Current Strategies
Discuss about the strategic management in relation with the Amazon Inc.
Amazon Inc. is an American e-commerce and cloud computing company headquartered in Seattle, Washington. It was founded in 1994 by Jeff Bezos and today, company has gained the position of the largest internet retailer across the globe in terms of revenues and market capitalisation. In terms of total sales, organization stands on second position after Alibaba Group. Amazon.com initially started as the online book seller and with the passing time, Jeff Bezos, founder and current CEO of the organization diversified its products offerings and started selling videos downloads, streaming, MP3, software, games, food items, toys, etc. Jeff Bezos once dreamt of selling all items over internet and today, Amazon is dealing in millions of products and services. Their target market segments have been increased with wide range of products. Apart from this, organization has attained the peak position in terms of cloud infrastructure services which includes IaaS and PaaS). Amazon also sells certain low-end products under its in-house brand AmazonBasics. Company surpassed Walmart in 2015 as being the most valuable retailer in the United States by market capitalisation (Amazon, 2018).
Organizational success could be determined with its strategies, policies and benchmarks. Apart from this, the major component which affects organizational success is its effective and efficient human resources. Amazon relies on its employees and the same is expected by them in terms of effective performance which could match up with the expectations of the organization. Along with this, strategic management plays vital role in organizational success and development. Since 1994, Amazon has expanded its business in various parts of the globe and the main reason behind this is the selection of strategic management approaches and the strategies adopted to accomplish the desired goals and objectives (Hill, Jones & Schilling, 2014).
Amazon has adopted set of effective strategies in relation with accomplishing their operations in an effective manner. Strategies adopted by Amazon are effective as well as efficient and these are developed on the basis of organizational standards, policies and benchmarks. With the help of these strategies, organization has enhanced its efficiency and management also believes in innovation and creative strategies in order to enhance organizational performance. For this, employees are provided with all resources which are required to think out of the box as well as to gain competitive advantage in the dynamic and competitive business environment (Wheelen, Hunger, Hoffman & Bamford, 2017). Following are some of the current strategies adopted by organization:
Corporate Strategy
Corporate strategy is the medium of ascertaining crucial factors for attaining competitive advantage in the business environment in which company operates. In relation with Amazon’s operations, corporate strategy helps the organization to determine effective factors through which competitive advantage could be attained along with enhancing organizational performance. This strategy concerns every facet of business in relation with adding more than the sum of all other business units (Lasserre, 2017). There are four generic strategies which are included in a corporate strategy which is as follows:
- Portfolio management: This is an essential part of corporate strategy and it is used by most of the organizations. Main motive of this strategy is based on diversification strategy through acquisition. However, acquisitions could be done completely in new markets and corporate managers will focus over their own personal expertise rather focusing on new markets. New acquired firms should be run on autonomous basis so that the teams could focus over their own work. Amazon Inc. has various sub units whose operations are completely different from each other and for every unit, separate team performs its functions and these teams are rewarded on the basis of unit results (Michael, Storey & Thomas, 2017).
- Restructuring: This element is dissimilar to the portfolio management as it involves overall restructuring of the business. Corporate manager acquire a new business unit in order to restrict the overall business with the objective of attaining positive outcomes. This strategy is useful and generates positive outcomes when underperforming companies are acquired which are going through threat of liquidation. Amazon has acquired various companies which were suffering from low or negative profits and soon they were going towards liquidation. Audible, Zappos, etc. are certain companies acquired by Amazon and it is cheap mode of acquisition and it will help the organization towards growth and development (Luthans & Doh, 2018).
- Transferring skills: Above two strategies are majorly dependent over acquisition and restructuring of companies in order to expand organizational business in other areas which has not relevance with organizational main business operations. With the help of transferring skills, interaction develops amongst the sub-units of the organization so that they could get inter connected with each other (Fitzroy, Hulbert & O’Shannassy, 2016).
