In order to accomplish its company goal -to become the world’s largest online retail store”-, it verified its operation to include the retailing of toys, electronics, music, and other consumer goods. Through this paper, we first aim to analyze the internal capabilities of Amazon as an organization and discuss a sustainable future trend for the organization to follow. The analysis which follows is aimed to first identify Amazon.com’s Internal strategic capabilities explained as ‘resources’ & secondly ‘competencies’ (which will be aimed to summarize the manner in which the Identified resources are deployed to effective use).
The ‘Resource Based View’ will be used s the strategic tool to hence sum up the firm’s Internal strategic capability. The strategic capableness of a firm would be defined as Its resources & competencies to survive and prosper in the business environment. We will first begin by identifying the tangible & intangible resources of Amazon. Com. Typically, its resources can be considered under the following broad categories.
Amazon’s many fulfillment distribution centers were strategically located near the main airports of the cities it operated in.
Such choice of the strategic location of distribution centers not only improved efficiency but also effectively erring the operating costs thereby enabling the company to offer lower prices to its customers. Differentiated Into two, Other non-tangible resources can be Internal non- material: continual enhancement of customer experience on the website through continuous Software and technology development External non-material – this included the positive image of Amazon’s brand name as a result of a customer base running into millions and the company’s Associate Program.
Amazon always took a tactical approach to employ its staff. Amazon’s global workforce is comprised of 20,700 employees. Its top brass management included names such as Richard Dalzell (previously Vice-President of Wal-Mart) who bought in expertise in supply chain management, international retailing, data mining systems, and merchandising & logistic systems. Other senior managers had been recruited from various companies such as Apple, Microsoft, and Laddering, who added value with their various skills & capableness to the firm.
The founder of Amazon, Jeff Bozos himself was a Princeton graduate with previous experience as the Senior Vice-President of D. E. Shaw, a Wall Street hedge fund firm. From which he exploited the Information he rendered about the incredible growth of the internet retail industry which was prelate to grow at a mammoth 23 per Month.
By 2008, Amazon had a market capitalization of $29. 4 billion with its net profit growing from $190 million in 2006 to $645 million in 2008.
Amazon was also able to maintain a strong cash flow position to enable the company to focus on its ‘Long term sustainable growth of the firm by investing in continuous technological innovation. It is achieved by a substantial increase in its working capital via offering shorter credit terms to its consumers and longer payment terms to its appliers with the value being typically 26 days. How Amazon has really deployed its resources, gives it unique capabilities that the competitors would find hard to imitate. This is primarily as the firm has resources that critically underpin competitive advantage that others cannot obtain.
The efficiency of a firm does not just end on it possessing large capital, physical resources, a good workforce, or an advanced technological platform but how they are managed and deployed. The below analysis is aimed at depicting how well Amazon has exploited its resources to command the market they are in. Another method of analysis I think is appropriate for this case study is the Value chain which describes the activities within and around the organization that helps create a product or service.
It helps analyze the organization in terms of a set of activities that managers undertake to create value for its consumers. This analysis will help us conclude how well Amazon functions as a firm to be competitive in the industry.
Its weakness obviously lies with the fact that it doesn’t manufacture the goods directly but has to rely on various vendors for the end product. Such reliance can cause issues of dry supply for a product in high demand.
Amazon initially ventured out as a firm with an aim to become the world’s biggest and best online bookstore’ which it successfully achieved a few years after it was set up. However, in order to maintain sustainable growth, a competitive advantage, became necessary for Tort Amazon to expand ten Dustless Deanna online KICK retailing.
I nose Nellie teem in managing costs efficiently and achieving a competitor’s advantage over other aspiring firms As Amazon’s marketing activities spread quickly across the world, the intention level increased as well. In order to survive and keep sustaining in the global market, it is pertinent for Amazon to enhance its capabilities and competitive advantages. Since the company was established in 1994, it has continued to expand and achieve some sustainable competitive advantages.
