The Amazon brand is synonymous with high-quality offerings in the fields of e-commerce, cloud services, and AI, and the company itself is a household name on a global scale (AI). The Amazon business strategy study is a compilation of the many factors, including ideas, innovations, technological research, collaborations, and, most importantly, techniques that have contributed to Amazon’s rapid rise to its current position at the top of the retail food chain. The company’s business strategy has focused on expanding the reach of its online retail operations around the world, broadening the range of goods and services it provides (Gupta & Rodriguez, 2020). Amazon’s success can be attributed, in part, to the company’s use of data and analytics, which is part of the company’s IT strategy (Gupta & Rodriguez, 2020). To collect, process, and analyze data from various sources, Amazon has made substantial investments in data infrastructure and developed a wide variety of in-house tools and platforms.
Consider Amazon’s one-click shopping feature, which allows customers to buy items with only a single click. This element is a great example of Amazon’s dedication to its consumers and its use of technology to enhance the shopping experience. With this information, Amazon can better gauge customer needs and adjust product offerings accordingly. Amazon’s success can also be attributed to its innovative IT strategy. The company provides its employees with an atmosphere that encourages them to think outside the box and try out their ideas. Amazon also invests heavily in R&D; the company runs several R&D centers in different parts of the world to create innovative products and services (Gupta & Rodriguez, 2020). Putting a premium on innovation has helped Amazon stay ahead of the competition and introduce new products and services that have been well-received by customers.
The company is headquartered in Seattle, Washington, and directed by CEO Jeff Bezos. Amazon employs a decentralized management approach to give employees more autonomy and to encourage them to accept responsibility for their work. Employees at Amazon, whose management structure is a matrix, may be required to collaborate with employees of various departments on a single project and report to more than one manager. This configuration allows for adaptability and teamwork, but it also has the potential to increase complexity and confound thought. Amazon has substantially invested in data infrastructure and developed proprietary tools and platforms for collecting, processing, and analyzing data from various sources. Customer information, sales numbers, and logistics details are all included.
The company has also invested heavily in R&D, creating labs worldwide to focus on new products and technology. One of the most significant technological advances that have led to Amazon’s success is the company’s use of data analytics as a fundamental component of its business strategy. Insights from data and analytics are used to guide decisions regarding the company’s operations, goods, and services (Gupta & Rodriguez, 2020). As a result, the company can better address its clients’ needs. Amazon has employed technology to improve the operation of its supply chain, allowing the company to reduce costs and increase efficiency.
Porter’s Five Forces Model is a framework for assessing the elements that determine an industry’s competitiveness. Michael E. Porter is usually regarded as the idea’s originator. There are five things at work in this case:
- Amazon may encounter new competitors because of the low barriers to entry in its business. While Amazon has built a strong brand and a loyal client base, new businesses can readily enter the market and compete with the behemoth.
- Amazon must also contend that competitors may imitate its products and services. While Amazon has many items and services, competitors offer comparable goods and services at lower costs.
- Online purchasers have a strong bargaining position because of the number of available options and the simplicity with which they can switch between different suppliers. Amazon has sought to address this issue by offering its customers a wide range of items and services and expediting the purchasing process.
- Since Amazon buys from so many different vendors and has such a strong bargaining position due to its size and scope, its suppliers have comparably limited bargaining power.
- Competition among the industry’s current generation of competitors is intense due to the large number of enterprises seeking a piece of the e-commerce pie. Amazon’s size, reputation, and client base offer it an advantage over competitors, but it still confronts fierce competition from competitors like eBay and Alibaba.
A structured decision follows a standard procedure or set of criteria, is based on objective, measurable criteria, and can be easily analyzed. The type of organized decisions that Amazon could make include setting prices, managing supply chains, and arranging marketing campaigns. BI tools are useful because they provide information that can be used to make choices. Using best judgment and acquired knowledge, as well as incorporating some elements of structure, is required when making semi-structured judgments. Amazon’s operations in product creation, human resource management, and the formation of strategic alliances are all instances of the semi-structured variety (Gupta & Rodriguez, 2020). BI technologies can be helpful since they provide information that can be utilized to inform choices like these.
