Introduction

Being one of the primary major companies to promote goods over the Internet,

Amazon.com is a multinational electronic commerce company with headquarter in

Seattle, Washington and has become a worldwide established name and world’s

largest online retailer. It was founded by Jeff Bezos in 1994 and started as an online

bookstore but due to its success in its early development, Amazon has varied into

other product lines and services such as groceries, electronics and merchant

program. This Internet retail giant surpassed the $300-a-share mark for the first time

in 2013 July 21, (cnet.com, 2013) and Amazon has 130 million active customers

worldwide, in which 13.8% of the whole customer are the prime customer of Amazon

(googlesurvey.com, 2012). With its solitary mission, “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”, Amazon expanded its market share

and developed separate branches around the world, such as UK, Canada, China,

Japan etc. since it started, Although Amazon has made a huge economic benefit and

occupied a dominant position in E-commerce, criticism and controversy like anti-

unionization efforts; anti-competitive actions; price discrimination are also emerged in

the last few year. (cnet.com, 2013)

Objectives of the Report

Striving to examine the feasibility of Amazon.com’s past, present and future

strategies, and this survey analyzes the macro-environment, operating environment,

strategic capabilities, and stakeholder expectations within an international scope. In

addition, proposals for Amazon.com future strategic plan are also provided. The

detailed goals of this survey are as follow:

 To identify Amazon’s external environment

 To explain Amazon’s strategic capabilities

 To summarize Amazon’s stakeholder expectations

 To create a general TOWS analysis of Amazon

 To distinguish Amazon’s corporate level strategies

 To evaluate the suitability of Amazon’s main strategies

 To offer prospective potential strategic alternatives

Overview of Industry

The expansion of globalization has led to the emergence of the digital economy

which becomes an alternative to the traditional way of doing business or trade.

Nowadays due to globalization, technology is evolving at a very fast speed, forcing all

the companies to adopt new technologies. E-commerce plays and it will play a key

role in the economy in the future, and more and more companies will have to change

their business strategies. According to Goldman Sachs, the global E-commerce

market share will be $963 billion by 2013 and witness the growth rate of 19.4% E-

Commerce by the end of 2013. (dazeinfo.com, 2012) The e-commerce industry

contains various types of retailers, online retailers, e.g. Amazon.com and eBay,

information service companies, e.g. Google and Yahoo, online versions of traditional

brick-and-mortar stores and Amazon still retains the No.1 position among the global

E-commerce market around the world. The Amazon Company has been profitable

ever since and in 2010, Amazon reported a record profit of 1.15 billion U.S. dollars.

Amazon’s revenue grew from 6.9 billion dollars in 2004 to 34.2 billion dollars in 2010.

(statista.com, 2011) With the introduction of the novel kindle series since 2007,
Amazon gradually dominates the e-reader market around the world and gain larger

shares.

Chapter 1: Description of Current Status

Remote Environmental Analysis

Based on Strategic Management written by Finlay(2000) the environment of a

business contains two closely related parts, the operating environment and the

remote environment. As to the operating environment, individual business mutually

influences each other, while in regard to the remote environment, it can have a

significant effect on the operating environment but not just only influence the

individual business. Due to the fact that remote environment profoundly affects the

origins of most alternations in the operating environment, and individual enterprises

possess no control power on them, the evaluation of those parts are of great

significance for Amazon to fully grasp the future tendencies and potential capability of

improvement.

Political

At present, Internet is no longer a rare object and can be easily access to due to the

great attention attached by the governments around the world. For instance, the U.S

government policies were promoting competition through the telecom liberalization,

thus E-commerce in the last few years and nearly all the resident are able to access

to the Internet. What’s more, U.S government has posed high investment on the
national ICT infrastructures and proposed the ICT Development Fund with the

purpose of establishing a regulatory and policy framework that facilitates the

development of the country’s telecommunications and ICT infrastructure and services

in order to meet national, regional and international objectives (american.edu, 2011).

With regard to some developing countries, such as China, policies for Internet

development are also drafted and put into utilizing. China has invested large amount

of capital on the network construction and resulted in the prominent increase of

Internet users. Thus, along with the fast growth of global Internet infrastructures,

global Internet users can access for a better and reliable Internet to browse their

product on Amazon.com.

