Strategic management of Amazon

Intro

Amazon.com is a widely known international electronic commerce business selling numerous products and likewise producing customer electronic items such as e-reader Kindle along with industrial items such as cloud computing. It is the biggest online retailer on the planet with headquarters in Seattle, Washington, USA. It has more than 200 million active client accounts worldwide and provides a hassle-free method to shop items with budget friendly cost, variouschoices and integrated product details (Amazon.co.uk, 2013). It has attained excellent success and appeal over the last twenty years with their progressive vision given that it started in 1995: it desires to be earth's most client centric company, which suggests discovering out what customers want by asking them and then giving it to them, determining what they do not know they desire and offering it to them, the concept of personalization redecorating the store for every single specific customer (Stockport, 2011).

Amazon has dealt with many obstacles for many years, for example, is it reasonable to provide a heavy investment in innovation? On the other side, Amazon saw rising sales however fall in earnings in current months, showing a net earnings of? 53m for the very first 3 months, down 37% on in 2015 (BBC, 2013a).

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Structure and objectives of the report

The function of this report is to assess the viability of Amazon's methods from 2007 to the present.Specifically; the goals of this report are as follow:
1. To analyse Amazon's external environment utilizing PESTEL and Porter's Five Forces analysis
2. To examine Amazon's tactical abilities
3. To describe Amazon's stakeholder expectations
4. To establish a TOWS analysis of Amazon
5. To explain Amazon's corporate level methods
6. To assess the viability of Amazon's techniques using TOWS matrix
7. To provide future possible tactical alternatives

Overview of the industry

The internet has changed the method companies communicate and how they purchase and sell (Faramarz&& Damanpour, 2001). In truth, International e-commerce is flourishing considerably in this modern world, showing a 13% yearly growth over the past 5 years. The online channels have been regarded as an effective way to tap into growth market, build brands, and learn about consumers (Atkearney.com, 2013). In 2012, B2C ecommerce sales grew 21.1% to top $1 trillion for the first time (Emarketer.com, 2012) and the main e-commerce competitors for Amazon are EBay, Barnes and Noble, Wal-Mart, etc.

The competitor’s revenue and revenue growth comparison are listed in Table 1 and 2, from which we can conclude that Amazon has the dominance position in e-commerce industry. On the other side, web infrastructure industry shows a fast development based on the advanced technology innovation. The main giants are Google, Apple and Microsoft, the individual market performance of these can be found in Table 3.

Table 1

Table 2

Table 3
Remote environmental analysis

PESTEL analysis is a vital and useful tool when investigating the macro environment for a better understanding of the underlying reasons of market changes, as well as the position, potential, direction and future trend of an industry these factors are the underlying driving forces of changes and have meaningful implications to companies’ strategies. As a result, PESTEL will be evaluated first in this report.

Political

There is an easing competition policy from European Union on e-retailing (Kobrin S, 2001). Additionally, Indian government prohibits companies from carrying goods with more than one brand and selling directly to consumers on the web (BBC, 2013b). China regulates online business and operations through regulations and license requirements. In conclusion, the formulation of business strategy should be based on specific political factors in different markets.

Economic

The global economy has yet to shake off the fallout from the 2008-2009crises. Global growth dropped nearly 3% in 2012, which indicates that about a half a percentage point has been shaved off the long-term trend since the crisis (Conference-board.org, 2013). GDP of most European countries decreased dramatically in the recent economic downturn, and the overall annual percentage change of output of Europe was as low as 1.7 per cent in 2012..However, the growth rate in some developing countries remained strong, such as China and India remained 7% and 5.5% respectively in 2012 (UN/DESA, 2012). Foreign currency exchange fluctuation influenced international business as well.

Moreover, the disposable income per capita in the US in 2013 is estimated at $33,050(IBIS World, 2013) and 617 million households across the world will have an annual disposable income exceeding US$5,000. Specifically, 143 million of these will be in Asia Pacific and the second is Western Europe with 185 million (Euromonitor.com, 2011). Consequently, companies may reduce their investment in European markets while pay more attention on developing countries, especially the Asian markets.