When making a decision that is not part of a predetermined process, the decision-maker must use initiative, resourcefulness, and adaptability. Examples of unstructured opinions Amazon could make include its business strategy, expansion into new areas, and corporate social responsibility activities. BI technologies give data that may be used to guide such choices. By giving information on industry trends, customer needs, and technological changes, BI tools can assist firms such as Amazon in making better decisions.
- The likelihood of class “Cool” is 4 out of 14 if “Rain” is the value of Temp and “P” is the value of Outlook.
- If the temperature is mild and the outlook is cloudy, then the class is “P” with a probability of 5 out of 14.
- The likelihood of class “Hot” is 4 out of 9 if “Sunny” is the value of Temp and “N” is the value of Outlook.
The value web is the interconnected system of relationships and exchanges among employees and between a business and its many constituents. The value web illustrates the myriad of activities and processes a company uses to create value for its stakeholders. Amazon’s value web includes many activities and processes that the corporation employs to benefit its constituents. Amazon creates value for its customers by offering a wide selection of goods and services at competitive prices, streamlining and simplifying the shopping experience, and ensuring timely and reliable delivery of purchased items (Gupta & Rodriguez, 2020). The company creates value for its vendors by acting as a venue where its products can be sold to a large audience and by granting logistics and fulfillment services that facilitate their growth into new markets and expand the number of clients they can serve. As a bonus, Amazon creates value for its business partners by giving them access to a wide range of resources and services, such as the Amazon Web Services (AWS) cloud computing platform, which they can use to grow their operations and succeed at a higher level.
The term value chain describes the sequence of activities a company performs to create something of worth for its customers. It includes primary and secondary activities, the former being those directly involved in creating and distributing a product or service and the latter allowing the creation and distribution to occur. Amazon’s value chain consists of many different processes, such as receiving and processing incoming orders, running production, sending outgoing orders, selling products, providing customer care, making purchases, and creating new technologies. To provide value for its consumers, Amazon engages in various operations. Amazon’s business model is based on providing value to its consumers, so all these endeavors are intrinsically linked (Gupta & Rodriguez, 2020). Because of its comprehensive grasp of the many parts that make up its value chain and how those parts interact with one another, Amazon can establish a self-sustaining cycle of value creation that adds to the company’s growth and success.
Cloud computing could be a good fit for some or all of Amazon’s IT infrastructure, but it depends on the company’s specific needs and circumstances. Using cloud computing for at least some of Amazon’s informational systems is supported and criticized for various reasons. Amazon’s cloud migration proponents point to the company’s potential to increase efficiency while decreasing overhead costs. By relying on cloud-based systems, Amazon can save money on hardware and software by not having to buy, maintain, and upgrade them. As an alternative, the business only spends money on what it needs at any time. The company can save expenses and better allocate its resources as a result. Moving to the cloud would also make it easier for Amazon to grow its current operations, which is another compelling argument in favor of the shift.
Using cloud-based technology, Amazon may quickly and inexpensively scale up or down in response to fluctuating business demands without purchasing additional hardware or software. This can help the company adjust to changes in demand more and keep ahead of the competition even while technology advances at a breakneck pace (Gupta & Rodriguez, 2020). One of the primary criticisms of Amazon’s planned move to the cloud is that it would give up control of essential parts of its IT infrastructure. If Amazon were to rely on cloud computing, the company would be at the whim of the service provider and may lose some say over its data and infrastructure, for Amazon, this would be a significant setback.
Amazon has patented a technology called anticipatory shipping, which involves anticipating a client’s probable order and delivering it to a nearby fulfillment center before the consumer has even placed their order. This is just one of the many fascinating details about Amazon that have come to light. The purpose of this system is to improve customer satisfaction while decreasing delivery times. Since 2014, Amazon has been testing this system in a limited capacity, although it is currently unknown how broadly the company will deploy this method in the future.
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Reference
Gupta, S., & Rodriguez, M. L. (2020). Amazon in 2020. Harvard Business School.