Economic

High interest rate is always a significant factor influencing the development of certain

economic activity. According to money.co.uk (2012), high interest rate has become a

negative factor hindering consumers’ spending on E-commerce. However, as to the

Asian countries, such as China and India, consumers in these countries will spend

more on E-commerce as the result of fast and sustainable growth of the economy in

the last decade (xinhuanet.com, 2011). Based on the diverse economic development

and economic policy of various countries around the world, Amazon should transfer

its market focus to some countries with high economic growth and expand overseas

market.
 (Figure 1)

According to figure 1, the global online retail sales has a steady growth from 2007 to

2012 and reached 399,125 million& in 2012 (internetretailer.com, 2012). The steady

growth of global online retail sales indicates that more and more consumers will

choose E-commerce as their option for shopping. In addition, it also means that the

E-commerce market is expanding and more potential consumers will choose

Amazon.com as their preference for online shopping.

(Figure 2)

Along with the development of the economy, the annual disposable income of some

countries in the world moves forwards vigorously. According to figure 2, China’s

annual disposable income of householders has reached about $4, 500 billion and will

exceed $5,000 billion in 2015, which has largely outnumbered other developing
countries like India, Russia and Brazil (marketresearchworld.net, 2013). With the fast

and stable growth of the annual disposable income of the householders, more

potential consumers will have more spare money to patronize the Amazon.com.

Social

Social media and social networking are no longer in their infancy. Social networking

continues to grow rapidly, offering global consumers new and meaningful ways to

engage with the people, events and brands that matter to them. According to Nielsen

and NM Incite’s latest social media report, total time spent on social media in the

U.S. across PCs and mobile devices increased 37 percent to 121 billion minutes in

July 2012, compared to 88 billion in July 2011 (nielsen.com, 2012).

Consequently, the rapid growth of social networking is an efficient and lucrative

channel for the E-commerce marketing. Moreover, according to

internetworldstats.com, the number of the Internet users around the world has

reached 2,749 million in March 2013 (internetworldstats.com, 2013), and the rapid

growth rate of worldwide Internet users is bound to be an opportunity for increasing

the e-retailing market share.

Technological

Mobile device is no longer just a communication tool with its expansion on functions

and it could be a perfect opportunity for E-retailers to develop their own apps on

mobile devices. According to nielsen.com(2012), consumers ‘time spent on mobile

apps and mobile web has increased 63% in 2012, compared to the same period last

year. As a result, the E-commerce Apps on IOS and Android platform not only make it

easy for consumers find their ideal products though the simple steps on their mobile

phones, but also make E-commerce retailers access to more sales online.
Environmental

Global warming and pollution awareness are still prominent issues requiring more

attention. With the development of the E-commerce, consumers can easily access to

products without driving to an entity store. What they should do is comfortably waiting

for their desirable goods delivered to their house. Consumers with high

environmental awareness have somewhat reduced the automobile exhaust pollution

by adopting E-commerce retailing method instead of traditional shopping method.

With a more “green” business method and environmental-friendly products, E-

commerce retailing method become more and more popular among the consumers.

Legal

Firstly, E-commerce retailors need to abide by the laws and regulations of each E-

commerce market that they are operating. Every nation has drafted and implemented

laws on E-commerce in order to avoid improper competition and boost economic

growth among the fierce online competition environment. For instance, China’s first

e-commerce legislation is being drafted to regulate a market that boasts 1.1 trillion

RMB ($175 billion), according to government sources (chinadaily.com, 2013). The

law is expected to tackle malpractices such as unfair competition, lack of intellectual

property rights protection and tax evasion. This could be an astounding news for the

development of the E-commerce industry in China. In addition, there are no uniform

laws and regulations on E-commerce around the globe, and this is more likely for the

E-commerce retailers to be aware of both the domestic and international laws and

regulations on E-commerce. Only being compliance with the proper regulations of

certain countries can E-commerce retailers effectively broaden the market.