Table 4
Social

In recent years, the development of social networking is dramatic, such sites have rocketed from a niche activity into a phenomenon that engages tens of millions of internet users (Lenhart& Madden, 2007).When people spend more time on social network websites, it is easy for them to be attracted by online retailers’ web advertising. Some consumers regard online purchasing is good value for money and easy to find more suitable products for themselves, which provides implications to existing e-retailers that the effective promotional methods, convenient process of online purchase, competitive prices and customized options might be more desirable among customers.

Technological

Development of technology provides an increase of online shopping. Internet accessibility has been dramatically improved through not only computers but also mobile devices such as smartphones and tablets, enabling people to have access to online shops more often. On the other hand, security of online payments, facilitation of online payment process, and intelligence of websites system has all been leveraged by companies to increase the development of the industry. Moreover, development of technology boosts technological innovations for online retailers in terms of their product innovation and service innovation.

Environmental

More online shopping means less “travelling shopping” by vehicles, and then less CO2 emissions, which is beneficial to the environment (Matthews et al, 2002). Many e-retailers are becoming increasingly concerned about the materials of product packaging and have started using recyclable materials which shows their responsibility to the environment and wins market reputation.

Legal

Such policies need be considered by the players like return policy. Research shows that 63% consumers will look at the return policy before they purchase (UPS, 2013). Additionally, some players face some legal issues like uncollected tax and patents lawsuits. This may affect companies’ reputation and market share.

The operating environmental analysis

According to Porter (1980), competition in an industry is determined by its underlying economic structure and goes beyond the behaviour of current players. The five forces determine the competitive intensity and therefore the attractiveness of an industry, which, in this context, refers to the ultimate profit potential, which is the most critical factor that strategists take into account.

Industry rivalry: High

As for Amazon, it reported $13.18 billion revenue with net income standing at a loss of $274 million (Melanson, 2012). They are mainly involved in three industries, physical retail industry, e-commerce industry and web infrastructure industry. The largest e-commerce competitor is EBay, which accounted for less than half sales revenue of Amazon but earned much higher net profit. Moreover, an increasing number of companies are joining the battle which makes the industry warlike. On the other hand, there are two large competitors in web infrastructure industry, Google and Apple, both of them are top 10 global brands in the world and accounted for a majority of market share and revenue. We can conclude that the intensity of rivalry is high.

Potential for new entrants: Medium

The entry barrier of e-commerce is low. Because the low investment and customers’ switching cost, sometimes the price of new entrants’ products is low enough to compete with Amazon, such as Groupon and Offerfeast. Also, any established retail brands can enter the industry and compete with Amazon, such as Tesco, etc. However, the entry barrier of the web infrastructure industry is relative high because it is more complicated and requires more financial resources. Moreover, the intensity of existing competition may also put off the potential entrants. Therefore the overall threats of potential entrants are medium.

Substitute products: High

Amazon, which is mainly acting as a B2C e-retailer, provides a platform for wholesalers, distributors, and even manufacturers to sell their products to consumers. However, this model is now threatened by substitution. Because of the development of the social networking and physical store, wholesalers, distributors and manufactures may prefer to sell their goods to consumers directly without utilizing e-retailer as the vehicle. Additionally, rental businesses are also diluting Amazon’s market share of books market. Indicated by a recent survey, many people especially students prefer to rent books from online companies such as Bookrenter.com and campus book stores because of their cheaper price (Rentscounrer.com, 2011). Therefore, the threat of substitute products is high.

Bargaining power of suppliers: Low

As a renowned company with a strong brand image, it has thousands of merchants and retailers, as well as publishers. As for publishers, they need to compete with each other to be the book suppliers because Amazon’s well-established service and reputation provide a broader range of potential buyers than its retailing competitors (Gobry, 2011). As for retailers and merchants, they report an average 50% increase in sales when they join Amazon's marketplace (Bensinger, 2012). We can conclude that the bargaining power of suppliers is low.

