Amazon - Strategic Capability

5331 Words Feb 26th, 2012 22 Pages
Executive Summary
This report has been designed to identify Amazon's strategy between 2007-2010 and also to pinpoint the company's strategic capabilities. Internal and External analysis reveals Amazon's position against its competitors as well as sources of value creation and cost reduction in its value chain.
Amazon.com is a leading e-retailer and is a globally recognized brand, but is facing increasing competition from bricks and mortar companies setting up an online presence and current e-retailers increasing their geographical and product scope. Amazon.com also faces strong rivalry in its Web Services Business where more specialized web services companies are able to offer more products and have a broader geographical presence.
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These pillars are selection, price and convenience and Amazon believes that by fulfilling these three demands of customers they will be able to improve customer experience, traffic to Amazon’s websites by both customers and sellers will increase and this in turn is fed back to growing resources for innovation for improved customer experience and this cycle forms Amazon’s strategy. Using Porter’s Generic Strategies to study Amazon’s Strategy, we can determine that Amazon strategy is largely built on cost leadership although it appears that elements of the differentiation strategy are adopted as well. Therefore using the strategy clock concept, Amazon’s generic strategy can be deemed as a Hybrid Strategy that seeks to simultaneously achieve differentiation and low price relative to competitors. Hybrid strategies enable companies to aggressively win market share and build volume sales although Porter argues that its best to choose a generic strategy to adopt and stick to it rigorously and hybrid strategies leads to a danger of being “stuck in the middle”. However the hybrid strategy appears to be working well for Amazon. Cost leadership is a strategy Amazon primarily adopts as the company targets a broad market and offer similar quality products at a lower price than many of their competitors in order to gain a higher market share. Amazon is able to employ the cost leadership strategy
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