A strategy can be a mechanism of action that is mainly to realize a particular goal.
Strategy is all about obtaining or trying to realize an advantage over rivals (Simple Strategic
Planning). Amazon is the world's largest online retailer. Amazon business was started as a
book store and diversifying everything into online marketing makes it a success. The Amazon
business is using a corporate strategy. This strategy depend on leveraging technical
capabilities for the achievement of Amazon business and its cost leadership strategy primarily
aims to deliver targeted value to customers at lowest price. Amazon's strategy based on
opportunity, such as demanding customers to visit the store and now sitting anywhere at
home and clicking on the workplace, allows them to buy anything online. Amazon has
enrolled in multiple methods of strategic planning, permitting Amazon to be competitive on
price and efficiency, it allows sellers to sell their own product and is taking stock from each
purchase, Amazon's competitive edge it is exceedingly focused on price.
According to Rothaermel’s AFI Strategy Framework, is about gaining and satisfying
competitive advantage. Preliminary analysis of amazon business growth is based on detailed
approach to SEO (Search Engine Optimization) and creating unblemished and simple
experiences through testing and learning (Chaffey, 2018). Amazon is challenged by external
forces, amazon use PEST analysis as the finest model for analysing the external forces facing
the company, it focuses on the expansive dimension factors that are not within the
organizational control and are therefore not influences though policies and decisions and
internal analysis of amazon discloses some strategic capabilities and weaknesses. Amazon
has an obvious system of CRM (Customer Relationship Management) that supports the
information flow between the company and its customers (Samuel, 2019). Amazon’s
competitive advantage including low cost strategy, effectiveness and innovation help to frame
business strategy by that company formed customer loyalty and in return company get many
returning customers, Amazon formulation of corporate strategy based on concentric
diversification, it make it importance as amazon is online and easily available like any
channel, technology and customer support.
“Business environment means all internal and external factors that affect how the
company is functioning counting employees, customers, management, supply and demand
and business regulations (In YourDictionary).”
“External audit is an independent examination of financial statement that is equipped
by organizations. It is usually directed for constitutional purposes. External audit is mainly
done to check the accurateness and completeness of the client's accounting records, to
have client's financial statements and situation, it unambiguously target at issues
concerning an examination that examines for the existence of fraud (External audit,
2018).”
External audit is an essential part in business environment and it provide valued
insights and information that occurs within organization and helps in making strategic
management decision making, it helps to control problem or any snag within
organization before it grows. Macro environment provide the external environment
analysis of amazon business. It includes the extensive environmental factors which help
to influence organization on different level. For amazon it is important to contemplate its
potential influence as well. Amazon’s Micro environment is to use customer value funnel
approach. This customer value funnel approach is basically based on studying delivery
through collaborating, competitors, suppliers, supervisors and which will provide
company to implement strategies and this will positively affect business performance.
Pestle Analysis is to identify the current trends like in political, economic, social,
technological, environmental and legal environments, mainly it is concerned with
external environment and its aspects will impact in business. Political factor that affect
amazon is the political stability and instability and the defiance of government towards
e-commerce. Amazon plays an indirect role in American politics, in the world of markets
amazon has a strong occurrence. Economic factor such as taxation and inflation rates,
overall and industry specific economic growth, unemployment levels and changes in
currency exchange rates that unswervingly affect the volume of revenues and growth
prospects of Amazon. As a social factor amazon business has an upsurge in online social
network. Amazon opportunity is to increase market share, it need to consider
overwhelming risks to increase customers. Technological factor contain rapid
development of high speed networking and telecommunications technologies for internet
access. Environmental factor, like increase in global warming and pollution awareness,
Amazon provide more shopping online and less car expeditions. Legal factor of amazon
is to be aware of domestic and international laws and there are no uniform procedures
governing e-commerce in covering all countries (Dudovskiy, 2018).
Porter’s five forces model is to identify and evaluate five competitive forces that
help in determining every industry and help in identifying any industry’s weaknesses and
strengths (CHAPPELOW, 2018). It signifies five individual forces: Threat of new
entrants into online retail business is important. There are certain industry entry barriers
for amazon such as the economy of scale and predictable retaliation from current market
players of amazon. For Amazon the extent of buyer bargaining power varies transversely
customer categories depending on the nature of goods and services being consumed.
