Essay Sample on Strategic Issues Faced by Amazon

Introduction

Question One: Amazon's internal inclinations could be examined and analyzed using five tools: resource and capability analysis, SWOT analysis, value chain analysis, benchmarking and competitive strength assessment. Identify the analytical tool that you think would be most effective, and detail the rationale for your selection.

Since Amazon is a corporation focusing on e-commerce, cloud computing and artificial intelligence, the most useful analytical tool would be the Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. According to the financial data concerning Amazon, should consider analyzing the current company's position especially by evaluating the strengths and weaknesses. For the longest time, Amazon has been thriving; however, there is a significant need to analyze the operation due to developing competition. Through the analysis of the threats and opportunities, they can also offer relevant information concerning what should be done and what should not be done by Amazon management. Along the way, Amazon is encountering various obstacles that hinder it from maximizing productivity. If Amazon conducted a proper analysis of their strengths and weakness, then it means that there are chances that they could achieve maximum productivity since things could be much easy. As described in the textbook, the most significant aspects and purposes of a SWOT analysis are to conclude the information of a given company.

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Later on, the conclusion and findings are translated into strategic actions that could be utilized in matching the company's strategy by considering the strengths and aligning them with the opportunities in the market (Arthur, Thompson, Strickland, and Janes, 2017, p 97). With the use of this analytical tool, Amazon could acquire and understand their strategic position in as much as other similar companies are involved. Even though Amazon has been the world's largest retailer as of 2017, the SWOT analysis does not deliver the current position of the company but will assist in evaluating and making the necessary strategic decisions.

Question Two: Define and illustrate Amazon's "working backward" product development philosophy. Does this theory mesh with entrenched principles and strategies? Detail how or how not.

The "working backward" method operates well for problems or cases where a series of operations are involved in an unknown population, but the involved party is aware of the outcome. However, Amazon has managed to utilize "working backward" philosophy for their product development. In the proper understanding of what this philosophy entails regarding Amazon, it means that Amazon considered and thought for the customers perceptive (consumer preferences) and then worked backward on how to deliver the customer needs or rather provide the right product and service for the consumer. It is one of the major reasons as to why Amazon is successful when it comes to product development. The "working backward" philosophy facilitated Amazon's ability to deliver the customer wants which in the current corporate setting, the philosophy fits well modern and developed economy. Thus, meshing with the established strategies and philosophies. For instance, in the utilization of the "working backward" philosophy, Amazon operates the philosophy through a process of four steps (delivering a press release, Frequently Asked Questions documents, proper defines customer experience and a user manual).

In every step of the process, Amazon is responsible for focusing on customer preferences and feedback since the entire philosophy is based on customer needs. Thus, elaborating on how the "working backward" philosophy meshes with the delivered strategies. According to the textbook, "Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases" it derives a quote from Ian McAllister Director at Amazon delivering that the "working backward" philosophy helps keep the product development focused on attaining the consumer benefits and not just looking at the product (Arthur et al., 2017, p 21)

Question Three: What strategic issues and problems faced by Amazon merit front-burner managerial attention? Justify your response, including specific examples.

According to the 2016 Amazon annual report, Amazon listed challenges such as intense competition and straining of management due to rapid expansion (Amazon.com, 2018). However, the strategic issues faced by Amazon are much more alarming than competition and straining of the administration. Even though these occurrences could be some of the significant challenges Amazon, they do not render an exceptional problem since they are experienced by other companies as well. However, for Amazon to deliver a competitive advantage, it needs to address the issue concerning unlimited storage space which is allowing third parties to post in their platform. As a result, it leads to the availability of numerous unreviewed products that are negatively affecting their position while others are scamming the customers. In multiple occasions, it is evident that customers shopping on Amazon tended to pay more for a given product, not because of the quality but based on reviews provided as they avoid being scammed or purchasing of counterfeit products.

Moreover, according to a specific Forbes article concerning Amazon titled (One Major Problem Amazon Must Fix), it delivered details regarding how the third-party sellers are shifting people for some products they do not provide (Kam, 2018). And whenever individuals don't receive their claims, it's up to them to ask for requests from Amazon to receive their money back. To solve this challenge and issue, Amazon can focus on stronger third-party sellers since this strategic position can be resolved through a web store.

Question Four: Convey a value chain analysis of Amazon and correlated operations. Based on the outcomes of the study, discuss one activity that could improve the efficiency and effectiveness of the corporation.

A value chain involves a set of activities that a firm operating may perform to deliver a valuable product in the market. In this case, after concluding a value chain analysis of Amazon, it is evident that although Amazon activities are doing well, it needs to consider the distribution of the products (Amazon Inc., 2019). As the textbook relates a corporates value chain as the primary practices that create customer values, it ensures an understanding of how to it links to Amazon. The issue of distribution delivers a concern whereby, it allows third-party sellers on their site who sell unreviewed products, but Amazon may back up these transactions. The money back philosophy could be a guarantee; however, fixing the issue concerning the distribution of products and the involvement of third-party sellers is an occurrence that requires significant attention.

Question Five: Review the competitive difficulties fronting Amazon. Given the intensity of such competitive circumstances, can Amazon maintain its stand at the top of the heap of online retailers? Do present strategies ensure this placement, or are new/updated strategies needed? Be specific and detailed in your answer.

In every business, regardless of its nature, competition is paramount. Amazon has shown the capacity and abilities by assuming the top position over other online retailers since it has dominated the market share at a specific ratio. One of the significant challenges facing Amazon includes the online store and distribution of products. However, given the depth and breadth of such competitive issues, I believe Amazon can maintain its strategic position at the top of other online retailers. In various setting, Amazon could develop through the involvement of its strategies. For example, with multiple product strategies, I believe Amazon is beating all the odd and acquiring a competitive advantage that is playing a significant role in the developing of a retailer. Even though current strategies are capable of sustaining and keeping Amazon on the top of the lists, there is a need for updated policies. The current markets are dynamically changing daily regardless of the occurrence especially with the introduction of new products. Thus, for Amazon to efficiently sustain and deliver the needs of the customers, it needs to adjust to the new market strategies. For example, the company could focus on delivery of products among other occurrences that are critical. In as much as online retailing is involved Amazon seems to be heading the right ways especially with information from the New York Times Article that Amazon hit a value of trillion dollars just after Apple.

References

Amazon Inc. (2019). About Amazon. Retrieved from https://www.aboutamazon.com

Amazon. (2018). Annual reports, proxies and shareholder letters. Retrieved from https://ir.aboutamazon.com/annual-reports

Arthur A. Thompson, Strickland, A. J., & Janes, A. (2017). Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. McGraw-Hill Education.

Kam, K. (2018). One Major Problem Amazon Must Fix. Retrieved from https://www.forbes.com/sites/kenkam/2018/02/22/here-is-the-1-thing-about-amazon-that-still-bothers-me/