The Operating Environmental Analysis

Originally developed as a way of assessing the profit potential of different industries,

Porter’s five forces framework can provide a useful starting point for strategic and is

of great value to most organizations. The Porter’s five forces framework decides the

competitive intensity and help strategists analyze the ultimate profit potential of a

certain industry (Exploring Corporate Strategy, 2008). The Porter’s five forces

framework mainly composed of five forces, namely industry rivalry, potential for new

entrants, substitute products, bargaining power of suppliers, bargaining power of

buyers and each of the five forces will be examined as follow:

Industry Rivalry: High

The industry rivalry in E-commerce industry is very high. As search engines are

becoming the first choice for consumers when shopping online, such as Google or

Yahoo search engine, consumers may unintentionally find different online retailers

when searching one certain product on the Internet. As a result, it highly increases

the opportunities for other retailers to participate in this fierce E-commerce

competition. Moreover, due the little capital needed to start up an online retailing

store, there is an increasing amount of online stores appear on the Internet to share

this big cake. Some smaller niche affiliate online stores when combined create even

more competition (Bennett, 2009).

Potential for New Entrants: Low

Potential for new entrants in the E-commerce industry is relatively low comparing to

other industries with a fast product replacement rate. For the online retailers, it is

easy and convenient for them to buy in bulk and offer the lowest price for the

consumers and this is the major competitive advantages as there is much choice
online. Strong brand image of online retailers is also a key factor influencing the

consumers’ trust and loyalty, which makes the new entrants find hard to seize the

market share.

Threat of substitutes: High

Threat of substitutes is high considering numerous physical stores spreading all over

every cities and towns. The direct vision and touch of the products in a physical store

could leave consumers a profound impression than shopping online. A fancy and

fashion physical store located in a downtown lot can appeal to a mass of consumers’

presence.

In addition, rental business became increasingly popular in the last few years and

somewhat influenced the online retailers. No one is always full of money and willing

to buy a brand new commodity if the stuff will not be constantly used. As a result,

some people tend to rely on rental business for their urgent need. Although start-up

of rental business costs can be high depending on the types of products and

equipment that you purchase to rent, however, costs can be minimized by purchasing

items in good condition secondhand (entrepreneur.com, 2012).

Bargaining power of suppliers: Low

Amazon’s purchases from its suppliers represent a good part of the suppliers’ offer,

which means that the company has more power and influence on costs and influence

on improving the features of the products. Moreover, because of the highly trained

experts carry on market research, Amazon is well informed about the suppliers

market. Therefore, Amazon has more power over the suppliers.

Bargaining power of buyers: High

There is a large variety of online shops and comparison websites to compare best

prices for consumers. Consumers can make a thorough plan for the goods they

wanted before finally make the decision.

Strategic capabilities of Amazon

Capabilities are fundamental for an organization. A company’s strategic capabilities

are composed of two dimensions: resources and competences. Resources are the

physical and non-physical assets of an organization, while competences refer to

firms’ abilities to deploy and coordinate resources (Kostopoulos et al, 2002). In this

section, Amazon’s unique resources and core competences will be evaluated and

compared with competitors, from which Amazon’s strengths and weaknesses will be

derived.

Amazon’s Unique Resources

Amazon’s unique resources include its strong financial resources, supplier and

distributor resources and strong brand image. Strong financial resources can always

guarantee Amazon enough capital for necessary investment and be away from

predicaments. In addition, it can realize Amazon’s international expansion strategy

and enable Amazon open up more branch companies in the overseas markets such

as China, India etc. Moreover, Amazon.com has access to a highly complex network

of suppliers and distributors. Although the company owns some storage centres, the

majority of the products are based on timely-delivery contracts with external

producers. Furthermore, the distribution and shipping of the products is done through

external contractors such as DHL, making possible that the overhead costs of
Amazon.com to be very low, and gives the company an advantage cost over

traditional retailers, and enable Amazon.com selling its products at a lower and more

competitive price.

In spite of all, Amazon.com has one of the most valuable brands in the world, which

reflects the high awareness of customers about Amazon.com. Even in markets where

Amazon.com was facing impediments restricting the market access to some degree,

such as China, the company managed to obtain an important market share through

the acquisition of Joyo.com, China's leading online retailer of books and videos.

Amazon’s Core Competences

Amazon’s core competences mainly include technological innovations, and broad

range of different products. In order to satisfy customers’ needs, Amazon.com

developed its own state-of-the-art software technology, its main competitive

advantage, which allowed the company to implement an efficient customer

relationship management by tracking customer buying behavior and allowing them to

make recommendations on similar products, which a customer might want to buy

through user recognition (ugb.ro, 2012). Hence, the user recognition function not only

assists customers in their buying decision, but also increases the occurrence of

cross-buying, which adds to the company’s overall profitability.