It is an effective approach which is implemented within workplace for attainment of desired goals and objectives. In addition to this, a business strategy is adopted for minimum 3-5 years in order to enhance organizational performance and it encompasses three generic strategies i.e. retrenchment, growth and globalisation. Globalisation and growth, both strategies focus over expansion of business operations at domestic as well as at international level. Apart from this, retrenchment strategy acts as defensive strategy for organization through which the acquired position in the competitive business environment could be defended along with generating further opportunities to gain the leading position (Percy & Elliott, 2016). Main objective of business strategy is attainment of competitive advantage and in relation with this, business strategies has various ways which are used by Amazon to gain competitive advantage such as lowering down the prices of products, implementing differentiation strategies, etc. Business strategy is different from corporate strategy and it invites employees to provide views in decision making process.
This strategy is adopted by Amazon so that it could sustain for a longer period of time in the dynamic and competitive business environment. Every business’ primary objective is to sustain for a longer period of time so that it could establish its effective position in the target market. There are five key attributes which are main objective of operational strategy to attain:
- Cost: This is the ability of an organization of producing at low rates.
- Quality: Ability of the organization to produce with appropriate specifications and as per quality standards (Rugman & Verbeke, 2017).
- Speed: This is the ability of an organization to meet its target customer’s needs in appropriate time period.
- Dependability: This means what organization shows, it delivers the same. As per promises made to the customers, organization delivers the same products.
- Flexibility: It is an organizational capability to amend its operations as per changing trends and dynamic business environment.
These strategies are suitable as per Amazon’s operations because it is continuously expanding its operational area in different business areas. There are numerous factors which have great impact over organizational performance such as environmental risk management, Stakeholder’s involvement and support, human capital, intellectual capital, organizational learning, performance measurements, strategic integration of human resources, etc. (Sull, Turconi, Sull & Yoder, 2018). In a study on impact of human resources over supply chain management and organizational performance, it has been found that supply chain management has direct influence on supply chain management outcomes and it has indirect influence on organizational performance of Amazon. Apart from these success factors, following are crucial and critical success factors behind Amazon’s continuous growth and development in different parts of the globe:
- Management: It is one of the critical success factors for Amazon’s performance. In organizational success, vital role is played by the organization’s CEO Jeff Bezos and by his management team. Bezos is known for his unique leadership style and effective business understating. With these capabilities, organization has attained immense success in various big parts of the globe. Jeff Bezos believes in work life harmony which is significantly different and entirely new concept in comparison to work life balance. Work life balance is more of a deliberating term whereas; work life harmony encompasses the entire aspects of personal and professional life (Johnson, 2016).
- Innovation: Amazon is not the first online retailing company but it is one of the most innovative companies and this is the major factor behind organizational success and growth. Amazon started its operations by selling books but it does not stay that way only. They focused on diversifying their product offerings and soon or later, Amazon becomes “the everything store” which was the dream of company’s founder. Amazon has invented various innovative products and Kindle is one of them. It is sure that the organization does not break other e-readers to market, but it became one of the most popular brands. Amazon Prime, drone, Alexa, firefly, Amazon web services, etc. are some of the great innovations made by the Amazon which has lead the organization towards sustainable growth and development (Leonidou, Fotiadis, Christodoulides, Spyropoulou & Katsikeas, 2015).
- Customer service: Amazon constantly ranks on the leading position in terms of customer satisfaction because Jeff Bezos believes that happy customers will be the major success factor for the organization. He believes in special treatment with customers and for the same reason organization has kept customers on peak position. Apart from this, he believes in focusing over customers and their demand rather focusing over competitors and their strategies. Main motive behind putting customer satisfaction on top of the list is that happy customer become positive brand advocates for the brand, they spread positive word of mouth about the company not only to their peers, colleagues and families, but also help the brand to garner positive sentiments on the social media (Moradi, Eskandari & Hosseinian, 2015).
- Execution: Organization has focused over implementing right decisions at right time. Organization has always focused over delivering the products as per target customer’s demands. In relation to this, organization has set up their distribution centres in all parts where they operates and this helps the organization to fulfil its customer’s needs and wants on quick basis. Apart from this, they have adopted several strategies to make vendor relations effective and efficient through which they could provide discount offers to their target customers. Apart from this, organization is also focusing over brick and mortar stores in order to make their physical presence. With regards to the physical appearance, organization has opened their first store in New York City (Parmenter, 2015).
