Strategic Business Management: A Case Study Of Amazon In North America

Strategic Business Management and Amazon’s Performance in North America

Strategic business management is effective to evaluate the business goals and objectives with the ongoing performances of the company. It further develops the plans for future analyzing the current performances for the company to attract better effectiveness by the business operations. As analyzed by Adeniran and Obembe (2020), strategic management is the way of managing people by the managers in an organization to meet the goals and objectives of the organization. Continuous evaluation and monitoring of the business operations to achieve the desired goals have been involved with the scenario to attract better organizational performances. The present study aimed to discuss the strategic business management followed by Amazon in North America to evaluate the managerial structure. The study has presented the company information in detail by engaging the market scenario for Amazon in North America. The company’s strategic position has been elaborated through PESEL analysis by understanding the market environment in a proper way. Identification of the current strategies by using SBU involving generic, interactive strategies, business life cycle, corporate strategies, and use of theories and models have been performed. Evaluation of the strategies has been involved in the study by mentioning the gaps. Several recommendations have been entitled in the present essay study to attract better effectiveness for Amazon.

Strategic management is effective in business operations that offer all the directions for performing the business operation. This is further related to developing plans, policies, and regulations for enhancing the business. It is also associated with the arrangement of material and human resources to perform the business activities to attract better growth for the company. Strategic planning further involves human resource management practices to develop the work environment. It is developing the work culture that further results in better performance, Job Satisfaction, And Job Retention rate among the employees in an organization. It is also beneficial in terms of attracting competitive advantages in the market scenario. It is further related to the systematic analysis of the goals and objectives set by the company or organization. In terms of strategic management, Amazon has witnessed an increase of 37.9% in 2021, whereas the global sales growth for the company was 9.2%. The total worth value for Amazon is currently $1446.82 billion, and further, it is growing rapidly due to its high consumer satisfaction rate. The company focus on the quality of the products to address the consumers’ needs, expectations, and requirements. The company has further engaged in technological advances such as Artificial Intelligence, sensor technology, computer vision, voice, and edge computing. Amazon has further committed 24.8 million dollars for benefiting the local affordable homes to empower the local communities with better livelihood. Since 2010, Amazon has invested almost 530 dollars in the USA to empower and compensate the employees working for Amazon. Amazon is a consumer-centric company that emphasizes on positive experiences of the consumer throughout the planet. Multiple partners are engaged with the supply chain for the present company to reduce the prices of the products for the consumers. The company further follows human rights in an accurate manner while handling the workforces present in the company to attract better outcomes.

Political Factors Affecting Amazon’s Business

Company Overview

Amazon is a retail giant in North America that delivers essential products, including retail products, electronics, books, entertainment, and many more. The company has further invested 1.2 billion dollars in educating the employees to attract better efficiency while performing the production activities to satisfy the consumers (Aboutamazon.com, 2022). In terms of social and corporate responsibilities, the company has further donated 19 billion dollars for Covid related costs to ensure the health and safety of the consumers. The company has further donated 1 million or more energy supplies to help the people affected by natural disasters. As critically evaluated by Chevalier (2022), Amazon is present in North America, attracting maximum sales growth from the global perspective.

Political Factors

Political factor such as taxation policies, trade regulations, employment legislation, and stability of the government impacts the businesses to upgrade the growth rate. Further, while performing macro-analysis for Amazon, it is needed to discuss the political influences on the business. As opined by Hayashi et al. (2019), the land use of Mangrove Forest in the USA further develops the GDP rate of the country that is further benefiting Amazon with better effectiveness. Governmental support regarding the E-commerce disclosed several opportunities for Amazon. The company has further emphasized the cyber-security that is fostered by the government while performing the business operation to secure the database of the North American people.

Economic Factors

Economic factors such as GDP rate, exchange rate, wages, tax rate are the major drivers of the profitability of an organization. Thus, it is needed to be analyzed to attract maximum benefits or to address the issues related to this segment. The current Covid scenario and associated economic recession have further affected the business operations of Amazon. As described by Tallman (2019), the insecurity regarding the water resources is affecting the country’s economy further affecting the scenario for Amazon. Economic stability in the country further benefits the company with better business outcomes.