Amazon’s another core competence is its ability to offer a broad range of different

products. Since its beginning, Amazon.com has been expanding its product portfolio,

for instance jewelry or clothing, and nowadays offers nearly any product by itself or

uses a third-party seller. This massive diversity of products underlines its advantage

on traditional retailers that could just offer a small volume of products due to the

limited physical space in stores.

Amazon’s Stakeholder Expectations

Crucial stakeholder expectations rest with effective corporate operations. No

business could be survive without the constant patronage of the stakeholders.

Outstanding business performance will be achieved in case stakeholder expectations

are figured out and managed. Within this section, Amazon’s stakeholders will be

primarily identified, after that, much priority will be given to the anticipation of

Amazon’s solutions.

The stakeholders of Amazon mainly includes investors; top management; customers;

suppliers; regulators; media and are presented in the Figure 3 below:

(Figure 3)

Distinct in types, Amazon’s stakeholders own various power and interest. Some of

them may have the decision-making ability on Amazon’s strategies, but others might

not concern themselves with Amazon’s activities. As a result, the grid below Figure 4)

is used to identify different types of stakeholders and each of them will be examined

accordingly.
 (Figure 4)

 Investors

Investors of Amazon are privileged to possess high voting power but indifferent to

corporate strategies. What they expect are substantial returns of investment.

Therefore they ought to be kept satisfied.

 Top management

Both high power and high interest of company’s strategies are possessed by

Amazon’s top management. They expect a more prosperous company and attach

great importance on consumers’ satisfaction as well as their own profits. Therefore

they ought to be managed closely.

 Customers

Customers of Amazon also have reasonably high interest in Amazon’s online

products but with low power. They expect better products that have higher value-

price ratio and can choose whether or not to buy Amazon’s products. Therefore they

need to be kept informed.

 Regulators

Regulators also expect that Amazon is strictly accord with the policy and regulation
during normal operation. They have low interest in Amazon’s activities and high

power to effect the company’s strategies. Henceforth, regulators should be satisfied

when operating.

 The suppliers

Bargaining power of the Amazon suppliers is relatively low and they are reluctant to

care about Amazon’s activities. Therefore minimum effort will be taken to monitor and

employ them cooperate with Amazon profitably.

 The media

The media have high interest in the Amazon’s activities hold by Amazon but low in

power, as a result, they need to be frequently informed.

Amazon’s Corporate Level Strategies

Corporate level strategies include aims of company, acquisition and allocation of

resources as well as measure for optimum operation and they are the highest level of

strategic decision-making in a company (Johnson et al, 2008). In the next part,

Amazon’s past and present corporate strategies will be evaluated by using the

Ansoff’s matrix and BCG matrix.

(Figure 5)
Ansoff Matrix

Amazon’s corporate level strategies will be briefly explained with aid of the Ansoff

matrix (Figure 5). Through the exploration of prominent changes in these four areas

in terms of the products and markets, the corporate level strategies which Amazon

could adopt will be determined.

Since it was founded in 1995, Amazon has increased its product portfolio and

expanded into the global market. However, its core business is still the books.

Amazon has constantly perform well on its market penetration in existing market with

its existing product. Due to the large world-wide demand for literature, the low price

points for books, along with the huge number of titles available in print, Amazon has

attracted more and more online consumers to buy its books on Amazon.com.

Not only selling book in its existing markets, Amazon has made great effort to expand

its markets by providing wide variety of books with a low price to its new markets.

Achieving higher sales by selling books of both local language and English versions,

Amazon’s market extension go off well in its new markets.

In November 2007, Amazon launched its own e-book readers, Amazon Kindle, for

expanding the market share and satisfying the customers. Then, in order to enter the

computer tablet market, the Kindle Fire was introduced with a low price comparing

with the iPad to expand the digital market. All these novel Kindle series brought out

by Amazon obtained the great acceptance and support from the book-lovers.

Primarily launched and available in its existing market and achieving great economic

growth, Amazon has attempt to promote this new product to its new market for

diversification. As a result, the Kindle series become more and more popular and

bring more benefits to Amazon.

