Amazon global strategy
Multinational companies are organizations that are based in more than one country where its operations and businesses are done similarly in the respective countries where it is situated. The growth of the international market for locally produced goods has led to the creation and diversification of most organizations worldwide. To meet the demands of customers from most parts of the world, the multinational companies decided not to major on exports only but to create their branches in those countries to improve on their distribution (Shenkar, Luo, & Chi, 2014). Many companies have nowadays strategized ongoing international due to the local competition which sidelines most of their operations and business success. It is believed that the international market more so in the developing countries have very high business success rates due to the high demand for goods (Dunning, 2013).
Amazon also has many competitors today including Alibaba, Otto, JD, eBay, Priceline, Walmart, Flipkart, Costco, Home Depot, Kroger, Netflix, Tesco, iTunes, Target among others. The Amazon Company also operates in 16 countries including the US, France, Canada, UK, Spain, Japan, China, Germany, Italy, and Morocco among others. Amazon’s mission statement is “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience. ” Amazon’s corporate vision is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online. ” (Amazon, 2019) Amazon’s Outer- organizational environment in the United States Businesses depend much on the external environment which is so influential in the success of the particular organization.
Differences PESTEL Porter’s five forces Analyses how macro- environment factors many affect business organizations Analyses the power and influence of the operating factors of a business such as competitors, consumers and suppliers Helps in determining the impacts of the environmental factors on the business Helps in management decision making Examines the political, economic, social, technological, environmental and legal factors of business Identifies the competition, buyer power, supplier power and new entrants into the market Amazon’s PESTEL analysis PESTEL analysis is an analytical framework used to scan the external business environment and analyze how the external components of the environment might affect businesses. Moreover, this framework is very significant for strategic management and conducting market research for an organization. It encompasses political, economic, social, technological, environmental and legal factors.
Amazon is one of the companies that require a proper PESTEL analysis which will be discussed in this section satisfactorily. Political factors These are factors that revolve around the politics of the United States and their impacts on Amazon. The government support of e-commerce could also be a threat because of high competitions from other e-commerce companies. • There are also no trade restrictions in the United States more so on products dealt by Amazon Company. The company also benefits from the good international relationships the United States has created with other consumer countries worldwide. Economic factors The Amazon Company is profoundly affected by the economic situations of the places it is based. In the United States, the economic situation is believed to trend and change time to time which might affect the organization negatively or positively.
Economic growth has also led to the expansion of Amazon’s market in the USA significantly making to increase its operations all over the country. Social factors The performance of Amazon as an online retailer is increasingly determined by social factors surrounding the market of the organization. Some of the social factors affecting the Amazon in the USA include: • There is a significant increase in online purchasing habits among consumers in the USA. Most of the consumers have shifted to online stores and shops to purchase products through the internet and get deliveries at their doorsteps because it is easier than going physically to the shops to purchase goods. This has increased the profitability and customer base of the company. However, a high population growth rate leads to high growth of the market and an increase in the consumer base.
The number of consumers will go high, and the company will struggle to meet the demands by increasing its supply in the market thus high profitability. Technological factors Technological factors and advancements in the 21st century significantly impact on the Amazon Company. Technology which is believed to be the centrality of online trading and commerce affects the trends in the external environment of the Amazon Company. They are as follows • Increased use of technology and the internet in the USA has facilitated operations in the Amazon Company. Environmental factors The conditions of the natural environment impact significantly on Amazon’s operations. There are many ecological changes which impacts on the company as well. Some of the environmental factors include the following: • The increase in the interests of environmental concerns and programs has given the Amazon Company an opportunity to social responsibility.
The Amazon Company participates actively in environmental conservation and is drawn by a lot of interest to the natural environment of the USA. • There is an increasing emphasis on business sustainability in the United States. Moreover, the external business environment factors change so quickly which could not give stable results for strategy formation (Verbeke, 2013). Moreover, this approach does not always consider a lot of data as most of the actual data about the environment is always not easy to find. Finally, there is a high risk of mishandling information when using this framework to explain the external business environment. Corporate-level strategies for Amazon The primary plan for the Amazon Company is concentric diversification which is based on following a cost leadership goal and leveraging technology which will, in turn, increase the value to the customers at lower prices.
Since the company has been a leader in most of the market segments, it will have ample time in implementing this strategy which is believed to yield more to the organization (Issa, Chang, & Issa, 2010). Facilitating production will increase the output to match the demand of the products in the market. Diversified growth- the company will sell its products to new markets all over by diversifying its target segments and audience for its products. Creation of value proposition- Amazon company should focus on creating a value for their customers as most of them would like to get the value for their money. Creation of the value with all the available resource will be an added advantage to the sustainability of the company.
Product expansion strategy- Amazon company will consider innovation of more products and modifying the existing ones to meet the consumer needs in the market. Business level strategy for Amazon The main business-level strategy of the Amazon Company is to gain a competitive advantage through cost leadership, differentiation and focus. We shall consider the Ansoff matrix and the five porter’s analysis to form strategies of the Amazon Company as illustrated below. PORTER’S FIVE FORCES ANSOFF MATRIX Due to the high competitor rivalry, Amazon should consider attracting more customers through price cuts and give the suppliers a good deal. Amazon should consider various factors to improve in market penetration for example improving promotion and distribution strategies and price decrease (Hussain, 2013). Considering supplier alternatives will help the Amazon company in fighting the supplier power thus getting good deals form tis suppliers.
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