Social Factors

Social factors such as social trends, thoughts, beliefs, and so on are equally important for the companies. The enhancing gap between the rich and poor present in the country further increases the threat for the company while offering product bases in a certain range. Presently enhancing the online shopping trend is further changing the marketing scenario for the company. It is also causing changes in consumer behavior while introducing digital trends. As argued by Goel et al. (2020), social elements impact the consumers’ interaction. Apart from that, after introducing Covid the consumers have observed to change their shopping trends. People, over there are more focused on the essential items compared to luxury shopping.

Technological Factors

The technological scenario in the country is further facilitating the company with better benefits. It is further adding some threats in terms of data security accurate technological implementation by the company and so on. The development of Information Communication technology is further exploring the business in an international business. E-retail technologies are growing rapidly that can be an opportunity for Amazon to present in North America. Apart from that, enhancing the effectiveness of Artificial intelligence, Visual Reality, Blockchain technology, Internet of Things are benefiting the present company to act in a proper manner. Further, several risks as data security, cyber-crime are engaged with the present scenario.

Economic Factors Affecting Amazon’s Business

Environmental Factors

Environmental factors such as environmental well-being, pollution, waste generation, and so on are equally significant for the brand image of Amazon to attract consumer satisfaction. The people in North America are growing interested in environmental programs and protection that are influencing the business with a sustainable approach and greater CSR activities. The pollutions in terms of carbon emission, greenhouse gas emissions are needed to be addressed by the business. As opined by Silva et al. (2020), environmental variables further affect the firming activities by Amazon. People in North America further prefer purchasing products or items from companies attracting social and corporate responsibility. Thus, the environmental factors are engaging Amazon to follow the CSR activities in a better way.

Legal Factors

Legal factors such as rules, legislations related to the business, and delivering products are influencing the business operations. The company needs to ensure the maintenance of the food regulations to ensure public health and safety. Apart from that changing regulations in terms of import and export services are needed to be maintained by the company to continue the business in North America. Additionally, the regulations associated with environmental protection are needed to be addressed by the company to attract effectiveness in the business operations.

The competitors present in the retail sector in North America are Walmart, Flipkart, online stores, Target, Alibaba Group, and so on. The strengths and weaknesses of the competitors are needed to be determined to perform needed changes to attract better success in the business operations. In this study, the major competitors of Amazon are being analyzed to understand the scenario and attract better strategies to empower the business.

Table 1: Strengths and weaknesses of Competitors

(Source: Created by the learner)

In the opinion of Sadq, Sabir and Saeed (2018), the strategic business units of Amazon present in North America involve a strong brand image and popular location to attract maximum profits by its business operations. Further, it has entitled a consumer-centric approach to satisfy the consumer base. The company is offering quality products and services to its consumer base to attract better benefits through business activities. Product values are encouraged by the company and further, it has involved spreading knowledge of the product base to foster consumers’ shopping behavior (Conaway et al., 2018). The marketing strategy of the company is further emphasizing the brand recognition of the company by encouraging consumer traffic on the company’s websites. The business strategy of the company is engaging brand loyalty from the consumer’s perception to encourage repeat purchases. In terms of business, strategy Amazon introduces a vast range and volume of production base to expand the consumer base throughout the world.  

In the argument presented by Wu and Gereffi (2018), an E-commerce strategy has been implemented by Amazon to serve the world population with a variety of products. It further enriched the international strategy for the company to expand the business. Digital strategy for the company has been observed to be beneficial in terms of revenue generation. Consumers are easily influenced through digital strategies and further, it is increasing the brand image for the company. Further, the company has implemented a social media advertising strategy to attract better sales rates in the international market. As Amazon is a consumer-centric company it resolves the issues faced by the consumers on an immediate basis. Social media engagement is also high for the company. Further, the company addresses the negative online reviews through immediate consumer support to enhance the brand image.

Social Factors Affecting Amazon’s Business

According to Niemczyk, Trzaska and Trzaska (2019), in terms of generic business strategy Amazon involves a Cost leadership strategy. It is further beneficial to attract competitive advantages by the marketing scenario present in North America. Cost leadership strategy is also beneficial to reduce the production cost and foster efficiency in the process of production. Price wars are better fixed by the cost leaders by attracting a competitive market to ensure consumer satisfaction by delivering the products at a lower cost compared to other companies. This strategy is further helpful to enhance the market share for the company. As critically analyzed by Chepchirchir, Omillo and Munyua (2018), Cost-effective leadership is effective to enhance the performance of an organization to satisfy the consumers. In the present regard after implementing Cost leadership theory, Amazon present in North America has been observed to be a highly competitive company that competes with the retail giants of North America such as Walmart. The global expansion and growth of Amazon are possible through the present managerial strategy implemented by the company to attract better profits. In terms of market development strategy, Amazon is focusing on international expansion and online deliveries to attract a better sales rate.