From above, we can see that past and present successes of the company partially

stemmed from the effort of continuously and creatively developing new markets and
new products. In the strategic decision-making process, the Ansoff matrix provided a

useful tool to help determine the strategies that Amazon could adopt in order to

succeed. Specifically, Amazon Web Services has cut its prices for the 19th time in six

years (computerworld.com, 2012). This penetration strategy helped Amazon to

consolidate its existing markets by continuously lowering the prices of existing

products. Amazon also endeavored to adopt a diversification strategy i.e. exploring

new products in new markets. The introduction of innovatively designed kindle series

is a good example. Amazon never stopped developing new products for its existing

markets and exploring new markets through internationalization and finding new

segments.

The Growth/Share (or BCG) Matrix

In order to examine the balance of investment

portfolio and market condition, BCG matrix (Figure

6) could be the best option. In the following section,

the BCG matrix of Amazon will be explained

geographically.
Figure 6
As Amazon.com has grown aggressively in recent years, expanded into diverse

businesses, and achieved profitability, its impact on the E-business and retail sectors

is greater now than ever before.

European market has witnessed an e-retailing sale of $13.1 billion in 2011

(internetretailer.com, 2011). It has become the cash generator for Amazon in last few

years and could be marked as star. Taking UK as an example, UK has taken 25% of

Amazon International revenue share and occupied 19.8% market share of E-

commerce. Over the five years through December 2013, the UK segment of the

company is expected to increase its revenue at a compound annual rate of 33.7%, to

reach £4.3 billion (sap.com 2013).

Although smaller than the European market, North America is another place for

Amazon making profit. North American sales increased 36% compared to the same

period last year while global sales grew 29% and North American expenses

increased 34% to $6.98 billion from $5.19 billion in 2012 (internetretailer.com, 2012).

Therefore, the North America market could be a cash cow.

However, as in China, situation is not the same. China owns a $36 billion e-

commerce industry, which is hyper-competitive with online retailers frequently

launching price wars and marketing campaigns to win market share. Occupied 2.3%

of the total share of Chinese B2C market, Amazon has generated $750 million in

annual web sales in China, a figure that could increase 33.3% to $1 billion as soon

as next year and China may contribute about 10% of the global revenue by 2015

(slideshare.net, 2013). Although low in relative market share, Amazon will gradually

expand its market in China with a relative high growth rate. Thus, China should put

into the Question Mark area in the BCG matrix.

Not long before, Amazon has launched an online marketplace in India in 2013 and

plans to expand its market share in India E-commerce market. India's e-commerce or

more specifically e-tailing market, crossed $800 million with 13 million online

shoppers in 2012 (allthingsd.com, 2013). Since the Amazon in India is just a start-up,

and there is plenty room for further growth. As a result, the Indian market can be

categorized as Question Mark in the BCG matrix (Figure 7)

1: Europe 2: North America 3: China 4: India

Chapter 2: Evaluation of Strategies

TOWS Analysis

Within this section, a TOWS analysis will be employed to completely assess the risks

and possibilities within the exterior environment. According to this and also the critical

success factors and company abilities, the weak points and strength of Amazon.com

within their global market will be concluded.

Threats:

 Global economic downturn in primary markets

Due to the latest grave economic crisis, Amazon’s major markets are decreased

prominently. GDP of most European countries and North America is affected

seriously by this financial crisis. Therefore, the lower purchasing power of the major
markets will definitely have impact on Amazon’s operation and interest.

 Increasing competition from competitors in market

Although Amazon has occupied a big share in the global E-commerce market, it

faces the unprecedented challenges from various types of competitor in the market.

Direct competitors, such as Borders, eBay and Barnes & Noble stand in a direct

competition with Amazon’s core business activity, with their company business model

and product line. In addition, Google and Apple stand in an indirect competition with

Amazon with their unique services and products.

 Involvement in patent violation disputes

Amazon has managed to avoid a constant barrage of patent lawsuits in the recent

years. In order to avoid the expense that would come with protracted litigation,

Amazon reached settlement with other companies about the patent disputes. E-

commerce software company Soverain originally filed a claim against Amazon for

infringing on five of its patents covering "core" aspects of e-commerce technology.

Due to the fact Soverain's intellectual property is essential to the ongoing

development of Amazon, Amazon reached a settlement with Soverain at last

(cnet.com, 2010).

Opportunities

 Growing international E-commerce sale

Global E-commerce market is developing all the time and according to

internetretailer.com, Global business-to-consumer e-commerce sales will pass the 1

trillion euro ($1.25 trillion) mark by 2013, and the total number of Internet users will

increase to approximately 3.5 billion from around 2.2 billion at the end of 2011

(internetretailer.com, 2012). The rapid growth of international E-commerce sale

boosts the e-retailing industry for the most part and Amazon.com is without
exception.