- Diversification: Jeff Bezos always wanted to make Amazon “the everything store” and from selling to books in initial period, now Amazon delivers everything from soup to nuts. According to research, it has been found that while searching for soups, more than 3,000 results revealed for vegetable soup. Company deals in various product categories such as electricity, music, health and beauty, grocery, clothing, etc. Organizational success depends upon the risk taking capacity and Jeff Bezos has taken all possible risks in order to make Amazon as the largest retailer as e-commerce company. Organization has faces several critical challenges and issues but they have also adopted effective strategies to deal with those issues in an appropriate manner along with gaining positive outcomes (Sunley & Martin, 2017).
Business Strategy
In order to implement the strategies in business operations, it is required to manage critical factors such as leadership, people, culture and capabilities in an effective and appropriate manner. All these factors are essential and have a great impact on strategic management process. Especially these factors affects in determination of organizational vision and mission. Further, these strategies facilitate organization to execute these strategies along with attaining vision of the organization (Zou, Kumaraswamy, Chung & Wong, 2014).
Implementing corporate, business and operational strategy requires team efforts along with an effective and efficient team leader. Every member of the change management is responsible for its own actions, thus, it is necessary for the organization to understand the role of leadership in strategy implementation process in relevance with making delegating responsibilities more effective (Shieh, Yeh & Yeh, 2016).
- Involvement: When a new policy or strategy is being implemented within the workplace, participation from all departments of organization is required in order to enhance the efficiency of organization. Team and the leaders are required to identify that what teams will be affected through the implementation of new policies so that representatives could be hired from each department which will be affected by the implementation of strategy. Representatives of each group will share their views while implementing the strategy so that the desired goals could be attained in an effective and appropriate manner. A structure requires to be created by management which could identify various group leaders, their responsibilities and the accountability system which will effectively meet up with the requirements of the organization in relevance with the implementation of new strategy (Krotov, 2015).
- Interest: While implementing a new strategy or while adopting change management, involvement from every employee should be recognised along with consent from them. In relevance with getting consent from all employees towards implementation of new policy or change management, leaders play vital role in explaining the significance of new strategy in the workplace to employees (Chen, Schütz, Kazman & Matthes, 2016).
- Monitoring: While implementing new strategies, it is necessary for the management to analyse dynamic business environment in order to meet the goals of the organization. Leader and the other team members are responsible for implementing monitoring system so that as per the requirement of implementation system, necessary changes could be made in order to enhance the efficiency of implementation system (Labes, Hanner & Zarnekow, 2015).
Culture also plays vital role in the strategic management, thus, Amazon has adopted dynamic strategies so that while implementing new strategies, organizational culture could align with the requirements of the strategy. This will help the organization to enhance its efficiency along with developing effective culture within the workplace. Strategic management is considered as the planning process and in this process; company leaders formulate strategies in order to accomplishing goals and objectives. This has mainly four basic elements i.e. environmental scanning, strategy implementation, strategy formulation and strategy evaluation (Ritchie, Kirchner, Parker, Curran, Fortney, Pitcock & Kilbourne, 2015). With the help of these four steps, leaders determine organizational current situation, analyse strategies, implementation of strategies and review their effectiveness. In relevance with this, organizational culture is most influencing tool for company’s success and failure. An effective and strong organizational culture is one of the most suitable competitive strategies for an organization. Organizational culture includes workplace values, methods adopted by organization and the policies of organization for doing things. These attributes contribute towards enhancing organizational performance along with imposition of organizational strategies in an effective manner (Hubbard, Rice & Galvin, 2014).
Organizational culture has unique advantage in making strategic management efficient and effective, thus, Amazon has also given culture an effective place while developing and implementing strategies. This helps the Amazon to match up with the requirements of the new strategies in relevance with the cultural factors. For example, if organization will not amend its culture as per the current environmental conditions, organization will not be able to attain its desired goals and objectives. Apart from the organizational culture, Amazon also focuses over its external as well as internal strategies in support with the culture and to make balance between external as well as internal strategic elements. Corporate missions and visions have direct link with the strategic management, thus, balancing these attributes with organizational culture is necessary element for enhancing organizational performance (Hettema, Ernst, Williams & Miller, 2014).