Bargaining power of Amazon suppliers is inconsequential. Amazon deals with a wide
range of suppliers due to the diversity of its business and the company drills a vast bargaining
power in relation to the mainstream of its suppliers. Threat of substitute to Amazon has
strong concentration, this factor supports low switching costs, high availability of substitutes
as well as low costs of substitutes, and Amazon unceasingly addresses the strong force of
substitutes which portend the e-commerce company’s performance. In threat on new entrants,
Amazon also has threat of new entrants, which can easily transfer to new firms. New firms
can decrease Amazon’s market share in online retail business (Dinodia, 2019).
SWOT Analysis model involves an internal strategic analysis that classifies the
strengths and weaknesses and external strategic analysis that recognizes the threats and
opportunities pertinent to the e-commerce business (GREENSPAN, 2019). SWOT analysis of
Amazon shows the strengths that the company usages to overcome its weaknesses and pledge
the threats to its business, to maximize the benefits from manipulating opportunities in the
global market. Strengths of Amazon are that it is a strong brand, moderate and expanding
business diversification and having high capability for rapid technological innovation,
precisely in online services. Amazon weaknesses contain its imitable business model, limited
saturation in developing markets and limited brick and mortar presence, which is a blockade
to rapidly expanding in the non-online market. Opportunities for Amazon are its growth in
developing markets and in bricks and mortar business operation, its new enterprises with
other firms, especially in developing markets. Threats Amazon facing are, violent opposition
with online and non-online firms, issues of cybercrime and limitation of business model and
products (GREENSPAN, 2019).
Organizational change arises when a company makes alteration from its current state
to some anticipated future state. Managing organizational change is the process of planning
and implementing change in organizations in such a way as to curtail employee resistance
and cost to the organization while instantaneously maximizing the effectiveness of the change
effort (Managing Organizational Change).
Mckinsey’s 7s model framework organizational effectiveness that assumes there are
seven internal factors of an organization that need to be allied and strengthened in order to be
successful. Seven internal factors are structure, strategy, systems, skills, style, staff and
shared values. Amazon organizational structure can be classified as hierarchical. Senior
management team include two ceo, three senior vice presidents and one worldwide organiser,
who are accountable for various dynamic features of the business broadcasting directly to
Amazon CEO. Strategy of amazon is plan deployed in order to remain competitive in its
industry and market. An ideal tactic like cooperate strategy, leadership and cost leadership is
to establish a long-term strategy that supports with the other elements of the model and
clearly communicates what the organization’s objective and goals. Systems of the company
denote to the daily procedures, workflow, and choices that make up the standard operations
within the organization. Shared values are the frequently accepted standards and norms
within the company that influence and the behaviour of the complete staff and management.
Skills comprise the flairs and abilities of the organization’s staff and management, which can
determine the types of achievements and work the company can achieve. Style speaks to the
specimen and tactic that management takes in leading the company, as well as how this
effects performance, productivity, and corporate culture. Amazon business style is direct
sales that provide a platform for other stores to sell products to buyers. Staffs refers to the
recruits of the company, how large the workforce is, where their motivations exist in, as well
as how they are trained and ready to achieve the tasks set before them.
“A prescriptive strategy is one whose objective is distinct in progress and whose main
fundamentals have been developed before the strategy commences.” and “An emergent
strategy is one whose final objective is unresolved and whose elements are developed during
the progress of its life, as the strategy proceeds (Explaining The Prescriptive And Emergent
Strategies).”
Mintzberg’s, emergent strategy is a set of movements, or behaviour, reliable over time
a realized pattern that was not particularly envisioned in the original planning of strategy.
Mintzberg’s claims that strategy emerges over time as intentions strike with and
accommodate a changing reality. Amazon emergent strategy implies that an organization is
learning what works in repetition mixing the thoughtful and the emergent strategies in some
way will help the organization to control its course while encouraging the learning process.
This process will help amazon to get a clear vision (Rivera, 2012).
