Strategic Process and Analysis for Amazon, Inc.

Executive Summary

As the strategic analyst of our company, Amazon Inc., I was tasked with analyzing the current internal and external environments to facilitate effective strategic planning that the company has started. The findings presented here show that Amazon has differentiation strategies across its departments and business strategies, which are leveraged with technology to maintain its competitive advantage in the market. Amazon has leadership principles that seek to ensure that leaders can motivate their teams and inspire a vision to them in an attempt to achieve the company’s goals and objectives. The results show that Amazon still has a strong market base and is capable of competing favorably with other companies in the industry by continuously integrating technology into its operations and engaging in operations that align with organizational goals. To ensure its enhanced performance, Amazon can continue investing heavily in research to come up with innovations that enhance its ability to satisfy its customer needs and preferences and ensure collaboration with third-party sellers and suppliers.

As the strategic analyst of our company, Amazon Inc., I was tasked with conducting an analysis of the current internal and external environments to facilitate effective strategic planning that the company has started. The results of this report will be effective, particularly in dictating the company’s future strategic position in the market and the determination of its future directions. This report provides the key findings from my research alongside recommendations for the company on the strategic measures that it should adopt to enhance its market share and effective operation using the AFI strategic planning framework. The provided recommendations are in line with the company’s current status and the goals that it seeks to attain in the future.

Analysis of Key Findings

VRIO Analysis

A VRIO analysis of the company shows that Amazon offers resources that can add value to its customers by being one of the most valuable companies that operate in most countries throughout the world. The company’s sustainable competitive advantage is a result of its business organization through its brand. The company has acquired the foundation for long-term competitive advantages by attracting customers to its current and any new product that is introduced (Rodrigues, 2020). The company is also focused on research and the development of a strong brand reputation by conducting continuous analysis of its market and exploring any new opportunities in the market. Amazon has also continuously managed to control its capabilities through the integration of technology into its operations and the development of a unique organizational culture that values excellent customer service, trust, and loyalty (Amiri & Vida, 2023). The company also exhibits rare knowledge and expertise in e-commerce, which has helped it to gain a competitive advantage. Although Amazon’s resources can easily be replicated by its competitors, it is impossible for the competitors to imitate the company’s unique innovative capabilities and intellectual property protection. Amazon is heavily organized and can easily leverage its capabilities and resources in a way that aligns with its strategic objectives and its competitive capabilities in the market.

Value Chain Analysis

Amazon’s operations and activities are well integrated in a way that facilitates the adoption of differentiated strategies and leadership. Essentially, the company engages in activities such as logistics, cloud computing, and e-commerce platform management. The company prioritizes customer satisfaction and enjoys key resources such as its organizational infrastructures, human resource management, and technology development that can make it easy to achieve its strategic goals (Flamand, 2020). Its properly organized, diverse delivery of services provides the company with wide channels of revenues, an aspect that has made Amazon easily conduct its operation in the competitive market environment. As a way of ensuring effectiveness, Amazon has also automated its processes and prioritized research, especially in sales and marketing, to identify the areas that need improvements and additional investments.

PESTEL Analysis

A PESTEL analysis of Amazon shows that, politically, the company is faced with extreme challenges of labor practices and varying tax policies throughout the world that challenge the company’s ability to operate effectively throughout the world (Alshmrani, 2021). However, the support by the government on cybersecurity favors the company’s operations (Flamand, 2020). Amazon is also faced with economic fluctuations that can significantly influence the company’s customer spending behaviors, and this remains a threat to the company’s sales and profitability levels. Notably, economic fluctuations throughout the world differ depending on countries, and the difficulties in ensuring stability in the global economy continue to challenge Amazon’s operations. Its customers also tend to exhibit changing preferences, especially towards ethical consumption and e-commerce, as aspects that can challenge Amazon’s service demand. Technologically, Amazon is faced with stiff competition in cloud computing and e-commerce following the development of other service providers due to technological advancements. The findings also showed that the ever-changing business regulations and ethical policies in regard to intellectual property and data privacy pose a challenge to Amazon in its attempts to comply with the changing legal requirements. Besides, environmental demands of sustainability have made the company implement green initiatives in its supply chain and operations, an aspect that has enhanced its reputation.