Bargaining power of buyers: Medium

There is a large variety of online shops and websites to compare best prices (McGrath &Heiens, 2003). Amazon’s strategy is to offer cheap price and it has a good brand image among customers which ranks high on the list of customer loyalty at the rate of 68% and the customers choose Amazon because of the customized and reliable service (Lin & Yan, 2011). Amazon's performance in customer loyalty stands out when most online companies received significantly lower ratings (Grant, 2011). However, it is common that consumers compare prices before making the purchasing decision. They will very likely to choose another company which offers them cheaper products. Therefore, the bargaining power of buyer is medium.

Strategic capabilities of Amazon

To achieve superior performance than competition, a company needs to create and sustain its competitive advantages, which stem from the unique or distinctive capabilities that competitors are unable to obtain or imitate (Johnson et al, 2008). Such strategic capabilities are composed of unique resources and core competences.

Unique resources

Amazon’s unique resources include its strong brand image; human resources and leadership, specialised fulfilment centre, well established web infrastructure and IT systems. Amazon has become the No.1 retail brand in a study of top 100 most valuable brands with a brand value $37.6 billion (Fashionunited.com, 2011) and it has been described in the five forces section that Amazon’s brand image influences the bargaining power of both suppliers and buyers. In terms of human resource, Amazon has 88,400 employees worldwide at the end of 2012 and it has a skilled management team with expertise in merchandising, logistic, supply chain systems. etc. Bezos, the leader of Amazon is also a vital resource as the leadership implies the overall capacity of the organization’s performance. Amazon has many large fulfillment centers strategically located in the convenient place across the world which is a unique resource for Amazon. Amazon’s web infrastructure and IT systems ensures that the excellent and convenient website system specification, the website layout, payment process etc, which contribute to the Amazon’s strategy” convenience”.

Amazon’s core competence

Amazon’s core competences are product selection, price leadership, customer centric strategy, intelligent financial management, investment on technology, ability to acquisitions and alliances, as well as branding. Amazon offers the widest range selection of products from retail products and software and cloud computing offerings. Price leadership is a strategy Amazon primarily adopts with no sacrifice to quality; it targets a broad market with lower price at the same quality. Another core competence of Amazon is its customer centric strategy. It keeps providing convenience to customers, striving to please customers by collecting customers’ feedback, establishing free return policy, one click buying program, and “Frustration-Free-Packaging”. Amazon emphasizes “long term, sustainable growth in free cash flow” (Amazon.com, 2009), ensuring the necessary investment when opportunities are spotted or when facing challenges.

It is also the foundation of Amazon’s technology investment and market and service expansion.Heavily investment in technology helped Amazon improved efficiency and customer experience as well as innovative outcomes including Kindle, improvement of web service, offering digital content and enhancing accessibility (Stock, 2011).Amazon strategically aligned acquisitions and alliances kept a key way to catch the technology development, applications and expand products or service (Stock, 2011). Amazon’s branding strategy is also one of its competences. It builds its own demand-side platform that allows them to load customer data into a media-buying technology to target prior Amazon buyers on other websites, so their tracking and targeting systems have the potential to powerfully affect viewers based on demonstrated interests(Learmonth,2013).Amazon also takes its corporate social responsibility. They have environmental friendly packaging to reduce package waste.

Amazon’s stakeholder’s expectations

Every company has a number of stakeholders – defined as individuals or groups that have certain expectations of the company as well as influence (Johnson et al, 2011). Identifying and managing stakeholder expectations are critical when achieving better performance.

After identifying stakeholders of Amazon, it is necessary to acknowledge that different stakeholders have different expectations towards Amazon’s operation. All the stakeholders can be mapped out on a Power/ Interest Grid and their expectations will be analyzed below.

