Amazon operates in a competitive environment. All the firms that Amazon competes with are giant. In e-commerce, especially consumer’s goods, Amazon competes with firms like eBay, Walmart, Alibaba, Target among others. In video streaming services the main competitors are Netflix, Google, IBM cloud video, Facebook, among others. In cloud computing services the firms face Apple, Microsoft and the like. But, among all these competitors, Walmart remains as the most aggressive competitor.
Walmart and Amazon have been competing for the retail market. Walmart prides itself by having physical presence, while Amazon has footing on the online market place. But, the two firm’s rivalry is live. Amazon acquired Whole Foods with an aim of establishing brick and mortar outlets, while, Walmart acquitted jet.com to gain online presence. While, Walmart is doing well on retail presence, sustainability and in terms of financial strength, Amazon on the other hand is scoring well in terms of customer focus, innovation, digital growth and supply chain logistics.
Taking a keen look on these two firms, Amazon and Walmart, it is very clear that Amazon will take the day in the long run. This is because shoppers are inclined on online shopping and they choose well established firms that values them. The new normal that came with Covid-19 pandemic favored Amazon. The movement restrictions and social distance protocols made many firms to realize the importance of technology. The online shopping plummeted during the pandemic months. Amazon investment in technology bore the fruits that the competitor did not enjoy. Amazon diversification strategy is another factor that makes Amazon to be ahead of Walmart. In case of a decline in retail business income, Amazon has cloud computing services, video streaming services among other lines of business as a source of income. This is an area that Walmart has failed to look on. Walmart concentrates on retail business.
Comparing Amazon’s cost leadership and constrained diversification to Walmart cost leadership and market penetration, Amazon’s strategies are likely to be successful in the long term. Diversifications makes a firm to be resilient, especially in times of economic crisis like the one brought about by covid-19 outbreak. Secondly, Amazon strategy is likely to be successful because it is founded on technological innovation. For instance, Amazon uses robotics in its warehouses while Amazon drone services are used to deliver products to customers’ doorsteps within hours (Sadq, 3). Technology is the driver in the twenty first century, and this reality has been confirmed by coronavirus outbreak. Technology has become a lifestyle and Amazon has positioned itself as that lifestyle. As Amazon continues with the state-of-the art innovations, there is no doubt that technological capabilities and prowess will continue to reign.
Market Cycles
Hitt, Ireland, & Hoskisson (1) characterize market cycles into categories; the slow market cycles and the fast cycle markets. Slow cycle markets are defined as markets with considerable time to allow for firms innovate and shield their innovation from replication in a manner that gives them a competitive advantage. Fast cycle markets on the other hand are markets where players have little turnaround time to develop new products. Fast cycle markets are characterized by intense competition as firms try to outshine each other through competitive activities like imitation and price wars. These activities are meant to guard the market share as possible from going over to competitors.
If Amazon was operating in a slow cycle market, the concentric diversification strategy would be ideal since there would be adequate time innovate and make products or strategies unique to be imitated by competitors. However, cost leadership approach would not be ideal in slow cycle markets. Rather, differentiation would be ideal in slow cycle markets because there is adequate time to make a unique product that cannot be easily imitated by rivals. In the event that Amazon was operating in a fast market cycle, cost leadership would be ideal since it entails capturing a large market share of consumers who are price sensitive (Sadq, 3). While concentric diversification and cost leadership would be ideal or success in the long-term, the success of the strategy would differ depending on the type of market cycle.
In conclusion, Amazon is cognizant of the kind of market cycle it operates in and makes strategies ideal for the cycle. Amazon diversification of products see it sell products for slow and fast cycle markets. For instance, technologically based products like cloud computing, are autonomous vehicles are ideal for slow market cycles, thus making concentric diversification strategy suitable as the corporate-level strategy. Other products like grocery and consumer products fall within fast cycle markets, which makes cost leadership ideal. Thus a combination of cost leadership and concentric diversification business and corporate-level strategies help Amazon to compete effectively in the contemporary marketplace.
Walmart and Amazon have been competing for the retail market. Walmart prides itself by having physical presence, while Amazon has footing on the online market place. But, the two firm’s rivalry is live. Amazon acquired Whole Foods with an aim of establishing brick and mortar outlets, while, Walmart acquitted jet.com to gain online presence. While, Walmart is doing well on retail presence, sustainability and in terms of financial strength, Amazon on the other hand is scoring well in terms of customer focus, innovation, digital growth and supply chain logistics.
Taking a keen look on these two firms, Amazon and Walmart, it is very clear that Amazon will take the day in the long run. This is because shoppers are inclined on online shopping and they choose well established firms that values them. The new normal that came with Covid-19 pandemic favored Amazon. The movement restrictions and social distance protocols made many firms to realize the importance of technology. The online shopping plummeted during the pandemic months. Amazon investment in technology bore the fruits that the competitor did not enjoy. Amazon diversification strategy is another factor that makes Amazon to be ahead of Walmart. In case of a decline in retail business income, Amazon has cloud computing services, video streaming services among other lines of business as a source of income. This is an area that Walmart has failed to look on. Walmart concentrates on retail business.
Comparing Amazon’s cost leadership and constrained diversification to Walmart cost leadership and market penetration, Amazon’s strategies are likely to be successful in the long term. Diversifications makes a firm to be resilient, especially in times of economic crisis like the one brought about by covid-19 outbreak. Secondly, Amazon strategy is likely to be successful because it is founded on technological innovation. For instance, Amazon uses robotics in its warehouses while Amazon drone services are used to deliver products to customers’ doorsteps within hours (Sadq, 3). Technology is the driver in the twenty first century, and this reality has been confirmed by coronavirus outbreak. Technology has become a lifestyle and Amazon has positioned itself as that lifestyle. As Amazon continues with the state-of-the art innovations, there is no doubt that technological capabilities and prowess will continue to reign.
Market Cycles
Hitt, Ireland, & Hoskisson (1) characterize market cycles into categories; the slow market cycles and the fast cycle markets. Slow cycle markets are defined as markets with considerable time to allow for firms innovate and shield their innovation from replication in a manner that gives them a competitive advantage. Fast cycle markets on the other hand are markets where players have little turnaround time to develop new products. Fast cycle markets are characterized by intense competition as firms try to outshine each other through competitive activities like imitation and price wars. These activities are meant to guard the market share as possible from going over to competitors.
If Amazon was operating in a slow cycle market, the concentric diversification strategy would be ideal since there would be adequate time innovate and make products or strategies unique to be imitated by competitors. However, cost leadership approach would not be ideal in slow cycle markets. Rather, differentiation would be ideal in slow cycle markets because there is adequate time to make a unique product that cannot be easily imitated by rivals. In the event that Amazon was operating in a fast market cycle, cost leadership would be ideal since it entails capturing a large market share of consumers who are price sensitive (Sadq, 3). While concentric diversification and cost leadership would be ideal or success in the long-term, the success of the strategy would differ depending on the type of market cycle.
In conclusion, Amazon is cognizant of the kind of market cycle it operates in and makes strategies ideal for the cycle. Amazon diversification of products see it sell products for slow and fast cycle markets. For instance, technologically based products like cloud computing, are autonomous vehicles are ideal for slow market cycles, thus making concentric diversification strategy suitable as the corporate-level strategy. Other products like grocery and consumer products fall within fast cycle markets, which makes cost leadership ideal. Thus a combination of cost leadership and concentric diversification business and corporate-level strategies help Amazon to compete effectively in the contemporary marketplace.