As described by Wu and Gereffi (2018), a complex business model is entitled with the internet-based activities and offline activities, that profiting the company. Integration of the business model further requires rapid change management in the process to attract better production and service deliveries. As critically analyzed by Guo (2021), Amazon initially implemented the business model focusing on low price in terms of production cost to attract better consumer bases. Later the company realized the significance of third-party logistics and sellers to decrease the price for the product base. Amazon prime has attracted rapid success by implementing this present business model to decrease the prices for the services. The company further uses the B2C model to continue its business operations. Consumer loyalty is fostering the company to attract better financial profits by the business performances. The business model is further integrating cost-effectiveness, consumer support, and a better brand image.

As evaluated by Sharma, Nigam and Sharma (2020), Amazon uses Amazon Cloud Development Life Cycle to set some rules for different object groups. Apart from that, it is an engaging cost-effective approach for upcoming business operations to attract better consumer satisfaction. The company further engage effective communication with the consumers in each possible way to understand the expectation of the consumers. This is a big reason Amazon is witnessing continuous growth in North America. The life cycle of Amazon further emphasizes majorly on quality consumer services to attract better consumer recognition of the brand. Effective Consumer Relationship Management (CRM) system is engaged with the company for the current sake to empower the life cycle of Amazon. Further, the company Amazon present in North America is thinking of expanding its era to every possible aspect such as retail, groceries, electronics, pay segments, entertainment, and so on.

In terms of CSR responsibility Amazon present in North America is active and further invests financial resources to protect the environment and communities around the business locations. The company has aimed to achieve “Net-zero” carbon emission by the busine4ss activities till the end of 2040. It is further empowering 100% renewable energies by 2025 to contribute to the planet’s climate. Apart from that while performing the delivery services the company has introduced 1 lakh electric vehicles for delivery to avoid air pollution. The company has further invested 100 million dollars in reforestation projects throughout the world (Aboutamazon.com, 2022). Climate Pledge Fund has been raised by the company to address the issues related to environmental protection. The use of plastics has been reduced by the company to protect the environment to sustain the business for the future.

Technological Factors Affecting Amazon’s Business

As argued by Fantin (2020), to address the negative media attention Amazon emphasized innovation, sustainability, and human rights. The company further looked after establishing an ethical business image for the company to regain the trust among the stakeholders of the company. In the present regard, the company is focusing to influence consumers from different backgrounds such as different localities, languages, cultures, and nationalities by engaging in ethical activities as a significant business strategy. The corporate social strategies further involved training of the employees to attract better performance during the production.

Gap Analysis

Gap analysis is effective in the current context to understand the limitations of the implemented strategies by Amazon to attract better growth for the company. The targeted growth of a company by implementing the strategy and the current state of achievements are measured through this gap analysis. The SMART objectives of the company are further elaborated to understand the efficiency of the strategies discussed in the above section. As elaborated by Allen, Metternicht, and Wiedmann (2019), it is essential to determine the policy gaps and information associated with the present regard to empowering sales growth.  The clear indication of the future goals in addressing the current situations of the company is further illustrated through the gap analysis. Additionally, it is focusing to reduce the gaps between the strategies and final outcomes by engaging effective operations to empower the business.

As critically evaluated by Sadq, Sabir, and Saeed (2018), Amazon present in North America is facing some issues such as governing issues, privacy issues, taxes, and ownership-related issues are engaged with the scenario. The strategic position for the digital strategy implanted by the company is further responsible for these presently occurring issues. As illustrated by Huang, Obada-Obieh and Beznosov (2020), the data security issues involving cloud computing are further bothering the consumers. It is further leaving harmful impacts on the company’s sales growth. Governing issues further introduce managerial difficulties in the company in terms of handling human resources. The changing rules and regulations regarding online services can optimize requests for Amazon products and services and can also increase the cost of business while performing the business on online platforms. Sales taxes and other taxes are increased which is further negatively impacting the rapid growth of Amazon present in North America. As critically analyzed by Onyusheva and Seenalasataporn (2018), delivering the products and services is difficult for the company focusing on some specific locations in the US. Technological developments in some eras are further raising challenges for the company to attract consumer satisfaction. Further cost leadership is cutting the financial expenses can harm the company with quality concerns while developing the product base. Innovation is optimized and consumer satisfaction also gets disrupted due to the implementation of cost leadership theory.

