Amazon growth strategy
Amazon growth strategy as well as their business strategy is based upon the porter’s generic model. This has enabled the company to expand and grow strategically thus gaining more competitive advantage and increasing their market share and number of customers in the market. This paper has analyzed Amazon’s growth strategy which has been a responsible approach for the organization in the development of its business despite the amid harsh rivalry in the online market. Amazon has demonstrated to be highly competitive in its operations even contrary to its major giants such as Walmart. Amazons generic growth strategies have been essential for their expansion and growth within the markets. Through the implementation of the generic growth strategy, the company has been able to grow its international business as well as succeed the global e-commerce market. This paper illustrated how their generic competitive strategies have enabled the business to grow and affordable rates for their goods and services. Thus, their intensive strategies and competitive strategies have been essential for their international growth.
Amazon has been one of the most famous online retailers. This is because company has managed to grow from strength to strength throughout the last decade (Miller and Bosman, 2011). Amazon has been known as the leading e-commerce brand of the world that was incorporated in 1944 in Washington and again in 1996 in Delaware. For the first time, their website was launched in 1995. Amazon brand has continued to see very impressive growth and has come a long way through its success and corporate strategies that have enabled its growth. Additionally, the company has been considered the leading could player and is still growing its strengths within the cloud industry. Considerably, customers have been the main central focus for the company in its operations. Amazon’s business strategy has been considered important in keeping the success of the brand. Ideally, the e-commerce market has been intensified by competition and has retained its customer focus in order to ensure that they are competitive (Laudon and Traver, 2013). On the other hand, the brand has continued to grow its investment through innovation and continued performance to increase the overall experience of their customers. Additionally, the brand has continued to grow through acquisition and merging to ensure that they change the game of retail in their operations as a way of gaining competitive advantage in the e-commerce market (Tsang and Yamanoi, 2016, p.2298).
The paper will critically evaluate the growth strategies of Amazon and how it has been able to grow internationally and as well expand its markets in other countries. This will include their global value connection strategies, their competitive advantage strategies, the firm’s growth, and their international business operations. The paper will analyze all the growth strategies that have been applied by the firm and its web design, e-marketing, consumer service, and B2B plans.
The Global Value Connection Strategies
Amazon is considered a multinational technology company that focuses on cloud computing, e-commerce and artificial intelligence in Washington. It has become the utmost appreciated retailer in the United States surpassing Walmart through market capitalization. It is the second most treasured public firm ahead of its competitors such as Apple and Walmart. The company is able to get supplies from China to the United States and is able to reach the world market through the use of the internet as well as their website.
The spread of technology and the internet have been considered an important contributor to the success of Amazon (Zahra, 2003, p.499). Ideally, these developments lowered the barriers of the e-commerce industry which permitted Amazon to go in the e-commerce market in 1955. At that period the books were being published and sold in stores. Amazon then spotted that the internet could enable them to build one large online store that they would be able to use in presenting storefront to their customers all over the country. This was an essential way through which they would build their success through the use of this strategy. In order to ensure that they were able to dominate the markets, they had to ensure that they continued to keep hold of their customers and to ensure that they lowered the risks of competitions (Jones, 2013). Thus, they decided to use technology that influenced their supply chain efficiently. The established e-books through the use of exclusive kindle technology that encompassed of both software and hardware enabled reading from screens and that allowed the customers to purchase and download the eBooks through the internet. The internet has been an important tool for its global connection through new technologies such as Kindle that has been incorporated in its software to enable technical services (Peng, 2013). They have been able to deliver their eBooks efficiently and directly to their customers from the writers thus even eliminating the publishers
Global Competitive Strategy (Generic competitive strategy)
In all countries, it is so straightforward and attractive to start up a business but there are various problems that are associated with the development of enterprises in the past few years (Singh, 2011). These include proper branding techniques and correct trading techniques. There are countless business ventures that have been provided by the internet. Amazon has been able to build the e-commerce brand and thus has kept it rising. The porter’s generic competitive strategy has illustrated the three generic strategies that have been relied on by Amazon for the achievement of average performance within the e-commerce industry. These include focus, differentiation and cost leadership.
Amazon has relied on cost leadership as their generic competitive strategy. Ideally, minimizing their cost of operation has been their main goal in their generic competitive strategy. For instance, the company has been using advanced networking and computing technologies that have maximized the operational efficiency thus translating to minimal operating costs. The nature of their e-commerce has enabled the company to gain from automation of their process which has been used in scheduling, purchase processing and many other operational processes (Wheelen and Hunger, 2011).
Amazon has been able to differentiate their brand by making their products and services different from other stores. The eBooks and the online bookstore has been an attractive way through which Amazon has been able to deliver high-quality services or products. This has also been an effective way through which the market has been able to understand what is being offered within the market.
The focus strategy within the firm has entailed concentrating on the e-commerce business and trying to offer more efficient services as compared to their competitors. Through understanding the dynamics of their markets, they have been able to develop unique and well-specified products at a low cost and also enabling them to build a strong loyalty brand.
