Amazon: Leading Online Retailer Dominating Global Market Share - Essay Sample

Paper Type:  Essay
Pages:  7
Wordcount:  1793 Words
Date:  2023-05-06


Amazon is currently the leading online line retailer globally and is also a pioneer in the world's online retailing space. Initially, the enterprise began as an online book store, and later on, after realizing that its business venture had been successful, it diversified into selling anything online(Singh, 2011, p.58). Amazon has now dominated the world market share through a wide range of localized portals, globalized delivery, as well as logistics platforms. The firm has leveraged technology as a source of competitive advantage, which in turn has enabled it to reap the benefits of economies of scale. Furthermore, Amazon leveraged the synergies between its external and internal drivers, which have to make it difficult for the rivals to enter the market (Carayannis, 2018, p.11). Discussed below are some of the strategies that have enabled it to prosper across the globe

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One of the strategies Amazon has been using for internationalization is concentric diversification or generic business strategy. The approach is about leveraging technological capabilities for business success. The plan is cost-effective as it aims to provide maximum value for the customers at the lowest price possible (Singh, 2011, p.33). Customers have been finding it easy to get Amazon products as they are readily available on its online portal. The strategy has enabled Amazon to remain the world's largest online retailer as well as remain the leader in a market segment which carries out its activities. More often than not, cost leadership does follow the laws of diminishing returns, a fact that has been limiting Amazon's strategy (Keupp, Palmie & Gassmann, 2012, p.3). Sometimes the firm has been finding it challenging to sustain growth and increase profitability once it realizes that the approach results in a loss. In this regard, Amazon must take some measures when using generic business strategy. For instance, offering steep discounts for regular members to ensure timely and express delivery. The Amazon program should also waive off the shipping charges and pass on the benefits of avoiding customer taxes, thus lowering the prices of their products further. The aim of doing so is to ensure customers feel at ease when buying the products.

Secondly, Amazon focuses on its sources of competitive advantages. The firm pays more emphasis on technology, the actualization of the economy of scale benefits as well as leveraging the efficiencies from the synergies between internal and external sources. Apart from this, the firm has been using big data analytics in the process of mapping its potential customers. Big data tends to monitor the behaviors of customers, thus making more sales(Kim & Mauborgne, 2014, p.49). For this reason, the big data strategy is now something to emulate by other companies. Once a customer shops at the Amazon, the shopping history is left in that the website. The website tends to display or would be showing the list of recommended products to regular customers. The system can sense and guess what the consumer wants by following browsing history and mapping of their purchases.

Amazon also has been focusing on cost leadership strategies, a fact that has made it impossible for its competitor to outdo it in the market share that making it easy to internationalize. The firm also has been focusing on cost reduction as opposed to product differentiation; therefore, no product line is exclusive, and all of its products are available to other portals (Frynas & Mellahi, 2015, p.40). In the same way, the company does not stock products that appeal to the need for instant gratification but instead rely on consumer's impulse purchases who tend to be in hasty and require instant fixes.

Lastly, the company's current strategy is based on the convenience aspect. The firm has made it possible for the customers to shop as there is no need for them to visit a physical bookstore or wait for long for their order to arrive after some time. Amazon currently delivers goods on the same day in many countries it operates. Further, it has been attempting to employ drones for near-instantaneous delivery (Mol, Stadler & Arino, 2017,p.1). Additionally, it has been focusing on non-retail product lines, for example, cloud bases services as a move to address the issues with product differentiation and overreliance on cost leadership strategies.

The firm must evaluate the policies if it realizes that it is incurring losses in some of the quarters. It is worthwhile to note that the company merely focuses on cost leadership, thus impacting its bottom line. In this regard, it's high a chance for the company to adopt a global approach in the international markets. The move would enable it to align its local delivery and logistics supply chain with the global business model (Sparrow, Brewster & Chung, 2016, p.10). It aims to create a globalized business value chain to make it possible for any customer to purchase any time any and anywhere. Therefore, the company has to maintain its growth rates and sustain its momentum. If the firm can evaluate the existing drawbacks in its current strategies and adopt what is right for them, it can still maintain its bright future. The company, therefore, must continue to focus on its go competences aiming at expanding the global value chain. The firm must only rely on strategies that have maximum profits (Moutinho& Vargas-Sanchez, 2018,p.16). There is no need for the firm to continue using some procedures such as cost leadership in some places when it is incurring losses. The company must carry out a feasibility study in different countries before coming up with a strategy to be used. Nowadays, It should be noted that states have theirs on language and culture, which can make it difficult for some strategies to be effectively applied. Amazon must continue educating the personnel on the importance of business knowledge. In the 21st century, any business enterprise can only succeed if the owner has relevant knowledge about the market, language, and people's culture. Therefore, Amazon must devote more resources to educate its staff, especially the ones in overseas countries, to familiarize them with all aspects of people's way of life.

