Amazon Developed Strategy - Strategic Management Assignment Help

Assignment Task

Company Overview
Amazon.com is a huge multinational technology corporation that specializes in e-commerce, cloud computing, digital streaming, and artificial intelligence founded by Jeff Bezos. It began as an online bookshop in 1994 but has since grown into a multi-service/product e-commerce platform. Amazon is recognized for providing millions of things at the lowest possible prices.
Currently, the firm aspires to be a leader in innovation and to test new concepts in order to grow into new industries. Strong leadership concepts are the company's foundation. This entails taking responsibility for making short-term sacrifices for long-term gains and learning to be passionate by always improving themselves and others.
In a strategic move to win the middle east, Amazon has acquired souq.com completely in 2021 after buying Souq for $580 million in 2017. The move comes as Amazon tries to figure out how to develop its retail business profitably, with North America accounting for 69 percent of revenue.

Vision and Mission
Amazon has incredibly successful mission and vision statements. Amazon vision statement was established before as to be “Earth's most customer-centric company” (Amazon's global career site). Amazon's main shareholder, its customers, are addressed in this vision statement, which states that they desire to be the most customer-centric corporation on the planet. They use the word "customer-centric" to establish an idea among their clients and to give them a sense of belonging. Amazon's objective of being the finest firm in the e-commerce market is clearly stated in the vision statement. However, this vision statement is developed in April 2021 and shared by CEO Jeff Bezos to be “Become Earth’s Best Employer and Earth’s Safest Place to Work.” (www.aboutamazon.com). This statement was developed to address Amazon team and addressing their safety after the spread of COVID 19, to prioritize health of its employees as well as its customers and stakeholders.
From my point of view, it would be clearer and more detailed to combine both vision statements to become” Earth's most customer-centric company, Best Employer and Safest Place to Work.” By this mean Amazon is addressing its consumers needs and its employees’ value.
-The current mission statement of “Our mission is to continually raise the bar of the customer experience by using the internet and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximize their success.” (www.aboutamazon.co.uk). In this mission statement Amazon's core aims are covered, as well as how the company's strategic direction is defined. Amazon is a company that uses its technology to help individual customers and businesses find what they need and maximize their success.
However, this mission lacks to address the security of payments for their customers. In the recent month when Amazon totally acquired souq.com, most of the customers in Egypt complained from breach on their cards when they tried using Amazon website for online shopping and it was considered as a hack on Amazon website. Besides seeking secure payments, consumers target the best quality goods at reasonable prices. So, its recommended for the mission statement to be more specific about that to be become “Our mission is to continually raise the bar of the customer experience by using secure e-commerce base and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximize their success by offering highest quality and reasonable price”.

Amazon state they are guided by the following core values:
Customer Obsession
Insist on the Highest Standards
Ownership
Think Big
Bias for Action
Hire and Develop the Best
External Environment Assessment

PESTEL Analysis:
Political factors:
Government policy
political stability
labor laws

The Amazon Company's stability has been affected by political stability factors. Nations have their own laws and political orientations; for example, economically wealthy nations such as the United States and Australia have assisted Amazon's expansion. Other nations, such as China, have restricted Amazon's progress. China has always been willing to assist local Chinese enterprises. India, an expanding market of critical importance to Amazon due to the enormous magnitude of the country's population, has taken steps to prevent large corporations from obtaining control of the market to preserve its small businesses. Fortunately, in Egypt the political situation is stable and government regulations are open to foreign investments and projects, so it will aid in Amazon’s expansion in Middle East. As a result, political factors in Egypt will have positive impact on Amazon's position, reputation, and productivity.

Economic Factors:
Economic growth
Disposable income
Unemployment rates
As the percentage of disposable income or desire to spend has risen over the years, a huge range of products and offers given by Amazon has made massive amounts of money. Furthermore, as customers increasingly choose value-based propositions when making purchases, Amazon's massive discounts and the goodwill it has earned over the years helped it maximize and gain market share over its competitors.
The Corona epidemic helped Amazon as well. Consumers' desire to use Amazon to find solutions to their problems. Recently in Egypt, online shopping has revived, and this will create a wealthy economic environment for Amazon after Souq acquisition.

