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Business level and corporate level strategies comprise the two distinct levels of organizational strategy. The two strategies significantly contribute to the success of any business, especially in a competitive environment. In fact, the corporate strategy focuses on the questions related to the choice of business to compete while business level strategy deals with the ways of competing in a particular business. Since the plans are developed for the purpose of survival and competition, corporations rarely compete but the major competition originates from the products or services produced by the specific business unit. The separate business unit products contribute to the overall purpose of the corporation and its ability to compete for survival. Although the business and corporate levels can be observed as separate, they influence each other and work together with the intention of making the corporation and the business units successful. Thus, the aim of the paper includes analyzing Amazon Inc. business and corporate level strategies. Amazon Inc. is listed among the top companies in the electronic commerce industry within the United States and globally. Moreover, the electronic commerce competitive environment will also be analyzed with the intention of identifying the strategies both corporate and business ones with the hugest potential for a long-term success.
Business Level Strategies
All steps taken to gain or sustain and utilize a competitive advantage comprise the business level strategies. The business strategies are formulated after implementing an analysis of the production line, target customer, and the competition dynamics (Mckeown, 2015). The tangible strategic resources contributing to the business strategy include data centers, employees, and fulfillment centers. Moreover, brand equity, reputation, patents, and technologies are the intangible strategic resources. Amazon exploits the core competencies to maintain a sustainable competitive advantage (Amazon. 2015). Differentiator process, cost leadership through available and low priced products, technological capability sustained through research and development contribute to the firm’s competitive advantages. However, corporate goals, leadership, reputation, brand name, and technological innovation are difficult to substitute considering their level of development and the investment made for sustainability (Mckeown, 2015). Nevertheless, Amazon experiences some competition disadvantages because of the ease with which e-commerce platforms can be imitated. The business is also significantly dependent on the partners especially in delivering their products to the customers (Amazon. 2015). Too many sectors of activity combined with government regulations and lawsuits are also qualified as competitive disadvantages.
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Under the generic business strategy, cost leadership is combined with the differentiated medium to create a large differentiator advantage. The company gains advantage based on the perceived uniqueness of the product value affordability and services efficiency. In addition, the fusion strategy is also referred to as the best cost approach that offers the opportunity to pursue differentiation and low-cost leadership simultaneously (Amazon. 2015). The affordable and differentiated products create customer’s loyalty that erodes the rising completion from Netflix and eBay. Moreover, the uniqueness and reliability of Amazon products reduce the client's sensitivity to pricing. If eBay or Barnes & Noble introduce substitute products in the market, Amazon will remain competitive because of its loyal customers. Substantial barriers to substitutes’ potential entrance exist because of uniqueness and affordability already enjoyed by the company. Although differentiations often increase the cost, the firm can still pass it to the loyal customers without significant impact on its market share. In fact, Amazon has faced numerous challenges in the past few years, especially because of global financial crisis, disruptive technologies, and diminishing shareholders sentiments. The company has remained afloat because of its brand stability and strong corporate culture.
Besides, technological research and development is the most important long-term success strategy of the company. The extensive investment in the strategy is justified considering that organizational culture identifies technologies as a fundamental element in the consumer business (Amazon. 2015). The appropriateness of the strategy can be proved based on the previous years’ implementation growing success. For instance, advancement in technology makes the company more efficient in meeting the customers’ needs. The improved efficiency always results in the reduced operation cost, which in turn enables the company to establish a cost leadership through affordability (Thompson, & Martin, 2005).
Furthermore, sustained extensive R&D investment provides the company with the opportunity of developing a better innovation to revolutionize the customer experience. Similarly, technology eliminates the needs to segment the market upon demographic and human behavior conventional approaches (Thompson, & Martin, 2005). Artificial intelligence tools integrated into the Amazon websites enable the firm to mine valuable customer’s information like the purchase and search patterns. The data create a virtual sales person by recommending products based on the specific search trends. Besides, the potential of R&D technology has been illustrated before through the launch of Kindle. The service has revolutionized the books’ market and increased the books’ titles to over 200,000 down from 90,000 in previous years (Amazon, 2015). The impact of technology on the modern market cannot be underestimated making the strategy both viable and potent as a long-term success strategy.
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Corporate Level Strategies
Diversification occurs when business identifies an opportunity outside its area of operation and takes it. Amazon started as an online bookstore but to date has diversified with the latest area of business including video services and Kindle (Amazon, 2015). As a result of the diversification, a need for corporate strategy arose. The effective corporate strategies contribute to the success of the individual business unit under the umbrella company. From a single online bookstore business, Amazon has diversified to become the world’s largest and most valued online retailer until it lost its position to Alibaba. The growth remains central to the Amazon strategy (Amazon, 2015). Moreover, the company continually improves the customers’ experience through its various business units and websites. The various innovative products are fed to the new customers. The company’s brand name has been formed and grown with the development of the organization. The diverse changes made the company’s corporate logo illustrating the changing business dynamics and strategic expertise and flexibility.
