Strategic management is what helps top management in an organization to make decisions that make a firm to be competitive in the industry. The strategies laid down by the management of a firm determines how a company will perform at any given period. In this paper I will look on the role technology and globalization has played in Amazon business operations, how industrial organization model and resource based model can be applied in Amazon to make the firm earn above average returns, the impact of Amazon vision and mission to its success and the influence of stakeholders to the firm’s success.
Globalization
Globalization has made local business to operate at international levels. This has made businesses to seize opportunities like access to fresh minds and talents, ready market for products and lower cost of production. But, these opportunities come hand in hand with global challenges. Amazon is an online ecommerce business and globalization has helped it to overcome the physical barriers and time disparity. Being accessible at any place with internet connection has enabled the firm to gain acceptance across the globe.
But, Amazon has adverse issues it has to deal with. Among these is data breaches. Amazon clients shops online. This includes making payment on the internet. Being in an age when cybercrime is on the rise the firm faces a major challenge in ensuring its clients data especially bank accounts are safe. This calls for the firm to implement data security systems. The need for secure systems means the firm will have to spend a lot of its resources. This eats on its bottom line, as an increase in the cost of production lowers the profit earned. This is a major challenge as the firm cannot increase prices of its products beyond what other players in the industry are charging.
Amazon faces a challenge of complying with several laws regarding processing of personal information on its systems. There are regulation compliance requirements that have made Amazon to incur huge amount in legal battles. For example, in July this year Amazon had a data breach case and was fined $886.6M for not complying with the European Union laws (BBC, 2021). This means that compliance with local, regional, trading block and so on laws is paramount for the success of Amazon. If the firm does not ensure data of its clients is safe, it degrades its reputation. Amazon may lose its clients as some will shy away giving their personal data for payment processing. This makes clients data privacy a top priority to the Amazon top management.
Technology
Amazon is a technology business, without technology Amazon cannot exist. For Amazon to continue existing or thrive it must adopt emerging technologies. Amazon cannot rely only on world wide web for now. Amazon, though a giant in ecommerce its major source of revenue comes from cloud based platforms. Amazon technologies like Alexa digital assistant enables the firm to sell more products. On Internet of Things, Amazon is a leader with its Amazon Web Services IoT. The services enable Amazon to integrate most of its services and help companies to streamline manufacturing processes (Neiger, 2019).
Amazon uses social media platform like Facebook, Twitter, LinkedIn, YouTube, among others to market their products, respond to clients queries, share community information, highlight hot deals and offers among them. The marketing done on social media by Amazon is targeted to a given group of people or event. The firm uses analytics to understand the demographics of its clients (Giraffe Social Media Editors, 2021). For example, most of its posts and ads during the month of December targets Christmas celebration.
Artificial intelligence is at the heart of Amazon, as the firm is now using robots in its warehouses and delivery of orders. Robots are making workplace safer for employees though they are issues of concern among them loss of employment. Robots use may mean very few people will be left in warehouses and may trigger unemployment in other sectors like postal services (Bukszpan, 2019). The delivery of orders using robots has gained acceptance during the covid19 pandemic lockdowns.
Industrial Organization Model
I/O model is all about the influence of external environment in relation to a firm’s strategic decisions and actions. The I/O model a firm chooses has a strong impact on a firm’s performance than the choices management make within their organizations. Amazon may study firms in the ecommerce industry and identify an opportunity that may result to earning above average returns. For instance, Amazon may find out that firms like Target, Walmart, EBay, among a host of others are exerting a lot of pressure to it and decide to concentrate on its Amazon Web Services. This is diversification. This industry is an attractive industry to Amazon as it is able to earn above average returns (Hitt, 2020). The next step is bringing all the required resources together. Amazon has all the expertise and financial resources needed to implement this strategy. The last step is to roll out the strategy. Amazon is already a brand and it can use the clients it has to implement a new strategy. This will include incorporate IoT in its AWS.
Resource-Based Model
A firm’s resources are categorized as either tangible or intangible. There are three categories of resources; human, physical and organizational capital. It is how these resources are integrated that form capabilities and this gives a firm a competitive advantage. Firms can have similar resources but different capabilities (Hitt, 2020). Amazon has enough employees to steer Amazon Web Services business. The technology Amazon is using in ecommerce and its other business areas is enough for AWS to start earning above average returns. The firm also has well established structures like clients, financial strength and suppliers, who can be consumers of the AWS products.
Vision
Amazon vision is to become the best company in the globe that values its clients and gives them an opportunity to buy all they want online (Amazon, 2021). This vision statement has two constituents that are vital for the success of Amazon. One, customer centric. Amazon gives its clients the first priority for it knows without clients there is no business. This includes rewarding loyal clients with hot deals and loyalty points. Two, global presence. Amazon want to spread its wings to all continents. This will make it have advantage of not relying on clients from one region.
Mission
Amazon mission like its vison it talks about its clients. It has three components; affordability of products, shopping convenience and varied selection. Amazon pursues cost leadership strategy and thus their products are cheaper. The automation of shopping experience is not complex and therefore clients do not undergo tedious process. Amazon provides diverse products from which clients can choose from. These components enable Amazon to have a huge client base that contributes to its profit growth (Amazon, 2021).
Stakeholders
Stakeholders are people, groups and organizations that have effect or are affected by a firm’s vision and mission. This also includes those who have enforceable claims on a firm and those affected by a firm’s strategic outcomes. This includes capital market stakeholders like shareholders, product market stakeholders like customers and suppliers and organizational stakeholders like employees (Hitt, 2020). Amazon major stakeholders are the investors, customers and suppliers. The investors provide resources needed for the business to run smoothly in exchange of a share of profit earned. Amazon cannot be able to expand to new markets without investors. The suppliers play a great role of ensuring there is enough supply of products when they are required. The consumers are the people who make products to be brought to the market.