Shareholders (Investors)

The shareholders are playing an integral role of the company's strategic objectives making.Investors of Amazon have high voting power while low interest of corporate strategies. Their expectation is higher return of investment. Therefore they need to be kept satisfied.

Top management

Amazon’s top management has both high power and high interest of company’s strategies. They have Amazon’s equity and their expectations include the prosperity of the company, the satisfaction of customers and employees, and their own earnings. They need to be managed closely.

Customers

Amazon is a customer centric company so customer experience and relationship are regarded as the main task for Amazon. The capabilities we discussed before can also indicate that customers in Amazon have both reasonable high power and interest of company’s strategy. They expect better products with good price and service as well as Amazon’s corporate social responsibility.They needs to be satisfied. Suppliers and distributors (Including individual sellers though Amazon Affiliates, Merchant Programs, and Marketplace) The suppliers and distributors of Amazon have little bargaining power and low interest in Amazon’s activities. Therefore they need minimum effort. Their expectations could be the opportunities to cooperate with Amazon profitably.

Employees

Employees have high interest but low power. They need adequate information while serving customers. Otherwise, they are relying on Amazon for earning and individual promotion. Therefore, they need to be informed.

Environmental groups

Environmental groups expect that Amazon can develop with concerns of environmental issues. They have high interest in Amazons’ activities but not high power to control the company’s strategies.

Regulators

We can know some regulators for Amazon from PESTEL analysis before, who are local government and policy makers. They have relatively high power in Amazon’s strategy but low interest. Their expectation is based on the own benefits.

They need to keep satisfied Amazon’s corporate level strategy

Corporate level strategy are actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets(Hitt et al., 2012)In the following section, Ansoff’s matrix and BCG matrix will be used to analyse Amazon’s corporate strategies (2007-present).

Ansoff matrix

The Ansoff matrix can be used to analyse Amazon’s corporate level strategies because it has strategically undergone changes in these four areas regarding its products and markets. It increased its product portfolio and expanded into the global market.

Market penetration

Marketing penetration strategies focus on selling more existing products within existing markets. For Amazon, the market penetration strategy is especially reflected from intangible parts. Amazon Consolidate its market position by using loyalty programs, penetrating existing products in existing markets and some promotion methods. For instance, Amazon added a membership programs called “Amazon Prime” which engenders a progress, leading to a stronger brand loyalty. Except that, In May, 2013, Amazon launched its Appstore in Chinese market (Brien, 2013). In June, 2013, Amazon has finally brought the Kindle tablet and e-reader to the Chinese market (Kan, 2013).

Product development

Amazon has focused on expanding the new product categories on its global product range, both tangible and intangible (Birchall, 2010). During 2008, Amazon developed innovative services such as “Amazon currency converter”, etc. In 2009, “Amazon Flexible Payments Service” was announced to expand Amazon’s IT offerings. Additionally, during 2007, Amazon launched many new sites that served customers with specific needs, such as “Endless.com”, etc. And also expand its digital content offerings between 2007 and 2009(Stock, 2011). Except that, since 2007, the acquisition of several online companies such as “Farbic.com”,etc. Recently, Amazon is planning to expand in online grocery business “Amazon Fresh” which will be tested in America first in 2014(Barr, 2013).

Market development

Amazon always keeps exploring new markets. It has established its websites in counties like United States, Canada, etc. In June, 2013, Amazon launched its shopping website in India which means it entered another new market (BBC, 2013). It is also expected to launch its websites in Netherlands in next few years (Dutchdailynews, 2011). Amazon’s fulfillment centers are also established worldwide in order to better serve customers in different markets

. Diversification

Amazon developed from being just an e-retailer to a web-services provider and then to electronic reading device innovator, and now moving into web technology infrastructure (Stock, 2011). Kindle, Kindle Fire and web service can be the outcome of diversification.