PESTEL Analysis:
Social Factors:
Population growth rates
Age distribution
Lifestyle attitudes
Cultural barriers

Amazon has met the desires of its consumers across all ages especially the young. Customer’s preferences have been changing and now they are looking for everything on the internet. Consumers are more likely to buy high-value items like computers and smartphones since they are more convenient and comfortable. In addition to Amazon's delivery services that are a lifesaver for individuals and families that live incredibly quickly lifestyles, especially when it comes to ordering groceries. All these factors left a great influence on business strategy for Amazon.
Technological Factors:
Technological changes and awareness.

Level of innovation.
As it is a technology company after all, Amazon has made effective use of technology, communication, safe payments, and a privacy policy across the globe. However, after the acquisition of Souq.com in Egypt, most of consumer payments have been hacked in the recent month leading to huge gap in customers loyalty to Amazon. Also, the level of awareness to technology in Egypt in limited so this might be a challenge for Amazon while operating in the country.

PESTEL Analysis:
Environmental factors:
Environmental policies.
Pressure from NGO’s.
Amazon has been criticized for its wasteful business methods that are harmful to the environment. Many environmentalists have attacked Amazon's free shipping and one-day delivery services as being harmful to the environment because of the cost savings to the consumer, resulting in carbon emissions and packaging waste. When it comes to packing, Amazon has been widely accused of its excessive use of cardboard boxes and packaging materials, particularly plastic and bubble wrap. After intense pressure and criticism from environmental activists, Amazon has started investing in renewable energy and recyclable packaging material, as well as releasing its sustainability report since 2016.

Legal Factors:
Consumer protection laws
Health and safety laws
Employment laws
Legal consistency is also critical for every firm wherever in the world. It is critical for popular companies like Amazon to adhere to the criteria. Amazon has its own legal department to deal with legal issues and problems. To be competitive in the worldwide market, Amazon is concentrating on respecting various countries' laws. Amazon's success is due to its adherence to the law. The firm has always prioritized openness and avoidance of ambiguity.
External Environment Assessment

Porter’s five forces Model:
Rivalry among competing firms (High):
In recent years a lot of rival corporations and comparable enterprises, and more internet businesses has increased many retail, small scale brands. The number of competitors expanded as quickly as in previous years due to the pandemic's impact after the global lockdown. Existence of familiar and almost similar portal companies as Noon, Jumia, Ali Baba and Walmart affecting the size of market share.

The Threat of New Entrants (Low):
Even though cheap switching costs make it simple to enter the e-commerce business and win clients, any company would find it tough to compete with Amazon. Amazon-style e-commerce would need significant expenditures in warehousing, distribution, marketing, user-friendly, marketing, customer support, logistics, and other areas. As the largest internet retailer in the market, Amazon has a strong brand. Amazon distinguishes itself apart by investing millions in consumer experiences like its user-friendly website, delivery times, and returns of goods. Amazon has earned the reputation of offering the best customer service in the industry.

Bargaining Power of Buyers (High):
Customers are usually price conscious. Furthermore, the economic downturn caused by the epidemic reduces consumer demand, increasing competition. Amazon's customer-centric strategy not only earns the company a prestigious name, but it also offers a large range of items on one site, allowing users to compare prices and discover the best deal in the market without having to go to a store.

The Threat of Substitution (Moderate to High):
Under normal conditions, physical merchants pose a moderate to high threat to the internet business. However, during the pandemic, customers' hesitation to purchase in physical stores has reduced the threat of substitution to Amazon and other merchants. Furthermore, the threat from the physical retail industry is minimized because many small local firms are closing or stopping operations because of the pandemic.

