Amazon Strategy and Recommendations
The strategic factors that affect Amazon’s performance include a quality company culture, financial positioning, global positioning, vertical integration, employee relations, process-oriented research and development, distribution channels, manufacturing facilities, quality products and services, and government regulations. Amazon is one of the largest companies today and the industry leader in the online retail sector. The company has interests in various fields and currently employs over 1.3 million people. Given this size, Amazon will only be able to effectively handle the most important aspects of its business by monitoring the strategic factors listed above. Also, considering these factors will allow the company adapt well to variables that it can’t control like government regulations.
Review of Mission and Objectives
In their mission statement, Amazon lays the objectives of offering the lowest possible prices, the best available selection, and the utmost convenience. These objectives are appropriate with the identified strategic factors because they will ensure them when efficiently managed. A quality company culture, strong financial and global positions, efficient vertical integration, good relations with employees, efficient R&D and distribution channels, company-owned manufacturing, and high quality products and services will lead to the realization of Amazon’s objectives. With these factors taken care of, favourable government regulations will make it easier for the company to succeed in its mission. Therefore, the current mission and objectives should remain the same as they align with the key strategic factors. Changing the mission and objectives will lead the company to another direction away from profitability. Amazon’s success depends on how well it handles its key problems and executes on the strategic factors.
Strategic Alternatives and Recommended Strategy
Amazon currently uses concentric diversification as its corporate strategy. This approach is founded on following a cost leadership strategy and leveraging technology for business success. The cost leadership strategy aims at giving Amazon’s clients maximum value at the lowest price possible (Amazon.com, Inc., 2021). By also making their operations customer-oriented, the company establishes itself as the go-to place for any online shopping needs customers may have. The current objectives set out in Amazon’s mission can be adequately met with the strategies in use if they are implemented efficiently.
The only feasible alternative approach the company could adopt is the stability corporate strategy. With this strategy, Amazon will focus on maintaining its position as the approach means concentrating on the current market and products (Alshawabkeh et al., 2019). One example of this strategy in place will be not introducing new products or services. This strategy is feasible because Amazon is well-established in all spheres it operates in. The company is large enough and offers a wide-enough array of products and services that allows it to focus on stability. In addition, this strategy has been around for some time so corporate scenarios can be develop and agreed upon especially as they will be informed by a well-established body of knowledge. One advantage of this strategy is that Amazon will not need more resources and expertise than it currently has. This strategy is also less-risky in a stable environment and it allows the company to think deeply about the long-term. The disadvantage is that this strategy is only effective over the short-term as the company might become irrelevant if it sticks with it for the long-term. Also, a stability strategy discourages any innovation, which increases the possibility of failure.
The best alternative strategy Amazon should adopt is a combination made of the best of different strategies. These strategies include the profit strategy type of stability strategy, the growth strategy, and the differentiation strategy. This overall strategy should be applied at the corporate level of the company because the directives will trickle down to the business and functional levels. Therefore, these levels will not use any specific strategy and instead adopt the overall strategy to their specific processes. Operations in all units of the company should be guided by this overall strategy. The proposed strategy will take care of important short- and long-term problems. Amazon’s biggest long-term problem is maintaining profitability despite the inefficiencies accompanying a large size. This is the ideal strategy for the following reasons:
- The profit strategy component will allow the company to keep generating profits from its current market.
- The growth component will allow it to tackle current and future challenges standing in the way of its expansion (Pidun, 2019).
- The differentiation strategy will allow the company to keep producing products and offering services that makes it distinct form its competitors in the marketplace (Qayyum, 2017).
The effective implementation of this strategy will need the development of a new policy of compound thinking; the company’s management and employees should be in a position to effectively implement a multi-pronged approach. With the ability to think about how one element affects the rest, management and employees will be able to push to company to the desired ends. This strategy will enhance amazon’s core and distinctive competencies. Amazon operates in a dynamic business environment that needs organizations to think about the present and future simultaneously. The components in this strategy allow amazon to do just that and ensure present and future profitability.
Alshawabkeh, Z. A. E., Aldiabat, B. F., Al-Zubeidi, M. A., Nsour, B. H., Al-Shalabi, F. S., Al-Momani, R. Z.,… & Al-Abbadi, L. H. M. (2019). Stability Strategy and Its Direct Role in Achieving Competitive Advantage at Jordanian Communication Companies. Academy of Strategic Management Journal, 18(3), 1-13.
Amazon.com, Inc. (2021). 2020 Amazon Annual Report.Amazon.com, Inc. Web.
Pidun, U. (2019). Corporate strategy: Theory and practice. Springer.
Qayyum, Y. (2017). Product Differentiation Strategies and Impact of Factors Influencing the Differentiation Process. Linnaeus University, Växjö School of Business and Economics.