Strategic Management Assignment: Business Planning Report On Amazon

Question

Task: The strategic management assignment requires you prepare a strategic plan for Amazon focusing on any three managerial concepts in detail.

Answer

Step 1: Introduction and background to the strategic plan
Selected organisation
Amazon is a publically owned business that was established in the year 1994 by Jeff Bezos. The company is serving worldwide and has its headquarter in Seattle and Washington. The annual revenue earned by the business is around USD$386.064 billion, and the net income is worth US$22.9 billion in the year 2020 (Ir.aboutamazon.com, 2020). Amazon has a total asset of US$321.331 billion with total equity worth US$93.404 billion. The global business is employing more than 1335000 employees worldwide (Ir.aboutamazon.com, 2020). The company is willing to serve the customers with their needs at their doorstep.

Industry
Amazon.com is an American based multinational technology company that is focused on the industries like e-commerce, digital streaming, artificial intelligence as well as cloud computing. Amazon is categorised as one of the top five companies of the USA in the sector of information technologies. It is referred to as one of the most influential cultural and economic forces in the world and is determined to be the most valuable brand (Amazon. in 2021).

Competitors
In the competitive business environment, Amazon is adopting effective business competition that is allowing the company to maintain its market positing even in the tough situation when the supplementary products are easily available. The main competitors include Wal-Mart, eBay, Apple as well as Home Depot (Ir.aboutamazon.com, 2020).

Market share
In the year 2019, the market share of Amazon was 45%. The global market share of Amazon is 7.7%. Having a net sale of US$263.5 billion,it has the largest share in the US market-dominating business like Apple, which has 15% of its share in the market (Forbes.com, 2020).

Selected strategic tools
This report explores the use of strategic concepts such as the PESTLE, SWOT, Porter’s five forces model, VRIO framework as well as BCG matrix. The selected tools are effective in evaluating both theexternal and internal business environment.The use of the PESTLE analysis will identify the condition of the external market for Amazon and how it is helping the business to flourish in a tough situation. The SWOT evaluation, on the other hand, is effective in understanding an internalbusinessenvironment. It will provide an insight into the ground level services expertise that the company has. The use of the Porter’s five forces is productive in outlying the threats that are bothering the business and thus ensure that a better idea about the company strategic measures are reflected. The use of the VRIO framework will shed light on the producteffectiveness and the strategies that are favouring the business to excel in the competing business environment. On the other hand, the BCG matrix is an effective tool that will outline the productive strategies that are key to business success. Each tool is selected in a coherent manner, and this report showcases the critical arguments with the support of the facts reflecting the strategies that Amazon has adopted to fetch success in the market.

Step 2: Method overview
In the report, the use of the strategic tool adopted by Amazon will be done so that the better evaluation of the competitive measures adopted by the company can be analysed for a better understanding of the strategic measures of Amazon to succeed. In the process of doing so, the focus is on the secondary evidence available on the company websites. The annual report of Amazon is conducted for the key facts. Moreover, peer-reviewed articles and journals from authentic sources like ProQuest and Google Scholar are considered. The authentic sites like economic times as well as Forbes are taken into account for the proper extraction of the fact that are effective in porting the strategic measure that is adopted by the business. The webpage of the company is used to understand the business culture, and therefore measures are adopted to ensure that all the collected information is authentic and not fake. The use of the recent articles is taken into consideration so that the analysis of the strategic notion adopted by Amazon can be inspected in a logical manner.

Step 3: Analysis

Table 1: PESTLE analysis

Table 2: SWOT analysis
Strength: Amazon is the global giant in the e-commerce business and has effective brand images in the global market. As per the Interbrand’ Global Brand Ranking 2020, Amazon is ranked 2. Theinexpensivepricingis deveined to be effective in which the customer-orientedproducts are identified by the business (Alshmrani, 2021). Amazon uses strategic alliances with the companies like ThalamicLabs, TheOrange Chef as well as Evi Technologies in the process of a low-cost structure (Ir.aboutamazon.com, 2020). Weakness: Vox has published a negative report on Amazon that has affected its reputation. Moreover, the company has been constantly accused of its unethical business practices (Vox.com, 2021). Amazon has been fined an amount of $28 billion for the antitrust charges, the unsafe working condition increasing the employee strikes affecting the internal stability of the business (Businessinsider.com, 2021). As per the Environmental Protection Agency in the US, the business has to remove a wide range of unsafe products from its platforms.

Opportunities: Amazon has launched Amazon Go which is a technologically advanced store that is effective in fulfilling the needs of the customers. Moreover, the company is increasing its market share with the development of effectivetechnologies (Shankar et al., 2021).The measures are taken to reduce counterfeit sales that will benefit the business in future.

Threat: The increasing market competition is acting as a threat to the business of Amazon. An increase in the availability of supplementary products is determined to act as the barrier to the execution of the seamless service of Amazon (Dolata, 2017). Cybercrime is considered an increasing threat that the business needs to control in the process of developing success in the existing market.