One of the key factors needed to ensure an organization is successful in the global market is to provide products that add value to customers, which gives them an incentive to pay a premium price for its products. As long as customers feel they are aging advantage of the prices of Amazon’s products or services, leads to consumer satisfaction and brand loyalty. The idea of Amazon’s customer strategy called ‘customer-centric’ consists of three kinds of consumers – ‘Consumer customers, Seller customers, and Developer customers’.
It is wise for Amazon to focus on the satisfaction of all these customer groups who add value to them on the basis of distinctive capability that which competition is unable to offer. However, the company should not only consider the value to customers but also needs to ensure the organization’s activities have a positive investment return. When Amazon uses advanced technology to provide its customer’s convenient services, it is necessary for the company to take into account all the costs related to such activity to enable it to make financial projections.
According to the case, in 2008, the activities of investment and expenses were supported by Amazon’s shareholders due to positive returns being delivered to the market. Rarity of strategic capabilities If a company possesses a unique or rare resource, it is described absolute competitive advantage for this company. Amazon makes invests a fair bit to Research ND Development of Technology. It is the company’s belief that this emphasis on the development of advanced technology will give them an edge over other organizations. Competition has found it difficult to imitate Amazon in this sphere.
However, the rarity could be temporary, especially under these modern business circumstances. Other organizations might figure out the same technologies and strategies eventually, which is why Jeff Bozos lays great emphasis on continuous innovation. Maintainability of strategic capabilities Possessing advanced technology and skills are not enough to sustain a company’s success. Strong maintainability ensures the creation of sustainable competitive advantages for a company. Organizations are able to differentiate themselves from their competitors by developing activities focused on customer needs.
For example, Amazon attracted its initial customer base via its online bookstore and then went ahead to expand its product categories such as electronics, beauty, and digital media. The speed of expansion of Amazon’s products globally via its international network created barriers to imitation by other competitors. Non-substitutability of strategic capabilities An important competitive advantage is a low level of substitution. Using the five forces model to analyze we observe that substitutes will create an effective threat when the price and performance of the substitute is more valuable for customers.
There are two dimensions in this area. Firstly, the company needs to consider the possible product or service stimulation Trot a Deterrent Ministry. Amazon Autocue on online retailing, its direct substitute threats are mainly from “off-line” stores as Customers may prefer purchasing products from stores rather than waiting for few days for their goods in the post. Secondly, if the company struggles at the competence level, the organization could lose customers due to dissatisfaction.
Amazon has several direct and indirect competitors in the global market, a possible threat to the company is the possibility of these competitors offering customers better products or services and being more efficient in their services provided. Although widening its business beyond online bookselling could increase Amazon’s strategic capabilities and competitive advantages in the global market to achieve sustainable success, it is not advisable to digress completely from the initial goal of the company to. The original vision of Amazon has in most parts been fulfilled, as it has a major market share in the online bookstore industry.
Nowadays, Amazon.com has an online marketplace for books with over 110 million primarily used all over the world and with millions of people Joining through its global websites
Amazon.com is currently one of the finest in its industry. It has created a bundle of resources & strategic capabilities that has enabled it to build multiple sources of sustainable competitive advantage. The company though needs to block opportunities for its impetuous like Microsoft aspiring to create a substitute who took advantage of Amazon’s ‘Rigidities’.
This should be considered as a potential threat that may account for their decrease in growth. Amazon’s emphasis upon technological innovation has enabled it to launch new sites that serve customers with specific needs. Strategic alliances & acquisitions have been a key method for the company to penetrate the market by offering a wider choice of goods and services. This strategic capability could be enhanced and developed further to gain a wider share of the market for sustainable competitive advantage & is thus directing the company towards a route of diversification.
We believe that focusing on Just online retail of books, would limit the growth of the company to only one product in wide industry. However, focusing on all with equal emphasis and with the scope of enhancing the customer experience will give the company a positive platform for growth. It has already achieved a strong foothold in the online retail of books which it should endeavor to consistently maintain but at the same time exploit other avenues which the wide industry has to offer