 Enterprise acquisition

Enterprise acquisition is always a good option for enterprise expansion. Starting as

an online bookseller, Amazon gradually expanded its enterprise scale by planned

acquisitions. The scope of Amazon’s enterprise acquisition is both domestic and

abroad. Amazon.com took over one of Chinese e-retailer Joyo for $75 million in 2004

can be a good example for expanding its overseas market. Also, by acquiring

domestic e-retailer Goodreads, a large social network for book readers, Amazon

takes one step closer to controlling the entire book industry, which is its ultimate goal

(marketintelligencecenter.com, 2013).

 Growth in digital media

Digital media growth rate for everything from books to video to music was quite

strong in global market and Amazon is striving to become a dominant force in the

distribution of digital media (zdnet.com, 2012). Amazon put forward a serial of actions

to dominate the global digital media, for instance, a sizeable profit was achieved by

the successful release of kindle.

Weaknesses

 No physical presence and store

Unlike the brick and mortar retailers, Amazon can’t provide customers face-to-face

experiences. Storefront visibility and appealing interior design are mainly two

advantages against the online retailers. The traditional retailers are bound to have a

certain market among the customers and somewhat “undermine” the business of

Amazon.

 Dependence on external contractors

Amazon inevitably depends on external contractors and on-time delivery of the

required items in order to ship the products to the final customer on time and all

these are executed by a third party. Furthermore, because the company offers free

shipping service appreciated by all the customers, it costs the company millions of

dollars per year, and reduces the overall profitability.

 Short history of the company

The short history of the company may be considered also a weakness, because

especially in times of economic crisis, famous companies with a long history, such as

Wal-Mart, might be in an advantageous position because they already learned from

past experiences how to act in certain situations.

Strengths:

In above Amazon’s unique resource and core competence sections, some of

Amazon’s strenghths have been indicated. All the Amazon’s strengths ensured its

dominant position in E-commerce. In the following part the strengths of Amazon will

be briefly evaluated.

 Strong brand image

Amazon.com has one of the most valuable brands in the world, which reflects the

high awareness of customers about Amazon.com. Amazon has become a famous

international brand in recent year with its expansion at the international level.

 Broad range of different products

Since its beginning, Amazon.com added categories, such as jewellery or clothing,

and nowadays offers almost any product by itself or through a third-party seller. This

huge diversity of products underlines its advantage over traditional retailers which

can only offer a limited number of products due to the limited physical space in

stores.
 Technology innovation

Constant technological innovations have been carried out though the development

process of Amazon all along. The hit e-reader, Kindle, created by Amazon has

attracted large customers and could be a proper example for the constant

technological innovation of Amazon. Along with science and technology innovation,

company’s overall profitability has been enhanced.

 Supplier and distributor resource

Amazon.com has access to a highly complex network of suppliers and distributors.

Based on timely-delivery contracts with external producers, amazon makes it

possible that the overhead costs of Amazon.com to be very low, and gives the

company an advantage cost over traditional retailers, Amazon.com being able to sell

its products at a lower and more competitive price.

Evaluation of the Suitability of Strategies

Suitability of strategies ought to be assessed in order to indicate the strategy option

would whether accord with the broad business environment, corporate strategic

capabilities and stakeholder expectations.(Johnson et al, 2008). Therefore, TOWS

matrix (Figure 8) could be a helpful tool to examine the suitability of Amazon’s

present corporate level strategy.

The TOWS matrix

Considering the Amazon’s past achievements and obstacles, the TOWS matrix

(Figure 8) will be used to evaluate the suitability of Amazon’s past and current

corporate level strategies.