Bargaining Power of Suppliers (Low to Moderate):
The goods acquired for retail sales are often generic enough that a merchant might purchase from a different source. However, due to increased demand, many medical supplies like as masks, vitamins, and sanitizers are in limited supply during the pandemic. As of the volume it purchases, Amazon can influence suppliers' prices on most items. Most sellers are unable to find another e-commerce website with the same level of exposure and client traffic.
Internal Environment Assessment

Value chain Analysis:
- According to Amazon, they do not normally have long-term contracts or arrangements with their merchants to ensure the availability of items, certain payment periods, or the renewal of credit limits. Amazon decided to publish a document identifying its suppliers for Amazon-branded items but did not name the top suppliers. In addition, this list does not explain what each supplier manufactures for Amazon.

Amazon five primary activities are as follows:
1- Inbound logistics:
-Inbound logistics refers to a company's activities including the purchase of raw materials. Typically, Amazon does not have its own items. It serves as a marketplace for other companies to offer their goods and services. Amazon does not have long-term relationships with these companies or suppliers. Inbound logistics vendors can use the Fulfillment by Amazon (FBA) service from the corporation.
-Amazon is a business with several methods for purchasing and selling its items and services. The most basic strategy they have is to offer Business-to-Consumer, just like other internet merchants, however Amazon has a wider range of items and services. Amazon Marketplace is another option. Amazon Marketplace allows any company or individual to sell nearly any goods utilizing Amazon's platform. The variation between Amazon.com and Amazon Marketplace is that with Amazon.com, you are shopping directly from Amazon and the products that Amazon has to offer, whereas with Amazon Marketplace, you are seeing products from Amazon as well as other retailers who have chosen to use Amazon's services in exchange for a small fee on each purchase made by consumers.
- Sellers may use FBA to store their merchandise at Amazon's warehouses or fulfillment centers. Typically, Amazon needs them to deliver their items in advance for Amazon's systems to be updated and sales to be permitted. When the items arrive at Amazon's warehouses, the business handles logistics, customer support, and returns. Amazon has a competitive advantage over many other firms in the industry due to its excellent shipping infrastructure.
Value chain Analysis:

2- Operations:
Amazon organize its operation in three segments: North America, International segment, and Amazon Web Services. Amazon International segment is the second largest profit generating for the company. Recently the company gave more attention to international customers and completed the acquisition for souq.com to be able to reach the MENA area.

3- Outbound logistics:
Outbound logistics refers to the operations involved in storing, transporting, and distributing finished goods. Amazon's outbound logistics includes a variety of processes. For inventory, Amazon has fulfillment centers that employ robotic technologies. It entails product management, storage, selecting, and shipping. In addition to its fulfillment centers, the company engages in additional outbound logistics activities. it comprises both co-sourced and outsourced agreements. Similarly, for online items such as books and media, the corporation utilizes digital distribution services.
The company uses various delivery services to the MENA countries as DHL and FedEx. The corporation, on the other hand, has its own logistics system. It consists of an expanding number of aircraft, trains, ships, trucks, and vans used to transport materials to clients. In order to improve the efficiency of its delivery, the company has also invested in drone technology.

4- Marketing and Sales:
The company has been increasing its investment in the area over the past years. In order to penetrate the MENA market, the company started marketing campaigns promotional advertisements for specific products or the brand as a whole.
Amazon advertises its wide range of items and services, low costs, quick delivery, and excellent customer support. Similarly, the business promotes its Amazon Prime services as an improved version of similar offerings. To deliver its messaging to its target clients, the corporation employs a variety of marketing mix approaches. International sales increased by 40% in 2020 compared to prior years. The sales growth primarily reflects increased unit sales, including sales by third party sellers.

5-services:
Amazon's excellent customer service has also been a source of competitive advantage. Through all its goods, the firm provides a variety of services to its consumers. Customers of Amazon Marketplace and Prime include both buyers and merchants on the marketplace. For sellers, the platform offers a variety of tutorials and tools to assist them in increasing their sales. Customers can also make use of after-sale services such as returns.

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