The Business Strategies Of Amazon

Topics: Strategic management, Porter generic strategies, Michael Porter Pages: 15 (4229 words) Published: January 16, 2015


The Business Strategies of Amazon

MOHAMMAD BILAL HAYAT MAHMOOD CHOHAN
CONTENTSPAGE NO.

EXECUTIVE SUMMARY 3
THE HISTORY OF AMAZON & ACHIEVEMENTS TO DATE3
PORTERS GENERIC STRATEGIES4
AMAZON SWOT ANALYSIS 6
AMAZON FIVE FORCES MODEL 8
CONCLUSIONS 11
APPENDICIES 12
REFERENCES 13, 14 & 15

Executive Summary
In this investigation, I will be attempting to analysis the different types of business strategies employed by Amazon Inc to build and sustain a competitive advantage. I will unearth and identify any strategic issues or options that currently face the company exampling an array of different business theoretical tools to critically evaluate their usefulness for Amazon’s success.

The History of Amazon & Achievements to Date
Amazon was first founded in 1995 by Jeff Bezos and officially launched in the month of July where they sold its first book: Fluid Concepts and Creative Analogies (Douglas Hofstadter, 1995). After a success of rapid growth selling books online to customers, Amazon launched the company in 1997 as a public offering on the Nazdaq stock exchange and floated the stock at $18.00 per share. Today, in 2014, Amazon prides itself on having an expansible range of products targeting just about any person and industry. Their financial figures for the financial year of 2013 reports Net Sales of $74 Billion Dollars and a Net income of $274 Million Dollars. A single share will cost a potential investor of Amazon: $405.63 (Amazon Inc, 1996-2013).

How Amazon’s Interface looked in 1997

How Amazon Look’s in 2014, employing over 132,000 Nationwide

Porters Generic Strategies
To start my investigation and ascertain the business strategies used for Amazon, it is sensible for me to start by choosing a generic tool like “Porters Generic Strategies” because this will give me a broad scope of Amazon in identifying the sheer magnitude of the corporation. Michael Porter (1998) argues that, “a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. These strategies are applied at the business unit level. They are called generic strategies because they are not firm or industry dependent.” (M. Porter, 1998)

Appendix A – Example of Porter Generic Strategies Matrix
Michael Porter’s 1998 book, “Competitive Strategy” guides us on the thought processes and methods to use this theoretical tool so we can try and narrow down Amazon Inc with a particular business strategy/ strategies they may employ. Before getting into the nitty-gritty details, it’s wise to define the three core business strategies a company may adopt using Porters Generic Strategies. Cost Leadership Strategy

The cost leadership market targets a broad market. They are able to produce/source goods or services within an industry that a certain level of quality is assured. They can either sell their goods at average industry prices to earn profits higher than their rivals or in contrast, sell below the average industry standard to gain market share. Their rich diversity of products supports the business strategy that they are able to make gains in the market by ceasing activities and in contrast; for fill their profit margin in other markets by keeping prices at the industry standard level. Michael Porter (1998) outlines further cost leadership strategy traits by saying “Some of the ways that firms acquire cost advantages are by improving process efficiencies, gaining unique access to a large source of lower cost materials, making optimal outsourcing and vertical integration decisions.” (M. Porter, 1998) Companies that possess this strategy often display these internal strengths: A...

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Wal-Mart V
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