Globalization
Globalization has made local business to operate at international levels. This has made businesses to seize opportunities like access to fresh minds and talents, ready market for products and lower cost of production. But, these opportunities come hand in hand with global challenges. Amazon is an online ecommerce business and globalization has helped it to overcome the physical barriers and time disparity. Being accessible at any place with internet connection has enabled the firm to gain acceptance across the globe.
But, Amazon has adverse issues it has to deal with. Among these is data breaches. Amazon clients shops online. This includes making payment on the internet. Being in an age when cybercrime is on the rise the firm faces a major challenge in ensuring its clients data especially bank accounts are safe. This calls for the firm to implement data security systems. The need for secure systems means the firm will have to spend a lot of its resources. This eats on its bottom line, as an increase in the cost of production lowers the profit earned. This is a major challenge as the firm cannot increase prices of its products beyond what other players in the industry are charging.
Amazon faces a challenge of complying with several laws regarding processing of personal information on its systems. There are regulation compliance requirements that have made Amazon to incur huge amount in legal battles. For example, in July this year Amazon had a data breach case and was fined $886.6M for not complying with the European Union laws (BBC, 2021). This means that compliance with local, regional, trading block and so on laws is paramount for the success of Amazon. If the firm does not ensure data of its clients is safe, it degrades its reputation. Amazon may lose its clients as some will shy away giving their personal data for payment processing. This makes clients data privacy a top priority to the Amazon top management.
Technology
Amazon is a technology business, without technology Amazon cannot exist. For Amazon to continue existing or thrive it must adopt emerging technologies. Amazon cannot rely only on world wide web for now. Amazon, though a giant in ecommerce its major source of revenue comes from cloud based platforms. Amazon technologies like Alexa digital assistant enables the firm to sell more products. On Internet of Things, Amazon is a leader with its Amazon Web Services IoT. The services enable Amazon to integrate most of its services and help companies to streamline manufacturing processes (Neiger, 2019).
Amazon uses social media platform like Facebook, Twitter, LinkedIn, YouTube, among others to market their products, respond to clients queries, share community information, highlight hot deals and offers among them. The marketing done on social media by Amazon is targeted to a given group of people or event. The firm uses analytics to understand the demographics of its clients (Giraffe Social Media Editors, 2021). For example, most of its posts and ads during the month of December targets Christmas celebration.
Artificial intelligence is at the heart of Amazon, as the firm is now using robots in its warehouses and delivery of orders. Robots are making workplace safer for employees though they are issues of concern among them loss of employment. Robots use may mean very few people will be left in warehouses and may trigger unemployment in other sectors like postal services (Bukszpan, 2019). The delivery of orders using robots has gained acceptance during the covid19 pandemic lockdowns.
Industrial Organization Model
I/O model is all about the influence of external environment in relation to a firm’s strategic decisions and actions. The I/O model a firm chooses has a strong impact on a firm’s performance than the choices management make within their organizations. Amazon may study firms in the ecommerce industry and identify an opportunity that may result to earning above average returns. For instance, Amazon may find out that firms like Target, Walmart, EBay, among a host of others are exerting a lot of pressure to it and decide to concentrate on its Amazon Web Services. This is diversification. This industry is an attractive industry to Amazon as it is able to earn above average returns (Hitt, 2020). The next step is bringing all the required resources together. Amazon has all the expertise and financial resources needed to implement this strategy. The last step is to roll out the strategy. Amazon is already a brand and it can use the clients it has to implement a new strategy. This will include incorporate IoT in its AWS.
Resource-Based Model
A firm’s resources are categorized as either tangible or intangible. There are three categories of resources; human, physical and organizational capital. It is how these resources are integrated that form capabilities and this gives a firm a competitive advantage. Firms can have similar resources but different capabilities (Hitt, 2020). Amazon has enough employees to steer Amazon Web Services business. The technology Amazon is using in ecommerce and its other business areas is enough for AWS to start earning above average returns. The firm also has well established structures like clients, financial strength and suppliers, who can be consumers of the AWS products.
Vision
Amazon vision is to become the best company in the globe that values its clients and gives them an opportunity to buy all they want online (Amazon, 2021). This vision statement has two constituents that are vital for the success of Amazon. One, customer centric. Amazon gives its clients the first priority for it knows without clients there is no business. This includes rewarding loyal clients with hot deals and loyalty points. Two, global presence. Amazon want to spread its wings to all continents. This will make it have advantage of not relying on clients from one region.
Mission
Amazon mission like its vison it talks about its clients. It has three components; affordability of products, shopping convenience and varied selection. Amazon pursues cost leadership strategy and thus their products are cheaper. The automation of shopping experience is not complex and therefore clients do not undergo tedious process. Amazon provides diverse products from which clients can choose from. These components enable Amazon to have a huge client base that contributes to its profit growth (Amazon, 2021).
Stakeholders
Stakeholders are people, groups and organizations that have effect or are affected by a firm’s vision and mission. This also includes those who have enforceable claims on a firm and those affected by a firm’s strategic outcomes. This includes capital market stakeholders like shareholders, product market stakeholders like customers and suppliers and organizational stakeholders like employees (Hitt, 2020). Amazon major stakeholders are the investors, customers and suppliers. The investors provide resources needed for the business to run smoothly in exchange of a share of profit earned. Amazon cannot be able to expand to new markets without investors. The suppliers play a great role of ensuring there is enough supply of products when they are required. The consumers are the people who make products to be brought to the market.
