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


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...

References: Aguilar, F. A, 1967. Scanning the Business Environment. 1st ed. N/A: Macmillan. Investor Relations: Annual Reports and Proxies. 2014. Investor Relations: Annual Reports and Proxies. [ONLINE] Available at: [Accessed 01 December 2014]. - Wikipedia, the free encyclopedia. 2014. - Wikipedia, the free encyclopedia. [ONLINE] Available at: [Accessed 01 December 2014].
Associated Press. (2001, September 27). Economic impact from terrorist attacks. The Oakland Press, pp. C1.
Becker, J. B, 2012. Good SWOT, Bad SWOT. Jim Becker 's Blog , [Online]. 1, 1. Available at: [Accessed 01 December 2014].
Chesbrough, H. W. C, 2003. Open Innovation. 1st ed. N/A: Harvard UP, Hardcover.
Cottrill, Ken. (2001). Online booksellers turning point. USA: H.W. Wilson Company.
Davidson, S., & Kapsner, M.(2000). Bricks and mortar to the Internet. Journal of Internet Law. Retrieved  September 21, 2001, from the World Wide Web:
Frank & Cook, R
George, T. (2001, September). Amazon to offer Adobe e-book reader. Information week Magazine. Manhasset, New York: CMP Media LLC.
Hof, R. (2000, August). Suddenly, Amazon’s books look better. Business Week. New York, New York: McGraw-Hill.
Hymans, S., Crary, J., & Wolfe, J. (2001, August). Midyear review and forecast: The U.S. economic outlook for 2001-2003. Research Seminar in Quantitative Economics. University of Michigan: Ann Arbor, Michigan.
Independent bookstores look for ways to survive: A strong magazine strategy helps keep this shrinking class on the retail map. (2000, April 5). Magazine & Bookseller 56, no. 2
Merrill Lynch & Co. (2001, September) Global research highlights. New York, New York. (
Mintzberg H, Quinn J B, Ghoshal S
Online Privacy: It’s Time for Rules in Wonderland. (2000, March 20). Business Week. New York, New York: McGraw-Hill.
Patton, S. (2001, September). What works on the web. CIO Magazine, 90-95.
Porter 's Generic Strategies. 2014. Porter 's Generic Strategies. [ONLINE] Available at: [Accessed 01 December 2014].
Porter 's Generic Strategies - Strategy Skills from 2014. Porter 's Generic Strategies - Strategy Skills from [ONLINE] Available at: [Accessed 01 December 2014].
Porter, M.E.P, 1979. How Competitive Forces Shape Strategy. 1st ed. N/A: Harvard Business Review 57.
Porter, M.E.P, 1998. Competitive Strategy: Techniques for Analyzing Industries and Competitors. 1st ed. N/A: Free Press.
Regan, K. (2000). Who’s afraid of an Internet sales tax? E-Commerce Times. Retrieved September 10, 2001, from the World Wide Web:
Seipel T., & Quinn, M
Seybold, P. (1996). New York: Random House, Inc.
SWOT Analysis - Strategy Tools from 2014. SWOT Analysis - Strategy Tools from [ONLINE] Available at: [Accessed 01 December 2014].
Sullivan, J. (1999). E -commerce scores yet another customer. Baltimore Business Journal.
Thompson, J. (1998). Strategic Management; Awareness and Change. London: Thompson Business Press.
Totty, M. (2001, September 24). Making the sale: Facing tight times, e-tailers scramble for ways to turn browsers into buyers. The Wall Street Journal, p. R6. New York, New York: The Wall Street Journal.
United States Securities and Exchange Commission. (2000, December). Form 10-K. Seattle, WA:, Inc.
Wall Street Journal. (2001, September 25). Retrieved September 25, 2001, from the World Wide Web:
Wal-Mart V
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Strategy at Business Level
  • International Business Strategy Research Paper
  • Essay on Business Strategy
  • Business Strategy Essay
  • Essay on business strategy
  • Essay on Business Strategy
  • Business Strategy of Amazon Essay
  • Business strategy Report Essay

Become a StudyMode Member

Sign Up - It's Free