BCG matrix

BCG matrix is a useful tool to find the balance of the portfolio and examine the attractiveness of the business units. In this part, the BCG matrix of Amazon will be developed in terms of geographical areas and main product range. In Amazon’s home region, North America accounted for 57.0% of sales in 2012 as the No.1 e-retailers there, net sales were $34.81 billion, and up 30.4% from 2011.This market is the Cash cow for Amazon. Amazon also has a long standing base of operations in Europe. Amazon has been selling since 1998 in the UK and Germany. Currently, there are 8 distributions in the UK and 8 fulfillment centers in Germany. And Amazon has been selling online in Japan since 2000 and operates 11 fulfillment centers recently.

Therefore, Germany, Japan and UK are the three largest international markets for Amazon. In 2012, Amazon’s sales in Germany accounted for 14.3% of Amazon’s total revenue, compared with 10.6% in the UK. The market shares of them are 25% and 23.4% respectively (Dw.de, 2013). Amazon has no plan to invest in these two markets as they are regarded as more mature markets. Therefore, the two largest international markets are the smaller cash cows for Amazon. Japan accounted for about 12.8% of total revenue and the market share was 17% in 2011(Brohan, 2013). Amazon is planning to open more fulfillment centers in next few years and the market share is predicted at 23% in 2016(Holmes, 2012), so Japan is the star. In China Amazon has been operating since 2004 and now it has about 13 distribution centers in China but the sales in China is just at accounted for 5% of total sales (Siwicki, 2013).

This should be a question mark.

Regarding the product range some main products will be used as examples. Amazon has the dominance of printed book selling which account for around 75% market share, a growing number of people are paying more attention to e-books and e-reading device and now Amazon sells more Kindle books than printed books. The growth rate is low. As a result, physical book is the cash cow. Electronics category and computer/ accessories accounted for around 50% market share (Bachfischer, 2013).Amazon’s Kindle Fire accounted for 41.8%of the Android tablet market share. However, Amazon makes no profit on them and they want to make money when people using them (Fiegerman, 2012). The Kindle products should be positioned in the star grid as they have high market share and e-reader and tablet market has high growth rate. Amazon is the largest e-retailer globally and standing at 20% market share in 2011(Businesswire.com, 2011).

The company's product revenue, which includes its traditional online retail business, grew 25% to ?6.88 billion in 2012(Standard.co.uk, 2012). In fact, Amazon’s traditional e-business is in a relatively mature position and it is not beneficial to heavily invest on it. Additionally, as discussed before, the rate of potential e-retailing entrants is high and the growth rate is relatively high. Therefore Amazon would invest a little to keep the market position. The traditional e-commerce should in the middle of the star and cows. In terms of web service section, it is growing dramatically nowadays.

Services revenue surged 57% to $2.04 billion in 2012 which includes its online marketplace for third-party merchants and its cloud computing business Amazon Web Services (Standard.co.uk, 2012). AWS would account for 50% market share in cloud service market in 2015(Darrow, 2013). In fact, these newer businesses are more profitable than Amazon's retail operations, and they still need more investment for further development (Barr, 2012). So they are the bigger stars than traditional business

Evaluation of strategies
TOWS analysis

In this section, a TOWS analysis will be used to thoroughly evaluate the threats and opportunities in the external environment. Based on this and corporate capabilities, the weaknesses and strengths of Amazon in global market will be described.

Threats

Impact of global economic downturn in major markets

As mentioned in the PESTEL analysis, GDP of most European countries decreased in the recent financial crisis, and the US also flatted. These economic conditions may threaten Amazon’s business because of the low purchasing power. The cash cow markets like German market and UK market are shrinking. Moreover, the unstable exchange rate brings Amazon’s loss in international markets.

Fierce competition

As described in the operating environmental analysis, both e retailer industry and web service industry are in a fierce competition. Amazon may be threatened by some other existing competitors who provide cheaper products, stronger brand awareness in some markets. Additionally, potential substitution products as mentioned before may also dilute Amazon’s certain businesses.