Firm Growth (Intensive growth strategy)
Amazon started as an online bookstore but has quickly expanded and begun selling anything that can be sold online. Amazon is now able to operate around the world through a combination of localized portals as well as logistics platforms and globalized delivery. The success of Amazon has been proof of its growth, competitiveness, and expansion with support from their intensive growth strategy. Through the effective implementation of the intensive and generic competitive strategy, Amazon has been able to succeed and grow within the e-commerce market.
Market development has been one of their major competitive strategies. Through this, Amazon Inc. has been able to add many more countries through which it has been able to offer more products and services. For instance, the company initially offered services to its home country, the United States. Currently, through the use of e-commerce, the company has been able to operate in more than 10 countries such as the United Kingdom, Canada, India, and China. Each new country has been considered as a growth opportunity for the company. This has enabled them to build a strong competitive strategy that has enabled market development. Considerably, a strategic objective that is connected to the intensive growth and market development for Amazon is the establishment of online retail websites that have enabled the firm to correspond to new markets that are added to the firm’s global reach (Zahra, 2003, p.498).
Market penetration has been another major competitive strategy for Amazon. The objective of market penetration has been to generate more revenues through the markets that the company is operating in (Rugman and Collinson, 2009). Ideally, it is evident that Amazon has grown with the increased consumerism within the firm’s markets. For instance, as consumers continue to develop their interests concerning online retail, the firm has benefited from greater sales revenues by bearing in mind the reputation of Amazon brand. Ideally, market penetration has been accountable for the initial fast growth of the firm within the United States. The company has been able to create a competitive advantage through penetrating I markets through low prices and costs. A strategic goal that has been associated with the implementation of an increasingly marketing campaign to entice increased customers to their e-commerce online store.
Amazon Inc. has been able to apply product development as an efficient business growth strategy. Offering and developing new items to expand increased revenues is the objective of the growth approach. Amazon has been able to grow partly through the development of new products with time (Hammond, 2005). The product development strategy has been supported by cost leadership strategy through low-cost processes within the business to introduce new products. A strategic objective of the product development within Amazon has been to improve the R&D investment for the increased product expansion to apply in the online market.
Diversification has been considered the least important intensive strategic growth for Amazon. Ideally, growth that is based on a new strategy has been their objective in applying the intensive strategy. For example, it is evident that Amazon has grown through acquisition and merging of Audible which is a produces audiobooks and many other products. With regard to this, the company has been able to use such instances of acquisition in the implementation of their strategies and reaching new markets in other geographic areas. The cost leadership strategy for Amazon company has enabled the firm to grow in terms of diversification by applying the same approaches to be able to minimize the selling prices and the operating costs. The aggressive acquisition strategy has been essential for intensive growth strategy thus enabling the growth of the e-commerce business (Tsang and Yamanoi, 2016, p.2298).
Strategic Positioning and Sustaining Competitive Advantage
Brand positioning has been important for building brand equity and brand differentiation. Sustaining and obtaining a competitive advantage through brand positioning is considered a complex process within the notion of increasing consumers and competition (Sternquist, B., & Goldsmith, 2018). The ability to attract new customers and maintaining solid customers has been a string and favorable mechanism of growth within the business. This has been met through brand differentiation and as well building stronger brand equity for the consumers. Amazon competitive advantages and strategic positioning has been essential in boosting their growth. The brand image has been crucial and vital strength that has helped brands to grow, affect and as well find their leadership status. This has been critical in finding new customers and retaining their solid customers. Considerably, Amazon is a brand that has been built on a strong trust and is the most essential reason as to why the brand has grown so fast. Even when the company says millions of products and services to millions of consumers worldwide, it has ensured that it sells only the good quality products to their consumers. In order for the company to maintain trust they have established a review system that has enabled them to get the reviews of their customers on the products and services they offer which has been an effective way of maintaining quality and improving their levels of service and quality of what is offered in the market by them (Sternquist and Goldsmith, 2018)
Technology has been considered as also an important and influential culture and nature of the company which has enabled them to manage a higher degree of customers and as well improve the levels of customer experience (Sakarya, Eckman and Hyllegard, 2007, p. 218). Ideally, in this era, the internet and technology have been considered important requirements to improve the growth of the brand. For instance, Artificial intelligence technologies have helped better serve their customers and improve their experiences. Technology has enabled the company to offer better services thus acting as a strong competitive advantage. Ideally, investing in technology enables a business to give its customers the best service and experience. The Amazon web services have enabled the company to serve the developers and business in varying sizes. Additionally, the company has remained engaged in the application of practical machine learning for a number of years. From the use of the air delivery drone to the use of machine learning the company has been able to eliminate the check outlines and as well increase convenience in their stores.
International presence has been an effective way of boosting their brand positioning (Sakarya, Eckman and Hyllegard, 2007, p.215). Ideally, international presence of a brand increases the strength of a brand. Due to the fact, the company has increased its overseas demands, the brand has been able to introduce various regional marketplaces that have enabled them to serve their customers better in areas such as North America, China, Asia, Japan, and Europe. This has been considered as a strength that indicates the competitiveness of the brand within its markets and how the brand is growing internationally. Their strong customer base has also offered a competitive advantage for the firm and ensured that they are able to beat their competitors in terms of market share. Ideally, a large customer base is a vital strength for a brand such as Amazon that has heavily focused on retention of customers and increasing the number of active users who have continued to exist over years.
