Industry Attractiveness and Porter Five Force Analysis
Amazon is known as an American multinational company. It is one of the largest retail companies in the world. The company offers products like books, clothes, grocery and many products. The company is in news in the last two years. To enhance the sale in the market the company introduced effective strategies. From the strategies that are introduced some are successful and some are not successful. In this report the main focus is given on the industry attractiveness in which Porter 5 force model will be discussed. In the next phase of the report the core competencies and also the resources will be taken into consideration. Also the competitive advantage will be considered in this report.
By giving focus on the Amazon it is evaluated that the technology plays a great role to enhance the sales of the company. To explain the industry competitiveness the porter 5 force model will be discussed. It is essential for the company to analyze all the factors so that the industry attractiveness can be maintained. By taking into consideration porter 5 force model the five factors will be considered like threat of new entrants, the threat of substitute products or services, bargaining power of Amazon buyers, Bargaining power of suppliers, Threat of product substitutes, Industry rivalry (Sindi and Roe, 2017).
- The threat of new entrants: For Amazon, the threat of new entrants can be high also and low also. In the case of high threats of new entrants. The cost that is required in establishing the bookstore is low and also it has a low threat. By taking into consideration the proper resources and knowledge, new entrants can effectively establish a website by having a proper comparison with the Amazon website. The competitor can easily start the business by analyzing the resources of the company.
The threat of new substitute is low as it is seen that Amazon technology is a platform that can give tough competition to the competitors and also it can create difficulty for the new entrants to enter in and compete with the costs and experience. Brand recognition and customer loyalty can also create a difficult to compete with the existence companies in the market. The company who want to enter into in the market can face difficult by taking into consideration customer loyalty and brand recognition (Teeratansirikool et al., 2013).
- Bargaining power of suppliers: The bargaining power of the supplier can be high and also medium as it is evaluated that in the electronic business sector is high and also the Amazon has a low-cost strategy that makes difficult for the company to purchase the electronic product directly from the distributors like Sony, Panasonic. The bargaining power of the supplier in Amazon online book sector can be medium for bargaining power of the suppliers (Wei et al., 2014).
- The threat of product substitute: It is evaluated that the threat of product substitute in Amazon is high as it is an online business. If the company sells clothing and also groceries then it can be substituted easily. The competitors can also offer the services at a low price by analyzing the cost of the product available on other websites. But the Amazon one-click shopping can help to reduce the threat in an effective manner. It is evaluated that other competitors can easily analyze the products and services given by the company and can take same for enhancing the market share (Porter & Heppelmann, 2015).
- Industry Rivalry: As it is evaluated that the company has high and wide competitors for the book business. Amazon faces a high Industry rivalry in the online book business. The bookstores that are established have a benefit to the larger customer base and also awareness of the selection of books. The competitors are many as there are many competitors who are selling the products in the same segment (Huo et al., 2014).
It is seen that it is very essential for the company to give emphasis to all these factors, so that the industry attractiveness can be maintained in an effective manner.
Resources are considered as an important part of the organization. If it is managed effectively then it can give direct impact on the overall profitability of the organization. The company considers the benefit over the competitors when the possible result enhances the overall market share. The sustainable competitive advantage can be divided into four parts that consider the VRIN framework:
- The particular capability that offers value to its customers. Like customers who pay extra for one-day delivery service.
- The rarity of the capability of the company is important. The capability should not be considered by the other competitors who are present in the marketplace.
- The competitive advantage should be inimitable. Like the products and services offered by the company cannot be copied by other companies.
- The risk of non-substitutability should be less enough for the capabilities so that the competitors will not be able to replace it.
The VRIN framework is considered to determine the capabilities that give a positive impact on the sustainable advantage and also it gives impact on the overall success. By taking into consideration it is evaluated that Amazon within the structure of VRIN elaborates that the sustainable competitive advantage is in the diversified product categories, technology infrastructure and also in logistics in which the company set all the four criteria taken into consideration by VRIN and also it is implied on the long-term success for the organization (Foss & Knudsen, 2013).
Amazon’s Core Competencies and Resources
Also, it is seen that the online marketing channels do not consider the four criteria of VRIN and also there are chances that can give a contribution to the long-term success of the company.