Opportunities

Removed barriers on policy

The more relax and open policy brings Amazon an opportunity to provide customers more options of diverse products from all over the world. As European market is a large potential market for Amazon, it is reasonable for Amazon to seize this opportunity and quickly expand into new markets via acquisitions and alliances.

Popularity of online reading and e-readers

As described in Social section (PESTEL), a growing number of people are getting involved in internet. A recent survey shows that 66% of consumers prefer web retailer (Pan, 2012). For instance, there is a dramatic uptrend of internet users in India and the figure is estimated to reach 300 million by 2014, which will become the third largest online user market (Arya, 2011). And people using e-readers are predicted to increase in recent year: Demand in the North America market will have mild growth in 2013, while demand in Japan, Europe and emerging markets will continue to see a boom (Liu, 2013). Both of them provide opportunities for Amazon to promote their e-reader products and attract more customers to shop at Amazon.

Fast development of technology

Information technology based on web applications are evolving and maturing. This bring Amazon opportunities to enhance customer experience and also invest in technology innovation, with more new business come out, like Web service, Kindle fire.

Weakness
Low profit margin

In the first three months in 2013, Amazon’s net income fell 37% from last year. In fact, the sales revenue of Amazon goes up in recent years but the profit margin still remains low. In fact, Amazon’s profitability is strongly affected by investment decisions in terms of new warehouses, devices and data centers. As a result, Amazon shares have underperformed in recent years (Jopso, 2013).This weakness may bring Amazon some unstable issues. For instance, investment attractiveness may become low and employee loyalty may be influenced either.

Impact of legal issues

As mentioned in PESTEL analysis, some players face some legal issues. Amazon has been accused by Securities and Exchange Commission (SEC) for probing into an assessment from Texas of $269 million for uncollected sales taxes between 2005 and 2009. Meanwhile, there are some patent lawsuits with competitors. Amazon has been named in four new patent-infringement lawsuits in 2011(Lamm, 2011).Company’s brand image and reputation can be influenced by these legal issues.

Strengths

Strong brand image

Based on the analysis of Amazon above, Amazon is acting as a powerful global brand which is recognizable because of three parts. The first one is the
wide product range available all over the world and the establishment of international websites; another one is the development of customer base which can help it to weather the economic downturn; and also it is a diversified company who acts as the initiator for online technologies and gets in web service industry.

Well-established customer service and customer relationship

As a customer centric company, Amazon provides excellent service which we concluded in Amazon’s competences before. These enable them to offer specific service to customers and beneficial for building good relationship with customer, meanwhile, increasing customer loyalty.

Abundant resources

As analyzed before in capability section, Amazon has many unique resources like human resource, fulfilment carter, which are the solid foundation of advanced logistics and improvisation of firm strategy and adaptive capabilities.

Significant market presence

As we discussed in corporate level, Amazon accounted for a large market share in main markets, therefore, the strong presence can increase the attractiveness of new sellers and potential investment from other parties. Additionally, providing the company considerable bargaining power towards suppliers and government when entering new markets.

Price leadership

Price is one of Amazon’s three pillar strategy. They try to provide price leadership products with no sacrifice to quality. This contributed to Amazon’s competitive advantage, leading to customer traffic.

Environmental responsibility

As we described in Amazon’s competence, one of the branding strategies, they takes actions to reduce environmental impact. These will enhance the brand image and also meet the stakeholder’s expectations which would drive sales in the long term as well as saving cost.

Evaluation of the suitability of strategies

Suitability can be defined as assessing the key opportunities and constraints of a proposed strategy by looking at the strategic position of an organization (Johnson et al, 2011).To evaluate the suitability of Amazon’s current corporate level strategies, the TOWS matrix will be adopted in this part.

