Scribd
Upload
145 views

Amazon Strategies

Amazon employs several strategies to maintain its dominance in the market. It diversifies into niche areas to gain new customers, prioritizes scale over any single product, and obsessively focuses on consumer satisfaction through low prices, wide selection, and convenience. Amazon also structures itself divisionally to allow fast decision making and a startup culture within teams. Additionally, it grows through strategic mergers and acquisitions and invests heavily in new technologies to improve future services.

Uploaded by

anushri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
145 views

Amazon Strategies

Amazon employs several strategies to maintain its dominance in the market. It diversifies into niche areas to gain new customers, prioritizes scale over any single product, and obsessively focuses on consumer satisfaction through low prices, wide selection, and convenience. Amazon also structures itself divisionally to allow fast decision making and a startup culture within teams. Additionally, it grows through strategic mergers and acquisitions and invests heavily in new technologies to improve future services.

Uploaded by

anushri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Amazon Strategies

Strategy 1:

Positive: Diversification into niche areas: Starting from an online store for selling books to its own internet
video in demand service and grocery delivery service, one of the most prevalent business strategies that Amazon
has adopted is entering niche markets in order to gain a new customer base. It has entered every market possible
such as groceries, technology or fashion.

Their focus is not their product but their scale of business. The business works in scales depending upon the
product.
“Would this benefit from being a thousand times quicker, bigger and easier?”

Negative: Entering a new business market brings a significant expense and could strain management, financial,
operational resources. Amazon Destinations and Amazon’s Fire Phone are two recent examples of new projects
that have failed. Amazon Destinations, a travel website that was quickly expanded to 35 cities, was financially
supported by Amazon (and its shareholders) for a year before being shuttered. The Fire Phone and its associated
$170 million write-off, proved commercially unviable after a year of price markdowns.

Although a lack of market testing could have played a part in its failure, the Fire phone likely suffered because
of Bezos’ insistence on creating what he saw as the perfect phone with little resistance from his staff. At any
rate, both Amazon Destinations and the Fire phone were the result of a quickly expanding company that’s lost
control of its army of departments.

Strategy 2:

Positive: Consumer Obsession: Amazon provides the lowest cost for customers, suffering losses on products
just for consumer satisfaction, while also providing great customer service as they focus on value addition for
customers. They would rather lose a dollar of profit to make five in the future, using profits from AWS and
other fund projects like kindle and echo. Concentrate on scale and customers first and then revenue.

Three Pillar Strategy:

Selection: Offering the widest selection of products


Price: Great price with great quality
Convenience: Always striving to please customers eg one day shipping

Examples: User Contributed Review Systems, Similar Suggestions, Recommendations

Negatives: As consumers come first others come second and that includes employees.
Strategy 3:

Positive: Divisional Structured organization that allows them to focus their resources and results

Organisational Structure: Amazon is organized into teams, each running a particular product and/or business
and not a function like marketing, product or engineering. Amazon leaders are mostly strong general managers
rather than functional experts.
Teams work like a small company. Decisions are made faster. Employees feel more ownership as they see the
impact of their work. The primary focus is on Results, just like the do-or-die attitude seen in start-ups and small
companies. Processes are not given much importance like several large companies where employees feel they
just need to do their job well and not worry about the results. Yes, there are many other reasons (to be discussed
in another post) for these advantages, but organization structure is one of the main reasons.

Due to lack of functional expertise, most individuals relearn stuff already known by someone, causing loss of
efficiency. It is not unheard that two or more teams work on almost same idea, separate from each other, again
causing loss of efficiency.

Negative: Issues with business combinations and strategic alliances. Issues such as difficulty assimilating the
operations and disruption of ongoing business.

Strategy 4:

Positive: Mergers and Acquisitions: Furthering the Expansion of Amazon through Strategic Acquisition

Smart doorbell maker Ring and online pharmacy company PillPack, reflecting the company’s larger ambitions
in smart-home technology and in health care.
I wanted to continue to build the business and Amazon is one of the greatest acquirers in the world of allowing
companies to still build and be impactful post-acquisition,

Strategy 5:

Positive: Investments in Technology for better services in the future: Amazon has invested in robotics, drones,
alexa etc.

You might also like