Porter’s 5 forces

Table 3: Porter five forces

Table 4: VIRO framework

The above table is effective in evaluating the fact that the strong competitive advantage of the business of Amazon is considered to be productive and is indicated as the core competency that is effective in reinforcing each other, the capabilities like that of Artificial Intelligence has effective measures in the development of brand equity leading to the increase in the product effectiveness as well as the desirability. The table vividlydescribes that the non-core competency includesthe growingpresence of the company in the brick and mortar business. The execution of the measures like Amazon-Go has been an excellent measure adopted by the company (Polaccoand Backes, 2018). However,such measures can be easily imitable and not rare, the execution of the online service of the business is determined to be effective, butrecently almost all the retailbusinesses are adopting similar measures; thus, valuablemeasures are being imitated and are used by the rivals as well. It can be thereforeevaluated that Amazon has a well-connected networkthatallows the smooth mobilityof the product to and from the warehouses (Chua, 2018). At the same time, the core competency includes the brand name Amazon is has a huge brand image, andit’s trusted by its core customers. The quality services and the integratedcustomer's bonds are allowing the business to flourish. The market competition is huge, and the business has a leading market share in the e-commerce business. The advantagedtechnologiesand the AI used in the business are considered to be unique, and the measures cannot be imitated. The use of advancedtechnologies has allowed the business to reduce the time needed for the logistics and thus allows the company to gain the trust of the customers (Maedche et al., 2019). The use of the VIRO framework has been productive in showing that Amazon has lots of exclusive competencies that are making the company better than the rest of the competing businesses in the market. It has been evaluated that the company, with the use of the huge market share and the advancedservices innovation, is able to keep its customers satisfied and thusensureproductive service execution.

BCG matrix

Table 5: BCG Matrix

The implication of the BCG matrix is to evaluate that the star products that are fetching maximum returns to the business. As the business of Amazon is operating in different sectors thus it is essential to categories the products and services on the basis of the returns it is fetching. The starproducts that are providingaround 60% of the total returns to the business include the services like Kindle and retail products (Amazon. in, 2021). On the other hand, the productivity of the service likeAmazonweb series and Pinzon Private Label is still not prominent (Robischon, 2017). It is at the same time evaluated that the Alexa is considered as the cash cow as the product is producingconstant cash flow. Lastly, services like the Amazon cloud is not much aware of the customers and thus have a very limited market share. Each service executed by Amazon is serving in one the other manner. However, the start product is more preferred by the business, and they are contributing the most to the company's market share.

Step 4: Critical evaluation
The above strategy tools have been productive in outlining the different strategies that the business has been adopted, and thus the inspection of the effectiveness of the strategies in the current business environment is a must. Some of the key identified strategies are as follows:
• Investment in technologies: It has been evaluated from the PEST and the SWOT analysis that the business of Amazon is very concerned about the technologies. The use of AI measures is done to ensure effective services execution by the business. Moreover, Amazon Go is the proper example that Amazon is using strategies like investment in technologies to execute effortless services in the competitive market condition (Polaccoand Backes, 2018).
• Low pricing measures: The business is considered as the price leader and reflected from the findings of SWOT analysis. The cost leadership of Amazon is allowing it to propose the product at relatively lower prices so that it can attract the attention of the wider customer bases (Amazon. in, 2021).Porter’s five forces have been effective in oiling that the switching cost in the case of Amazon is low that is managed with the pricing strategies adopted by Amazon (Alshmrani, 2021).
• Geographic expansion: As per the evolution of the VIRO framework, Amazon has an international market expansion. The competitive advantages have been determined as one of the core competitions that are helpful in fetching better returns in the business of Amazon.

• Reliability on the distribution network to execute the business: The VIRO framework of Amazon has been productive in fetching light on the fact that the diverse network with the international, domestic and regional partnership is servicing as the effective strategies to the customers and thus allowing the business to execute better measures in fetch effective annual returns (Amazon. in, 2021).
• Product diversification: The implication of the BCG market is predictive in pouting the different products and services Amazon is proposing. It has been thus effective in developing the idea that a business like Amazon.com is the star product that are fetching maximum returns to the company (Amazon. in, 2021).

Alternative strategies
• Work on cyber security is a must for Amazon so that the threats to advanced technologies can be limited.
• Developing a quality price relationshipwhile selecting product prices is a must as the low process product are considered to be of inferior quality mad thus is unable to develop customers satisfaction.
• Understand and adopt the host countries law so that the controversies like tax issues can be controlled.
• Develop more focus on physical stores as the too much reliability of the distribution are affecting the quality of the services. • Concentrate on R&D and develop safe products so that the toxic product can be altered with the safe products and thus ensure seamless services execution by the company.
The reason which the existingstrategies are not fit in a current business environment
In the recent times of increasing competitiveness, it is a must for the business like Amazon to ensure that all the strategies that they are indenting to adopt are effective and are secure in natures. For instance, too much dependability in the technologies is harmful to the business as the threats to cyber attack are very high. Measures to keep a check on the online actives and ensure a secure network is essential. Similarly, the company is too much dependent on the distributors.Thusmeasures like opening the new stores of Amazon Go wild help the business to fetch more popularity among the customers (Polaccoand Backes, 2018). In recent times, the customers have been concerned about the environment as well as the product safety, so the unchecked product sales might hamper customers trust. Lastly, the poor knowledge of host countries law might increasecontroversies and Amazon has to lose it market reputations.

Step 5: Recommendation
Recommendation 1: It is suggested the Amazon needs to invest in developing secure technologies that have limited threat to cyber attracts.
Justification:The cyber threats are increasing, and thus the customers are unable to trust the services executed by Amazon. In the process of executing advanced technologies, sure measures need to be adopted. Appropriateness for Amazon:Thiswould help Amazon indeveloping innovative measuresto gain customers engagements. At the same time is helpful in developing a competitive advantage in the market.

Implementation in the business: The team of IT experts can be appointed to work on the technologies and their security so that Amazon can thrive in the coming years.
Recommendation 2: It is a must for the company to concentrate on the young markets to ensure effectivereturns Justification:As the business is already having huge control over the developed countries. It is essential to that the developing countries as it might fetch better returns.

Appropriateness for Amazon:The profitability is sure to enchase with the expansion of networks in the upcomingpromisingcountries such as Argentina, Guyana and Brazil.
Implementation in the business: The use of the marketing team to the inspect macro environment of the countriesand the development of better networkers wouldbe the best measure.

Reference List
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