Functional/Operational Strategy
People and capabilities are the most crucial elements for an organization. These two elements are effective in relation with attaining goals and objectives. Amazon hires people with customer centric approaches and in relation with the organizational standards and policies. Company’s primary mission and vision is to satisfy customer’s needs and with the help of customer centric approach, organization has made an effective image in the e-commerce industry. While implementing the new strategies, organization does not find many issues and challenges because their capabilities and people are efficient enough to gain positive outcomes for the organization. Amazon’s strengths and weaknesses could be determined with these attributes and in relation with this; organization could attain its desired goals and objectives in accordance with the strategic management (Yashin, Andreeva, Serebrjakov & Bagautdinova, 2015).
While implementing strategies, organization faces several challenges which affect organizational performance. This leads to generate gaps between expectation of the organization and actual performance attained. Following are certain issues in relation with implementation of strategies:
- Resistance from employees: This is the greatest challenge for an organization. If implementation of strategies requires adjusting employees, resistance to change will takes place. In order to overcome from these issues and challenges, it is required for the managers to involve employees in the decision making process in order to gain positive outcomes. For example: In the initial period, Amazon’s CEO Jeff Bezos took a decision in relation with diversifying its product offerings and the decision was to sell toys. For this, huge stock of toys was purchased from wholesales and toys manufacturers in order to deliver toys directly to consumers. Under this decision, advisory experts were also not involved by Jeff Bezos and later on this decision lead the organization towards huge losses (Chang, 2016).
- Communication gap: If top level management will implement strategies without taking consent from employees or without informing employees prior to the implementation of strategies, employees will not be able to cope up with the expectations of the organization. Thus, it will lead to generate disputes amongst the organization which could also affect organizational performance in negative manner. In order to gain positive outcomes, it is necessary for the organization to communicate and provide relevant information to the employees so that expected outcomes could be attained (Nilsen, 2015).
- Sufficient time to implement strategy (overnight implementation): If organization will implement strategy without providing sufficient information to the employees, desired outcomes will not be generated. Overnight implementation of strategies always affects employees’ mind-sets. In order to obtain positive outcomes from the implemented strategies, organization is required to provide appropriate training and development programs so that efficiency of employees could be enhanced in relevance with organizational goals and objectives (Galliers & Leidner, 2014).
Every organization should consider certain policies and standards in relevance with the implementation of strategies so that the goals and objectives could be attained in an effective manner. Amazon believes in taking their employees up with themselves. Thus, they are required to adopt certain effective measures so that positive outcomes could be originated with the implementation of strategies. Following are recommendations to the organization through which implementation of strategies could be enhanced:
- Communicating with employees: Before implementing strategies, organization could ask from the employees and the departments which will be affected through implementation of strategies. This will help the organization to gather consent from employees regarding implementation of new strategies at workplace.
- Providing training and development programs: It has been recommended to the employees that before implementing the new strategies, it is necessary for the organization to provide appropriate training and development sessions to the employee who will be affected by the implementation. This will help the employees to cope up with the requirements of organization which will ultimately help the organization to gain positive outcomes.
- Adopting effective measures for making efficient workplace: In order to implement new strategies at workplace with the objective of upliftment of organizational performance. Effective workplace environment leads to build appropriate and effective relation with the employees through which team bonding, interaction amongst team members, etc. could be developed at the workplace. Organization will be able to enhance its performance along with making its employees effective and efficient.
Conclusion
From the aforesaid information, it can be concluded that strategic management plays vital role in uplifting organizational image at workplace. In relation with making strategic management process effective and efficient, it is required for the organization to analyse certain aspects such as internal and external business environmental factors, organizational standards and policies, etc. These analyses will help the organization to gain its desired goals and objectives along with making their strategies effective as well as efficient. In this report, current strategies of Amazon have been discussed along with the suitability of organizational strategies in relevance with the goals and objectives. Further report also concludes implementation of the strategies and the key issues faced by the organization while implementing strategies.
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