Critical Analysis of the Theoretical Merits of the Resource-Based View and the Positioning School of Thought

From time immemorial, researchers have been trying to find ways of creating, managing, and sustaining competitive advantages as the only way of handling challenges that affect a company's survival. The success of the competitive strategy is based on how to establishing significant factors representing peculiar factors of competitive advantages coupled with the organization's capabilities of managing the resources of differentiation (Hill, Jones & Schilling, 2014, p. 151). The school of thought is, therefore, a strategic analytical view that is centered on the idea of position the firm basing on Porter's five frameworks and within the context of its industry. It should be noted that the importance of market structure depends on the manner with which induces the firm to behave. The behavior of the firm can be inferred in the way of outputs, changing prices, expenses, research expenditure, just to mention a few- which reflects the organization's performance. Additionally, these competitive forces are the ones that shape a firm's strategy.

Threats emanating from the environment are any factor or a company outside the firm, which can negatively affect the firm's operations. The model was developed to help managers in the process of constructing a competitive environment and aiding in analysis and neutralizing the threats. In the same way, the model was developed to support the management team to have a broader perspective when viewing the firm, thus coming up with better competitive strategies. The only analytical tool that can be used to find out how the company is positioned is Porter's five forces (Hill, Jones & Schilling, 2014, p. 155). The model was seen as the sole analytical purposes framework in determining the company's position and the way of defining it. As opposed to the resource-based view, that was based on organization's internal capabilities and resources in achievement the firm's competitive advantages. Porter's five forces focus more on external variables.

Porter Represented the Positioning School of Thought Basing His Idea on the Five Forces

approach, with an assumption that a company would only achieve a competitive advantage in differentiation or by directly at low cost by keeping competitors off-balance as well as defending its attractive market. The firm could accomplish that through strategic investment and engaging in pricing strategies (Hill, Jones & Schilling, 2014, p. 153). Additionally, the firm could achieve a competitive advantage by evaluating its competitive environment using Porter's five forces approach in the attempt to develop its competitive strategy. The five forces, according to Porter, were as follows: the threat of new firm entry, the threat posed by substitute products, buyers' bargaining powers, suppliers' bargaining powers, and rivalry among the existing competitors. Porters argued that different generic competitive alternatives and visions were as a result of overall focus, differentiation, and cost leadership (Ciobanasu, 2012, p.9). He further asserted that the company was to adapt a given competitive strategy, and any firm that lacked a clear orientation was like a stuck in the middle-represented an unfortunate strategic situation.

Resource-Based View (RBV)

The resource-Based view assumed the performance of the organization as determined by the efficient deployment of resources and its competencies. The RBV revolves on the question that "why are firms different?" (Ungson & Wong, 2014, p.3). RBV is usually seen as the most significant as it the most cited theories in the film of management. RBV has been frequently used in the academic literature as a way to understand the mechanism of building competitive advantages by exploring the role of resources, assets as well as capabilities in achieving superiority. Therefore, RBV is a tool of analysis for a firm's resource position as it offers a theoretical understanding about the deployment of organizational resources and the achievement of competitive advantage, which collectively results in the organization's superior performance (Lasserre, 2017, p.40). The resource-based view is based on the perception that sustainable competitive advantage is realized from the organization's distinctive capabilities such as non-substitutable resources, a bundle of variables, and rare inimitable. Therefore, RBV emphasizes that a firm can only achieve a state of a competitive advantage that is sustainable through acquiring and controlling its resources and capabilities. RBV tends to look at firms in terms of their resources as opposed to their products.

Similarly, RBV is a representation of an inside-out view where its perspective emphasizes that a firm can only achieve its competitive advantage by managing its existing unique resources. Therefore, the organization must approach their competitive strategies from capabilities perspective as opposed to the market position (outside-in). It is paramount to note that, even though a resource-based view standpoint that pushes the focus of internal resources, capabilities, and knowledge towards achieving competitive advantage (Makadok, 2011, p.1318). However, in the process, both the external environment and its re...

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