Questions:
1. Can a company like Amazon.com have a strong business model but a weak strategy?
2. How has the company’s strategy changed from the original generic strategy that was applied?
3. How would you describe the central elements of Amazon’s strategy?
Answers:
1. Amazon has established itself as one of the major e-commerce company. At the time of business initiation Amazon did not have a strong identity, through a long-term process they achieved competitiveness and success. Their cost leadership and market differentiation strategies are major components for their success. They have aligned their growth strategies with the generic strategies elements. The major focus of the generic strategies of Amazon is cost leadership (Hill, Jones & Schilling, 2014). Their growth strategy is related to the low cost infrastructure of the company. The company has been focused on the customer experiences and they are trying to align it with the lower cost structure of the company. The cost leadership strategy provided by the organization is entirely customer-centric and it offers lower prices with a greater selection. One of the major cost-leadership strategies used by the company is ‘three pillar strategy’ it is helping the company to cut their cost without hampering the quality of products. Another significant change from the original generic strategy is incorporating and investing in the research and development department and technological innovation department.
2. The central elements of Amazon’s strategies are cost leadership and differentiation. Amazon is following market penetration strategies as a growth strategy. The company is leading the market. Technological innovation and web based services have been focused. The company is attempting to provide specific service to their customer groups. Amazon offers low cost product to the customers. Amazon sold books only at the initial stages. The company is providing a wide range of products now, through their online marketing strategies (Hitt, Ireland & Hoskisson, 2012). Therefore, it can be said that one of the central element of the company is low cost of the products and focusing on their customer’s choice by enhancing their experience. This has been achieved by adopting product innovation strategies.
3. Low-cost provider strategy
Amazon included strategies for increasing its market share by lowering the price of their products. The major business strategy for the price reduction relies on Amazon Web services. The company has aligned with their strategic mission to provide products at low cost to the customers.
Differentiation
The innovation of new technologies with the help of their research and development department is the key element of Amazon’s products and service differentiation. The company is aiming to provide special service and offers it to special group of customers; it relies on their technology tracking customer’s experiences, thereby focusing on the customer’s experience based offers (Eden & Ackermann, 2013).
Diversification
Diversification is one of the major growth strategies of the company. The company is growing rapidly using its international network. The key entry mode in global expansion is FDI. Acquisition and alliances are central factors for global diversification.
Market timing
In the 2014 annual report of Amazon, it has been stated that ‘It’s all about the long term’. The company perceives that taking the decision in a steady and continuous way helps the company to be more focused towards its goal. The long-term decision-making and trade-offs help Amazon to make a difference than the other companies (Mellahi & Frynas, 2015). This has helped the company to achieve growth in terms of sales and return on investment.
Reference List
Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.
Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.
Mellahi, K., & Frynas, G. (2015). Global strategic management. Oxford University Press.