SWOT Analysis

Amazon’s strengths lie in its strong brand reputation and recognition that continues to help the company gain a competitive advantage. The company has also succeeded in continuously developing cutting-edge technology and strong financial performance that further enhances its market position (Luo, 2020). The company’s most threatening weakness is its dependence on third-party sellers, which can challenge its objective of ensuring customer satisfaction. Data security concerns and the easiness of imitating its model make the company vulnerable (Alshmrani, 2021). The company can, however, explore opportunities such as the expansion to new markets and investment in new ventures, although this is heavily challenged by the threats of intense competition in the market, cybersecurity threats, and economic fluctuations experienced throughout the world.

Formulation

Amazon relies on its leadership and organizational strategies to ensure that it continues to compete favorably in the market. Amazon has leadership principles that seek to ensure that leaders can motivate their teams and inspire a vision to them in an attempt to achieve the company’s goals and objectives. The company has sixteen leadership principles that act as the framework through which it evaluates the potential candidates for jobs and the performance of the leaders. The principles guide how employees should work with each other and how to maintain standards and consistency in the company’s operations. The company also enjoys a hierarchical organizational structure that enables an easy decision-making process, fosters innovation, and allows for effective implementation of the strategies that the company develops. Besides, Amazon also has a management design that prioritizes and enables accountability, transparency, and organizational effectiveness in the running of the company’s processes.

Amazon has differentiation strategies across its departments and business strategies, which are leveraged with technology to maintain its competitive advantage in the market. By utilizing these components, the company is fully focused on ensuring customer satisfaction, which is essential in helping the company to favorably compete in the challenging market environment with increased competition due to technological advancements. Emphasis on innovation and the ability of the company’s leadership to continually offer support to its employees to foster innovation plays a major role in ensuring that Amazon continues to enjoy its market share and maintain its customer base. The company’s diversification into new markets and industries heavily relies on its corporate strategy and is reflected in its entry into ventures such as entertainment that continue to add value to the company.

Implementation

Amazon’s leadership plays a major role in determining the company’s organizational structure, the employees’ innovation capabilities, the strategic direction adopted, and the making of effective decisions that enable the company to acquire a competitive advantage in the market. The company enjoys strong management systems through the integration of technology into the business operations that facilitate easier performance measurement and transparency among the employees. Amazon fosters a culture of innovation as a way of responding to the changing preferences of the customers and the various threats that the company faces in the market (Baboolal-Frank, 2021). By leveraging its operations in technology, Amazon has succeeded in expanding into new markets and remained a prominent firm in the technology industry, an aspect that has ensured that the company continues to enjoy its revenues.

However, to ensure its enhanced performance, Amazon can continue investing heavily in research to come up with innovations that enhance its ability to satisfy its customer needs and preferences. Through collaboration between the suppliers, the company, and the third-party distributors whom the company heavily relies on, Amazon can ensure that its supply chain is stable and aligns with the company’s principles of ensuring customer satisfaction. By strengthening its marketing efforts, Amazon can significantly differentiate its products and services to build customer loyalty despite the intense competition that the market exhibits.

References

Alshmrani, H. M. (2021). An analytical view of Amazon’s success worldwide. Life Science Journal, 18(6).

Amiri, S., & Vida, V. (2023). Analysis of marketing strategic issues at Amazon. SEA-Practical Application of Science, (31), 3-13.

Amazon (2023) Leadership Principles https://www.amazon.jobs/content/en/our-workplace/leadership-principles

Baboolal-Frank, R. (2021). Analysis of amazon: Customer centric approach.

Flamand, O. J., Wisher, A., & Riley, S. (2020). Strategic Plan: Amazon.

Luo, N. (2020). Amazon. com, Inc Strategic Audit.

Rodrigues, M. M. M. L. A. (2020). Competitive advantage in the age of digital platforms: the case of Amazon. com (Doctoral dissertation).

Appendices

VRIO Analysis

SWOT Analysis

Strengths

• Production of cutting-edge technology
• Large customer base
• Strong brand recognition
• Financial performance
• Strong leadership

Weaknesses

• Depends on the third party for selling and distribution
• Limited customer loyalty
• Increase in data security concerns

Opportunities

• Exploring new markets
• Investing in new ventures
• Leveraging technology in operations.

Threats

• Intense competition in the market
• Changing regulatory controls
• Economic fluctuations
• Increased cybersecurity concerns and threats.

• PESTEL Analysis

Political

• Government support for cybersecurity

• Regulatory policies

Economic

• Economic fluctuations
• Heavy taxations

Sociological

• Changing preferences of customers
• Ethical policies and concerns of technology

Technological

• Stiff competition in cloud computing and e-commerce
• Integration of technology into operations

Environmental 

• Emphasis on sustainable practices in production and operations

Legal

• Changing legal requirements of statutory policies and revenue policies