TOWS Strategic Alternatives Matrix

External External Threats(T)

Opportunities(O)
 1. Growing international sale 1. Economic downturn

2. Enterprise Acquisition 2. Increasing competition

3. Digital Media Growth 3. Patent violation dispute

Internal Strengths(S) SO ST

1. Strong brand image “Maxi-Maxi” Strategy “Maxi-mini” Strategy

2. Broad range of products Strategies that use strengths Strategies that use strengths
to maximize opportunities to minimize threats
3. Technology innovation

4.Supplier and distributor

resource

Internal Weaknesses(W) WO WT

1. No physical presence “Mini-Maxi” Strategy “Mini-Mini” Strategy

2.Dependence on external Strategies that minimize Strategies that minimize

contractor weaknesses by taking weaknesses and avoid threats
advantage of opportunities
3.Short of Enterprise History

Figure 8

Amazon’s plan of investing in China and Indian e-commerce markets to take

advantage of the overseas growing market has a high suitability. From the external

opportunities perspective, these two markets are enormous and the economic growth

remained strong with the barriers removed. Amazon’s strategy has taken advantage

of this opportunity and its strengths. Amazon’s past achievements partially credited to

the positive expansion methods by searching for and trading in new foreign

marketplaces. This method also assisted the organization to defend in the recent

economic crisis within the western nations, which are Amazon’s major marketplaces.

Therefore this internationalization strategy has taken advantages of the strengths of

the company, and not only helped to maximize opportunities but also minimize

threats.

However, in terms of its market penetration strategy, Amazon has devoted most of its

energy on price sensitive segment but ignored the necessity of brand building in

overseas market. One example can be cited here is Amazon’s market penetration in

China. Amazon.com entered the Chinese e-commerce market in 2004 by taking over

Joyo.com. However, as the BCG matrix indicates, Amazon.com is underperforming

and has lost its position as market leader comparing with some domestic e-retailers in

China. China owns a high economic growth and high consumer spending, moreover,

the internet usage of China ranks top in the world. Amazon has the resources in

skills, experience and knowledge to undertake global operations successfully as

demonstrated in European and North America markets and penetration into China will

be less capital intensive than entering a new market. As a result, Amazon has high

feasibility to have more e-retailing market share in China by adopting extensive

marketing through expanding brand propaganda by various medium e.g. TV, outdoor,

Press and radio.

Amazon’s product development strategy has high suitability. Amazon has

continuously expanded its product portfolio since it was formed. This also contributed

to its competitive position in the market when facing fierce competition from other E-

retailing giants and local companies. For example, Amazon introduced the e-reader

kindle and the tablet kindle fire HD and gained sizable profit from these two.

Amazon’s service development strategy of providing a ‘greener’ delivery option has a

very high suitability in terms of environment. Consumers will be given the choice of

selecting the ‘green’ option for delivering. The boxes used for delivering will be re-
used by Amazon.com in future deliveries, which in the long-term will reduce cost of

packaging and ensure less wastage. This strategy will address the issue of increased

environmental awareness and the value creation and the possibility of reduced costs

should lead to increased returns for shareholders.

Chapter 3: Future Recommendations and

Conclusion

Potential Strategies

Amazon is far from its desirable situations in consideration of its current situations.

The recent economic downturns in Europe and North America hindered the

internationalization of Amazon and its goal to dominant the world E-retailing industry

is still a long way to go. At present, Amazon faces the challenge to sustain its

competitive advantage and expand its market simultaneously. To sustain the current

competitive advantages of wide range of products and technology innovation,

Amazon could keep adopting the current strategies by continuously providing great

variety of goods and high-tech innovations.

Geographically, it is necessary for Amazon to sustain its position in Europe and North

America and continue to explore the Asian e-commerce market. Looking at Amazon’s

internationalization history, it has met some difficulties. Example could be the

difficulties it faced when entering into the China market as indicated above. Brand

building and appropriate marketing strategies are still important factors affecting the

expansion of Amazon’s global market. Amazon has already launched its operation in
India this year and the obstacles met in China could be used for reference to expand

this brand new market.

In terms of market segmentation and targeting, Amazon performed outstanding in its

high-tech gadget development. The kindle serial has attracted large amount of

consumers who have preference to E-reading. Technology innovation should be

constantly carried out in the future development.

Conclusion

Enormous growth has been achieved since Amazon is founded and all the success

could give the credit to the effective strategic management of its competitive

advantages. Focusing on the the evaluation on Amazon’s external environment,

strategic capabilities and stakeholder expectations, this survey has comprehensively

analysed the suitability of Amazon’s past and current corporate level strategies. In

addition, appropriate future potential strategies for Amazon have also been proposed.

In conclusion, brand building and differentiation abilities are still needed in the furture

development and Amazon should promptly expand those Asian E-retailing market

with an appropriate market strategy and retain its profitable position in western

market.
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