Table 2: SMART objectives

(Source: Created by the learner)

The digital strategy is implemented to benefit the company with better benefits in expanding the business to the international market. Amazon present in North America has looked after better sales growth by implementing this strategy. The sales growth has been increased even during the pandemic year when other businesses were facing several growths. Here the major gap between the strategic position and the strategic choices are related to the website experiences for the consumers involving data security risks. As analyzed by Jackson and Orebaugh (2018), Amazon Echo is entitled to the privacy and security issues that are further under investigation by law enforcement. It is further hampering the brand reputation along with worldwide consumer satisfaction. The risk of quality issues and restricted innovation are the challenges faced by the company while implementing the cost leadership strategy to deliver products at a lower cost. While reducing the production cost the company is unable to deliver a product of an improved quality that can affect the consumers’ perception of the brand. Apart from that, the cost leadership theory limits innovation and uniqueness in the production process.

Conclusion

To address these strategic gaps, the company needs to organize an action plan to engage better profitability through the business operations. As suggested by Birkel et al. (2019), a digitalization strategy is needed to be developed through better product life cycle management. Reducing waste and recycling the materials can be beneficial to attract consumers’ attention. As argued by Stamolampros et al. (2019), educational programs can not help the less experienced employees. Thus, it is required for Amazon to hire skilled and experienced employees to fulfill the strategic gap and strategic position while implementing the digital strategy. In the opinion of Zio (2018), risk assessment is effective to determine and control the product quality risks while implementing a cost leadership strategy. As opined by Boiko, Shendryk and Boiko (2019), an organized supply chain assists a company to improve the warehouse inventory system. Further, the effectiveness of the cost leadership strategy can be further facilitated through engaging multiple supply chain logistics.

This is recommended to Amazon focus on the leadership and managerial styles to attract better effectiveness. Situational leadership is recommended to implement in the company to address several changing situations in the company. Only cost leadership will decrease the product quality which can further affect the brand reputation.  Further, the quality of the products can be maintained by continuous risk assessments. Apart from that, the company is required to focus on multiplying the supply chain to reduce the production cost to deliver the products or services at a minimum price to attract better consumer satisfaction. Third-party logistics are suggested to be attracted to optimize the production costs. Recycling of the material can be beneficial for the company and the environment simultaneously. The company is further recommended to implement the digital promotional strategy to increase the brand image and further engage better effectiveness in attracting a new consumer base. The consumers having issues regarding the products and services are needed to be addressed immediately by involving efficient customer care services. Privacy and data security issues are needed to be addressed engaging effective performances of the human resources through better training. Better skilled and experienced staff are to be hired to attract better performance through their employee educating strategies.

Conclusion

It is concluded by the present essay study that Amazon present in North America consists of integrated strategic management that is further generating profits for the company. The company is attracting corporate and social activities in terms of taking better care of the environment and communities while performing production activities. This strategy has been followed to attract better attention and to enhance the positive brand image of the company in terms of following business ethics. It is further empowering the environment and society as well through social services as identified in the PESTEL analysis. The company is further assuring better wealth and skill developments to empower the lifestyles. The company further is engaged with the digital strategy to meet the ongoing social trends after the Covid restriction. Delivery issues are coring due to this strategy that can be improved through engaging multiple supply chains and logistics. Apart from that, the company has faced several challenges due to the ineffective staff members in spite of offering training and educating programs for the employees. Hence, it has been analyzed that the company can attract better revenue through hiring better skilled and experienced human resources for its business operations. The cost leadership strategy in terms of generic strategy has been interpreted as significant to lower the production cost. It is further analyzed by the gap analysis that this strategy involves risks such as quality concerns, the rate of consumer satisfaction is further decreased by implementing this theory. The company is suggested to continue risk assessments to control the risk factors involved with the cost leadership strategy. Gap analysis further interpreted that cost leadership strategy can affect the consumer satisfaction rate and brand image of the company. The company has been recommended to engage multiple supply chains to reduce the cost of production.

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