Case Study Analysis: Amazon

Paper Type:  Case study
Pages:  6
Wordcount:  1509 Words
Date:  2022-05-16
Categories: 

Introduction

The portion of the industry that should be dedicated to sales of products is advertising, personal selling, publicity, sales promotion, and customer relations. Since Amazon pursues a market penetration strategy these activities are significant, how useful these various selling tools are to consumers varies thus basing advertising rates on exclusively sale rates can be very useful for internet advertising. In regards to business partnerships for sales, the portion that should be focused on this sector s research and development partnerships, cross-licensing agreements, and merger and acquisitions. An online business can be most effective ii\f it mirrors the diversity of its customers (Phillips, 2001). However, it needs to do so strategically to avoid overstretching itself logistically and personnel-wise (Page, 2015).

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Digitization is rewriting the rules for competition in the new digital era where incumbent companies are most likely to be left lagging behind (Willmott & Hirt, 2014). With the internet, entry barriers are lowered therefore Amazon faces new competitors more often and the likelihood of succeeding is immeasurable. Most online stores are taking up Amazon's marketing strategy such as the Chinese company 360buy.com to compete against it (David & David, 2015). In its media segment, it's most likely future competitors are eBay and Netflix, in the general merchandise and electronics, Wal-Mart is the leading competitor. Alibaba group plays a vital role as its online competitors; Amazon competes against several worlds' most significant companies (Boyle & Stone, 2017). The company can continue to stay ahead of the competition through innovation by ensuring that they are ahead of technology thus providing maximum customer satisfaction. Amazon global dominance can be enhanced through the use of technology, alliances, and acquisitions to bid a range of products and services and constantly improving customer experience.

Amazon has a strategy of being the world biggest online store and therefore expanding into new international markets is a crucial strategy. The company should most importantly focus on density and proximity. Amazon has a business progressively dissimilar by geography; many of the company's services are limited to precise geographical areas. Therefore, it should mainly focus on a handful of countries where it can hope to achieve the kind of density and scale the company enjoys in North America and focus more explicitly on building density and scale rather than just focusing on expanding itself more thinly (Dawson, 2015). Countries such as India and China have strong local competitors and high bar regulations thus the markets are less likely to be prospective. This kind of strategy should be intense and enough to develop dominance, and then it should move to establish density and scale to different countries. Therefore, the company should first focus on density and size on a handful of states before moving to the next.

Acquisition of the companies that have proprietary technologies can be the best strategy for the company to further its expertise in emerging technology. The reason is that the company has a business strategy of providing diverse products and services to its consumers and it has been expanding rapidly. Therefore partnerships with these companies might be adequate at the moments. However, as the company grows more significant, it might need to have full control of the technology and eliminate these companies as prospective competitors. Amazon did not create innovative market like with Google or invent new products, but instead, it emanated to command by strategically captivating down a prevailing sector. Therefore it is always interested in the bigger picture, and technological advancement is growing at a breakneck pace and to maintain a lead in the ecommerce, it has to control the industry itself (Rao, 2011).

Amazon growth strategy is not the typical traditional one of boosting sales and improving margins for accelerating net income but instead increasing its revenues and maximizing on cash flow; this cash is later invested in the growth of the company. Amazon primary objective is to grow very strong on the most significant amount of cash flow to generate, continuously develop also the company's mission. The competition will not sit still, and it is rapidly gaining grounds, secondly, if rivals attain a similar interface, selection and delivery speed as Amazon, the company will be faced with a price considering. Therefore, the company should continue to intensely expand its territories and have a significant market share that will be hard to bring down in the future. However there are several challenges of expanding so densely, firstly the competition will not sit still, and it is rapidly gaining grounds, secondly, if rivals attain a similar interface, selection and delivery speed as Amazon. The company will be faced with a price considering that it has been working hard to accumulate market share rather than profitability. (Shaw, 2014).

Amazon's story of investing in its future has pushed the stock to huge gains over the past decade, and therefore investors are becoming more resistant to the enormous risks that face the company. The empire has been at the front line to offer customers lowest prices, however; other companies such as Target and Wal-Mart are closing in the gap. The company has invested so much and gained milestones in the industry. Therefore, it should consider creating a balance between financial gains and its goals relating to improving customer experience. Its competitive advantage has diminished as more businesses have joined the industry, unlike its inception. Therefore, it's time for the goal to shift to a more balanced strategy that ensures the company does not go beyond its core competency and protect it from making investments that are too costly for the company to recover from.

Conclusion

Amazon has experienced cases of cyber-attack such as the credit card security breach for its Whole Foods Markets; however, the company has relatively good security, which details why most online retailers have difficulty keeping up.For tighter security, the company should invest more in encrypting web traffic by ensuring that information between the customer and the website cannot be retrieved by a third party. Secondly, the company needs to set up tighter security that prevents cookie vulnerabilities and impersonation of customers. An online communication requires more integrity and stability. Cybersecurity can be complicated and difficult but only with customer confidence and data integrity can an online business be successful, Amazon has decent security however it can improve in a few more areas such as DNSSEC a mechanism that prevents DNS hacks by signing address translation responses with an encryption key (UpGuard, 2018). Vendors can also protect themselves from needless risks by safeguarding their identity such as adhering to password management best practices such as using unique passwords and making sure that they are more complex and lengthy (Abel, 2017).

References

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Willmott, P., & Hirt, M. (2014). Strategic principles for competing in the digital age. McKinsey Quarterly.

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Case Study Analysis: Amazon. (2022, May 16). Retrieved from https://proessays.net/essays/case-study-analysis-amazon

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