One of the essential goals of any organization is to maintain a proper competitive advantage over the competitors, so that profitability can be attained in an effective manner. A sustained competitive advantage is considered when there is proper implementation of the value strategy and also when all the companies are unable to duplicate the products of the other companies (Hollensen, 2015).
Strategic capabilities give direct impact on the long-term survival of the organization. If there is proper strategic capabilities then the company can easily accomplish the competitive advantages in the market. Strategic capabilities consist of the resources and the competencies. Amazon gives focus on the resources and competencies of the organization. The strategic capabilities can be considered by giving focus on the physical, financial and human resources. In Amazon, the physical capabilities consist of the products like warehouses, customer databases and also technology infrastructures. It is seen that physical capabilities contribute to the activities of operations so that the continuation can be maintained (Saeidi et al., 2015).
In Amazon there are 132,600 employees and also the customers are approximately 260 million. The company has a competitive advantage and can enhance the activities in an effective manner. Also, there are many employee empowerment programs that are conducted so that motivation level of staff and also innovation can be considered by the organization. The key competencies of the company are innovation, expertise, the motivation of the staff and also knowledge (Sorge & Streeck, 2016).
It also includes career choices and also motivates people to think about their careers. The facilities and human resources of Amazon give direct impact on the supply chain of the company. The utilization gives customers a proper delivery service that enhances the satisfaction level of the customers. Customers also get the advantage of attractive discounts that induces the customers to purchase the products (Keskin and Kennedy, 2015).
If the focus is given to human resources and competencies that are related to Amazon and also enhance the prosperity of the company for long term. Amazon can easily attain a competitive advantage by giving focus on attractive services so that the customer can be attracted towards the organization in an effective manner. It is seen that if the company offers proper services and discounts then the success can be attained effectively. Amazon uses a competitive strategy like the use of latest technology so that it can be easy for the company to survive for long-term in the competitive market (Lin & Wu, 2014).
Amazon’s Competitive Advantage
Conclusion
By evaluating the report, it is analyzed that the company should maintain goodwill in the market, so that the sales and profitability can be increased. Also, Amazon should give focus on strategic management so that the activities can be conducted smoothly. In the first phase of the report, industry attractiveness is considered in which it is important for the company to consider proper discounts so that more customers can be attracted towards the product of the company. In the second phase of the report, VRIN is considered so that the resources can core competencies can be discussed in a proper manner. It is seen that if the company gives focus on attaining a large share of the market, then it can be easy to attain large market share. Amazon should also give focus maintain proper promotional strategies like advertisements on social sites, so that the customer can easily get knowledge about the products and services offered by the company.
References
Foss, N. J., & Knudsen, C. (Eds.). (2013). Towards a competence theory of the firm (Vol. 2). Routledge.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
Huo, B., Qi, Y., Wang, Z., & Zhao, X. (2014). The impact of supply chain integration on firm performance: The moderating role of competitive strategy. Supply Chain Management: An International Journal, 19(4), 369-384.
Keskin, T., & Kennedy, D. (2015, January). Strategies in smart service systems enabled multi-sided markets: Business models for the internet of things. In System sciences (HICSS), 2015 48th Hawaii international conference on (pp. 1443-1452). IEEE.
Lin, Y., & Wu, L. Y. (2014). Exploring the role of dynamic capabilities in firm performance under the resource-based view framework. Journal of business research, 67(3), 407-413.
Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming companies. Harvard Business Review, 93(10), 96-114.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), 341-350.
Sindi, S., & Roe, M. (2017). The Evolution of Supply Chains and Logistics. In Strategic Supply Chain Management (pp. 7-25). Palgrave Macmillan, Cham.
Sorge, A., & Streeck, W. (2016). Diversified quality production revisited the transformation of production systems and regulatory regimes in Germany (No. 16/13). MPIfG Discussion Paper.
Teeratansirikool, L., Siengthai, S., Badir, Y., & Charoenngam, C. (2013). Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), 168-184.
Wei, Y. S., Samiee, S., & Lee, R. P. (2014). The influence of organic organizational cultures, market responsiveness, and product strategy on firm performance in an emerging market. Journal of the Academy of Marketing Science, 42(1), 49-70.
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