Furthermore, acquisitions and alliances contribute a lot towards increasing the business customer bases. Amazon has acquired numerous entities as a way of extending products and services range. Acquisitions also enhance the firm’s capital base and eliminate to some extent the cutthroat competition that exists in the online retail business (Thompson, & Martin, 2005). Some of the acquired entities include Junglee.com, Planetall.com, Musicfile.com, Bibliofind.com, Fabric.com, INOVA Software, Audible, IMBD, and exchange.com. These acquisitions have improved the company’s ability to compete with eBay, Apple, and Google. Similarly, the new entities promoted the company’s retail technology software services (Thompson, & Martin, 2005). Additionally, the corporate strategy has also helped the firm get into strategic alliances with Diane Von Furstenberg and National Basketball Association. Amazon Central growth strategies contribute significantly to its ability to gain an edge over the fierce competitors.
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Amazon core goals include becoming the most customer-centric e-commerce company by providing its clients with all their online purchased needs. Competitive prices, convenience and vast selection have been identified as fundamental elements of the efforts to achieve global e-commerce industry dominance (Amazon, 2015). In addition, the company commits to providing affordable and quality products and services around the globe. Some of the major services under this strategy contain the widespread app distribution to over two hundred countries, Amazon currency converter, software developer, and cloud computing services. The third pillar entails customers’ satisfaction assessed through feedback forms and online reviews. To that end, the prime membership promotes customer loyalty. Customer reviews enable the new client to get the exact products. Moreover, R&D and innovation extensive investments provide the necessary foundation for the various corporate level strategies (Amazon, 2015). Amazon concentric diversification can also be evidenced in its online accessibility through web-based technologies.
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Customer satisfaction through customer centric approach to business forms Amazon’s most significant corporate strategy as evidenced in the gradual transformation in the vision statement. The strategy is justified based on the fact that establishing the customer base and loyalty improves all the business units under the umbrella company (Mckeown, 2015). Besides, technologies help a lot in achieving this major corporate goal by providing reliable data on customers’ needs. Being aware of the wants, the organization can satisfactorily meet the needs through tailor-made products based on the popularity of individual need. Furthermore, success of the company depends on the four distinct consumer groups that include enterprises, seller, developer, and consumer customers.
Amazon diversifications make it difficult to name its one single competitor. The broad segment within which the company operates has different major competitors. In the media front, Amazon competes with eBay, Netflix, Time Warner Cable among others. Best Buy, RadioShack Wal-Mart, and Family Dollar are serious competitors along the electronic and other merchandise segments. Barnes & Noble has been the main competitor in providing books and online reading software and still remains one. Moreover, Alibaba Group has established its presence on the global competition and replaced Amazon as the most valued e-commerce retailer (Mckeown, 2015). Assessing the competitors on the basis of geographic market coverage, products breath, and business scope, Barnes & Noble, eBay, and Wal-Mart are the major ones.
Wal-Mart enjoys the world’s largest retail chain. Low-cost management in the value chain combined with cost leadership strategy helps Wal-Mart market its products globally at the lowest prices either through physical stores or e-commerce. Similarly, eBay remains the biggest online auction house and concentrates on service provision. It operates e-commerce as an intermediary in the absence of physical infrastructure and inventories, hence, employing cost leadership strategy. Moreover, provision of high-quality service security, vast products variety, and e-commerce services assist eBay in applying differentiation strategy in its competition. Barnes & Noble is the largest American book retailer operating both physical retail centers and online business. Barnes & Noble offers Amazon the intense competition in the book industry (Mckeown, 2015). Just like Amazon, Barnes & Noble utilizes a combination of cost leadership/differentiation strategy to win the price-sensitive consumer market by providing rarely available books at less expensive prices.
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The major competitors intend to compete and establish a good strategic position both physically and on the e-commerce platform in the nearest future. As a result, they have to increase profitability, products’ variety and gain a bigger market share so as to compete with Amazon through differentiation, cost leadership, and competitive pricing. The major assumption made in this industry lies in the demand for online shopping which will continually grow. Some of the competitors have the global presence with stable performance. Such advantages create chances for the strategic alliance in order to increase the customer base market share (Mckeown, 2015). Furthermore, differentiated services combined with low prices provide competitors with the capabilities to unseat Amazon. Nevertheless, Amazon is expected to continue increasing its competitiveness, in particular through technologies R&D. In addition, Amazon will continue to be more successful in the long-term at these levels because it has the most extensive investment in R&D. If the company overcomes its present challenges swiftly, it will harness its core competencies to maximize its competitive advantages.
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Amazon would do best in a slow cycle market because its technologies like the one-click purchase and Kindle would be shielded from imitation for a significant period. The competitors would be afraid of imitating because of the hefty fine imposed as imitation cost in slow-cycle markets. The competitive advantages will be shielded, hence, becoming more sustainable (Mckeown, 2015). On the other hand, the fast-cycle market provides no shielding from the competitors. Amazon would find it hard to retain its market leadership since the competitors would quickly copy the inventions eliminating the competitive advantages. Finally, the competitors with greater market value such as Alibaba would quickly take under control the market share enjoyed by Amazon.
To sum up, taking into account the information obtained in relation to Amazon business strategy, corporate strategy, and competitive environment, innovation, market and product development as well as concentrated growth, the company has the potential to remain competitive in the future. Slow-cycle will also work better for the market leaders while fast-cycle in most cases will benefit the upcoming competitors. Moreover, a long-term investment in innovation and customer experience through R&D and strategic flexibility provides the company with an opportunity to sustain its core competitive advantages.