Amazon’s plan of investment in Indian market has a high suitability. From the opportunities perspective, there is an increasing trend of online users in India and also the economic growth remained relatively strong in that market. As discussed the political factors in India, Amazon made full use of the abundant resource and then adjusted their strategy (not sell their own products) and launched its shopping website this year. This strategy has taken advantage of this opportunity and its strengths.

In Chinese market, as we discussed in BCG Matrix, Chinese market is in the question mark. Amazon is planning to build more fulfilment centres in the future which means Amazon has taken the advantage of its recourse and the large market opportunities. However, the competition in Chinese market seems the fiercest one. In this part, Amazon wants to minimize the impact of threats by taking advantage of strengths and opportunities. But Amazon’s strategy does not have a high suitability as they ignored the main reason of weak market share in China, which are the brand awareness and the differentiation among competitors. One of the important strategic choices of Amazon is the heavy investment in technology. In fact, Amazon has taken the advantages to capture the opportunity of technology development.

But on the other side, this part related to its low profit margin. In my opinion, although this strategy cannot minimize the weakness by taking advantage of opportunity, but, in a long term, it is a reasonable strategic plan with high suitability. As analysed in BCG matrix, the product or service which are most related to technology like web service and Kindle, are in the star grid. This is a product line that Amazon should focus its effort in and try to make it become cash cow. Therefore, in a long term, the weakness of low profit margin may be minimized. So far, Amazon’s strategic choice of focusing on and investing in the Asian market in the next few years has a high suitability. As we can conclude from the BCG matrix, major markets have already become cash cows and do not need heavy investment. And also the major markets especially the European markets are facing economic downturn. It would be unreasonable to invest large amount of money in these markets but instead, a harvest approach at the moment in these markets would be more suitable.

Amazon has continuously expanded its product portfolio by offering the widest selection of products. In recent years, it has diversified to other industry as well. This also contributed to its competitive position in the market when facing fierce competition from other companies. Amazon’s corporate mission, customer centric, has a high suitability. They enlarge the strengths of good customer relationship which could minimize the influence of unforeseeable legal problems, in terms of brand reputation and customer loyalty. Amazon’s corporate social responsibility strategy has a very high suitability regarding environment, corporate capabilities, and stakeholders’ expectations. Ample evidence has shown that this kind of plans can deliver a wide range of commercial and operational benefits for many global companies. (businessgreen.com, 2011).In fact, this strategy has taken advantage of Amazon’s strengths to meet stakeholders’ expectations and therefore it has a high suitability.

Conclusion

Amazon is a well-established company with successful strategies. The successes stemmed from the strategic management of its competitive advantages. They set up their strategies from a long-term perspective and consistently improve themselves based on customer feedback. This essay has thoroughly analysed the suitability of Amazon’s corporate level strategies roughly from 2007 to present, based on the assessment of its external environment, strategic capabilities and stakeholder expectations. In the end, subjective recommendations of Amazon’s future strategies have also been presented. In Conclusion, Amazon should maintain its competitive advantages in the market and strengthen its suitable strategy as well as integrate its resources and competence across different functional areas.

Future recommendations:

Attention of Market Penetration in China should be paid in terms of core strategies. In China, awareness needs to be raised. Amazon needs to invest more on promotion such as sponsorship, advertising etc. Moreover, in Chinese market and other international markets, Amazon lacks knowledge of the market. They can quickly build up their knowledge base through acquisition or strategic alliances. Amazon can consider providing a greener delivery option. Although it has already taken the suitable strategy of CSR, it will be better if they do an improvement. They can provide consumers choices when selecting the delivery option.

Standard one or greener one. The former one is the way which Amazon does now and the later one is the items in biodegradable plastic container with an encouragement of box returning for re-using as well as receiving a voucher inside. Amazon could develop their own Facebook page to encourage interactions on certain products, especial the ones that are targeted to younger group. As discussed in PESTEL, social networking website is the trend and Amazon should take advantage of it.

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