

Based on the given case, the strategic intent of Amazon is to become the number one choice of the online shopping for their shopping needs. Their website has been made to provide more convenience for customers who wish to buy certain items right away rather than wait for the delivery (See Figure 1). Amazon can now direct their customers to local stores that presently have the product in inventory. Consumers need not call all the local stores and tolerate taped messages and long waits to find a product. Even such Internet pure-play firm as Amazon, through its partnership with Borders, for which it provides website operations, can direct customers to the nearest Borders store offering the desired product. Customers need only provide a zip code. Integration of physical stores and online operations can also lead to greater efficiencies. The strategy of the company uses the Internet and took advantage of its capability to reach more clients (Baldwin et al, 2002).

Figure 1

Repeat Customers as a Percentage of Order 1996 to 1999

Furthermore, Amazon strategic intent is to provide more options for their clients by partnering with other international and local suppliers. The company also diversified their offerings to different products, services, categories and other physical assets. Furthermore, based on the given case, the company’s strategic intent is to sustain their competitive advantage by compelling what the needs and demands of their target market and expanding their business portfolio in the global market. The company’s strategic intent is to do their business in a slow but sure manner by becoming innovative in what they are offering for the customers.

Another strategic intent of Amazon based in case is its goal to be recognised and respected as a...
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