Change is a common filament that runs through all businesses irrespective of size,
industry and age. Amazon is acclimating change really fast and organizations and it must
change swiftly because organizations that handle change well prosper, whilst those that do
not may struggle to survive.
Kart Lewin’s three stage change model in a prescriptive approach, unfreezing,
changing and freezing, many people will certainly resist change; the objective during the
unfreezing stage is to create an consciousness of how the status quo, or current level of
acceptability, is encumbering the organization in some way. Amazon if want to adapt change
it should arrange campaigns to aware the potential customer or targeted people though to
create and maintain competitive advantage after unfreezing process is done the second step is
changing. It is a process where the organization must changeover or move into this new state
of being. It is also denoted as transitioning and moving as it is noticeable as implementing
change. During the change course amazon could struggle with the new reality, it is time
marked with indecision and fear. This is the step where organizations mostly learn. Amazon
should educate, communicate and support employees as they become familiar with the
change. The last stage of Lewin’s is refreezing; it is the act of reinforcing, stabilizing and
solidifying the new state after alteration. Like the changes made by amazon the
organizational structure, aims and when people have putative the change an organization
should refreeze it as the new custom and status quo and to ensure that people don’t step back.
Role of KPIs in the strategic planning procedure curtails from the belief that KPIs
provide assessable and objective standard by which business leaders can track progress and
implement change. Businesses use KPIs in the strategic planning procedure to offer
benchmark by which they can amount current performance. Business leaders depend upon
these KPIs to assistance them make more objective and scientific planning decisions
dropping the chance of human error and it helps in following what progress the business is
making and what changes it needs to implement if optimistic change does not occur. Four
KPI metrics are used in amazon business, sessions, conversion, profit and average rating.
Session is a pulse for amazon sellers, it tells how much responsiveness you are enticing, by
sessions graphs.
The conversion percentage demonstrate what Amazon mentions to as the unit session
percentage, that’s how you’ll see it in your Amazon seller dominant. Conversions tell you
how well your amazon business is performing.
Amazon doesn’t show your profit, but platforms like ours let you enter costs and other
influences in order to calculate profit on your sales. As amazon seller profit, high sales joined
with high costs lead to low profitability, and do not make a successful business. The average
rating, as calculated by Amazon, is a vital KPI for sellers who own their listings, including
secluded label sellers and brands. Amazon takes into account the age of appraisals,
helpfulness votes and whether the reviews are from proved purchases.
Works Cited
External audit. (2018, November 13). Retrieved from Accounting Tools; Accounting CPE
courses and books: https://www.accountingtools.com/articles/2017/5/6/external-audit
Chaffey, D. (2018, August 14). Amazon's business strategy, revenue model and culture of
metrics: a history.
CHAPPELOW, J. (2018, November 20). Fundamental Analysis. Retrieved from
https://www.investopedia.com/terms/p/porter.asp
Dinodia, V. (2019). Business Policy Strategic Analysis & Management of AMAZON.COM.
Dudovskiy, J. (2018, August 2). Retrieved from Amazon PESTEL Analysis: https://research-
methodology.net/amazon-pestel-analysis/
Explaining The Prescriptive And Emergent Strategies. (n.d.). Retrieved from
https://www.ukessays.com/essays/business/explaining-the-prescriptive-and-emergent-
strategies-business-essay.php
GREENSPAN, R. (2019, June 22). Amazon.com Inc. SWOT Analysis & Recommendations.
Retrieved from http://panmore.com/amazon-com-inc-swot-analysis-recommendations
In YourDictionary. (n.d.). Retrieved from Business environment. (n.d.):
https://www.yourdictionary.com/business-environment
Managing Organizational Change. (n.d.). Retrieved from Organizational growth:
https://www.inc.com/encyclopedia/managing-organizational-change.html
Rivera, G. (2012, September 11). Emergent Strategy. Retrieved from
https://interactioninstitute.org/emergent-strategy/
Samuel. (2019, April 4). Amazon Internal and External Analysis and Strategic Options.
Retrieved from https://blueoceanoutsource.co.ke/amazon-internal-and-external-
analysis-and-strategic-options/
Simple Strategic Planning. (n.d.). Retrieved from http://www.simply-strategic-
planning.com/what-is-strategy.html
