Analysis Of Amazon 's Value Chain

Amazon targets the at-home customer. Amazon makes it convenient for customer to buy anything or Anything, with a capital “A” according to Bezos. Amazon provides convenience to customers all over the world with it services. The services Amazon provides ranges from AmazonFresh which delivers groceries to your home to Amazon Prime that allows you to stream any television show, or movie with any Amazon device. Amazon is a multifaceted online marketplace that is changing the game of selling. The convenience of one-click shopping is powerful and a rapidly growing industry. Amazon is leading in this innovative industry, and has created jobs in the process.

➢ Mission: Amazon’s mission is to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible price[1].

Also, Amazon has emphasized on building “several distribution centers around the world to hasten deliveries”(Hof and Himelstein, 1999). Coupled with its software it provides a “laser-like focus on the buying experience”(IT Business Edge, 2012). Such a system and service is what draws customers towards Amazon and subsequently retains them.

Amazon.com has successfully managed to make its customers to feel that anything they could possibly want could be found on their website. Additionally, its products are marketed at a competitive price. Another important factor is their speedy delivery with their usage of UPS and FedEx (United States) and Royal Mail (United Kingdom). The company also caters for people that prefer online shopping with extra services such as Amazon Prime - a service with a yearly payment, customers are eligible for free next day delivery. Even though Amazon.com is known to be an online seller of most things, it still excels in its original market of book selling. Evidence of such is

Globalization is a growing part of everyday businesses. This is the process of interaction and integration among people, companies, and governments of different nations. With the world of online retail, the buying and selling to one person to another has grown drastically. There has also been a substantial change in technology and what we as people can do in today’s time rather than in the past. Amazon is a huge retail giant and buying and selling items is one of their key functions. The impact made on Amazon is nothing but an advantage. Amazon currently is the 56th largest company in America by market capitalization. Being one the largest retailer around, 15th in the nation at that, Amazon has made a name for themselves. Amazon has made some very substantial growths and with these opportunities they face they can make even more advances in the future. (Globalization 101, 2016)

Amazon’s fulfillment centers are valuable, rare, costly to imitate, and organized to captured value. Thus, they attribute to Amazon’s competitive advantage. Amazon Prime and 1-Click are also valuable to the organization. However, they can be replicated. Walmart launched a membership program to compete with Amazon’s Prime Service. With Walmart’s membership program customers receive free two-day shipping when they spend $35 or more on orders. Amazon Web Services is valuable, rare, costly to imitate and the organization has capture the value of it. Therefore, AWS has contributed to Amazon’s sustainable advantage. Amazon’s brand name and reputation have also given the company sustainable advantage. Amazon acquired enormous brand valuation in a short period of time. It is

Although it is the most established because of its long history and early start, competitors such as Alibaba Group Holding Ltd, AutoZone Inc., eBay Inc., Rakutenchi Inc., Netflix Inc., Jet.Com, Wal-Mart and Time Warner Cable among others exist (Yahoo Finance, 2015). Notably, apart from Jet.com, Amazon’s competitors are segmented according to products and services offered; for instance, Wal-Mart stores Inc. offers competition in general merchandise and electronics segment while eBay, Time Warner Cable and Apple offers competition in the media segment. Among the competitors, Apple Inc. and Google Inc. have the highest market capitalization; however, the Amazon’s dwarfs all other competitors. Amazon has a high market capitalization at $254.82 billion (Nassauer, 2015). The table below shows Amazon’s major competitors based on their market capitalization and 52-week share price range

The Amazon.com mission is one that has a centric value to hold very close for all operations involved, the Amazon.com online customer is first and foremost. Amazon has a clear focus and a solid mission that has imprinted since the beginning. Founder and CEO Jeff Bezos has multiple times referred to the Amazon mission statement as the force that guides his powerful leadership decisions multiple times within the Amazon.com history. The success of Amazon is confirmed as one of the top internet retail companies in the world is due in part of the commitment to their mission and the way top leadership executes. The mission and vision of Amazon is, “Our vision is to be earth 's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”

One of the companies that exploits opportunities and business ventures to create growth and sustainability is Amazon, Inc. Amazon was founded in 1994 and since then it has opted to take its business online and thus develop a global strategy that has paid off and turned the company into a technological business hub that serves consumers by offering an assortment of products and services in a noteworthy customer service. These strategies have made Amazon one of the leading online retailers with a revenue of US$ 88.988 billion as of 2014. This paper thus seeks to describe Amazon’s grand strategies of product development, market development, and concentration as part of its long-term growth strategy.

Low cost leadership is pursued by Amazon by differentiating itself primarily on the basis of price. Amazon’s goal is to become customer – centric, aiming to offer a wide range of products with lower prices and convenience to its customers. It can be seen that the company believes offering low prices and focusing on customers are fundamental to Amazon’s success. Over the time, Amazon seeks to mitigate the costs in order to lower the prices through achieving higher sales volumes. The company also finds many ways to negotiate to obtain better terms with their suppliers, and achieving better operating efficiencies. Amazon always ensures that they maintain

Looking at Amazons value chain above, its core competencies would be: Fulfilment centres (warehouses), Extensive products, Suppliers and Customers relationship, Supply chain management, Technology advancement, Its image brand, Marketing and Finance.

The basic Amazon sales channel is the web store front- end which serves as their core business. Customers go to the Amazon.com website, browse products, and place orders. Amazon is responsible for all front-end customer relationships and back-end logistics in this model. Once an order is placed, Amazon decides which internal distribution center or drop shipper should be responsible for shipping the order to the customers. After that, Amazon will responsible for coordinating the fulfillment of the order. When products are sourced from its internal distribution centers, then Amazon start to picks, packs, and ships the order. When products are sourced from a drop shipper, such like a book distributor, the distributor packages the products by using the Amazon box delivers it to the customer (Maltz et al., 2004). This model requires Amazon to maintain or purchase inventory for immediate selling. In this model, Amazon owns the customer relationship, provides the technology, owns or purchases the inventory, and executes the logistics as well.

There are mainly 4 priorities of Amazon when they established their online venture. The four priorities are convenience, selection, price, and customer service. E-business gave the Amazon a major advantage i.e it opens for 24 hrs or anyone can buy anything 24hrs a day. Various functions such as reviews, e-mail notifications , product recommendations, etc are given by Amazon in their website. Wide range of products are also provided by Amazon. They have an inventory of millions of products at a time.

The presence of strong as well as effective leadership in today’s organization imposes a great responsibility to the organization’s team and management networks as leadership implies the overall capacity of the organization’s performance like for instance, in terms of operations and research development. It can be said that Amazon’s resources and capabilities can be divided in the management of the company specifically their leader which is Bezos, the ability of the management to effectively use strategic supply chain management and aligning it with their business process and information technology, their competitive advantage in the online market, and the financial resources that it gains through its successful approaches.

An effective supply chain strategy makes the company is able to respond high level of responsiveness. Amazon balances between cost of distributions