Vertical integration has been seen a strategy very familiar for Amazon. The company has applied backward vertical integration at the time it began publishing the books that they would sell. The backward integration is referred to as the method of vertical integration that includes the acquisitions and merging with sellers within their supply chain of a company (Zahra, 2003, p.508). The backward vertical integration has been essential for cost savings and improving efficiency. Cost control and improved efficiency through vertical integration have enabled the company to grow faster and access certain resources and markets including patents and technology. For instance, through the kindle vertical integration amazon has been able to grow and move farther increasing the number of customers. It is well known that Amazon has been obsessed with vertical integration since its beginning. Amazon has been able to develop products that are able to meet the demands of the customers and optimize them thus making their operations and developments profitable. After the establishments of high levels of operations through their warehouses, Amazon then decided to offer other companies the opportunity to store their items within their warehouses and as well their packing and picking services. Amazon has also worked to ensure that they begin the delivery of fresh products thoughts its own personnel and fleet of vans.
Ideally, through its own logistics services, the company has moved into another logical step in their vertical integration process. This has been important for their growth due to the fact that they have enabled them to reach a certain level of activity which has offered them a sufficient operational experience. For instance, since Amazon decided to Maneuver in the vertical integration strategy it has been profitable and efficient due to the fact that it has been able to limit the need to pay the publishers and it has also allowed the company to choose which stores will be sold its books. Since Amazon has been able to control the Kindle content and readers that they are able to download, the company has been able to give their readers reasonable prices knowing that the customers will continue spending money into downloadable content.
Within its international business, Amazon has been able to employ various strategies that have enabled the company to expand globally. Ideally, the company has relied on multi-level e-commerce strategy that has enabled the company to focus on business to business and business to consumer relationships and between its supplier (Gruenhagen, Sawang, Gordon, and Davidsson, 2018, p.12). This has moved and facilitated the company to increase its market share and expand their operations beyond the United States Amazon is quickly dominating the e-commerce industry and through acquiring Whole foods and initiation of Amazon Go. The multi-level strategy has been essential in encouraging the existing distributors to reach the products to their consumers.
Amazon international business strategy has been grounded upon various strategies that have enabled them to win globally. At first, they have deepened their customer understanding. Considerably, they have invested much of their energy and time in understanding their customers in order to ensure that they are to fulfill the demands of their customers. Through the use of artificial intelligence technology, they have been able to precision their delivery thus being able to reach their customers effectively (Lasserre, 2017). Through the expansion of their logistics, they have been able to increase their networks, expanding their infrastructure and improving their delivery network to enable a thousand small businesses to efficiently fulfill their orders and customer demands.
Amazon global selling has enabled them to reach global marketplaces that has enabled them to expand internationally. Additionally, the company has been able to merge with other small companies that have been allowed to make sales within through their online store. This has increased customer awareness which has enabled the company to increase its global presence and as well grows their online business thus beating their competitors.
Amazon has applied various growth strategies that have enabled the company to improve and increase their market share. Their global presence has been facilitated by their technology, intensive growth strategies, competitive strategies, and their brand positioning. Through their various growth strategies, they have been able to compete effectively in the e-commerce market. Amazon has maintained very large customers and is increasing their customer base through these strategies thus expanding internationally. The paper has critically analyzed how Amazon has grown and expanded internationally and access millions of customers across the world.
Gruenhagen, J. H., Sawang, S., Gordon, S. R., & Davidsson, P. 2018. International experience, growth aspirations, and the internationalization of new ventures. Journal of International Entrepreneurship, 1-20.
Hammond, J. H. 2005. Amazon. com’s European Distribution Strategy. Harvard Business School.
Jones, G. R. 2013. Organizational theory, design, and change. Upper Saddle River, NJ: Pearson,
Lasserre, P. 2017. Global strategic management. Macmillan International Higher Education.
Laudon, K. C., & Traver, C. G. 2013. E-commerce. Pearson.
Miller, C. C., & Bosman, J. 2011. E-books outsell print books at Amazon. New York Times, 19.
Peng, M. W. 2013. Global strategy. Cengage Learning.
Rugman, A. M., & Collinson, S. 2009. International business. Pearson Education.
Sakarya, S., Eckman, M., & Hyllegard, K. H. 2007. Market selection for international expansion: Assessing opportunities in emerging markets. International Marketing Review, 24(2), 208-238.
Singh, N. 2011. Localization strategies for global e-business. Cambridge University Press.
Sternquist, B., & Goldsmith, E. B. 2018. International Retailing. Bloomsbury Publishing USA.
Tsang, E. W., & Yamanoi, J. 2016. International expansion through start‐up or acquisition: A replication. Strategic Management Journal, 37(11), 2291-2306.
Wheeler, T. L., & Hunger, J. D. 2011. Concepts in strategic management and business policy. Pearson Education India.
Zahra, S. A. 2003. Ownership involvement and international expansion: An empirical test of the stewardship theory among family firms. Journal of Business Venturing, 18(4), 495-512.