Amazon’s 2016 Annual Report for its shareholders allows evaluating the company’s strategic management over roughly two decades. While this period saw it turning into one of the world’s largest companies with colossal market capitalization, it does not necessarily mean that all strategic decisions made in the late 1990s were correct. Prioritizing growth and broadening product range played off while attracting motivated employees proved less sustainable, and risks related to internationalization require long-term solutions of a kind.
One long-term strategy that was outlined as early as 1997 and proved successful if judged from the 2016 perspective is the focus on growth. In the 1997 letter, Bezos reflected on balancing growth with the long-term profitability and stated that, at the moment, the company prioritized growth (“Annual report,” 2017). This approach was fully consistent with the company’s specific focus on long-term market leadership. Given Amazon’s current position in online shopping, one can reasonably claim that the early focus on growth at a time when online shopping was still in its infancy was a correct strategic decision.
Another long-term strategy stated in 1997 and conducive to the company’s present success was its focus on constantly expanding the range of products and services available to the customers. By the end of 1997, the company has already solidified its position as a bookseller, surpassing the brick-and-mortar stores due to the logistical advantages (“Annual report,” 2017). It was at that time that Amazon started working on its plans to expand the product range offered. The process began with adding music to Amazon’s product offering and, in various ways, continues until this day (“Annual report,” 2017). This strategy was a paramount complement to the focus on growth: instead of limiting itself to penetrating the book market, the company devoted its efforts to expanding the range of available products. This strategy was crucial in making Amazon the ubiquitous market giant instead of the highly specialized online store and, as such, should also be considered a success that helped meet organizational objectives.
The third strategy important for achieving the company’s objectives was the emphasis on attracting highly motivated employees. In the 1997 letter, Bezos stressed that setting the high bar for hiring and attracting the best people for the job is going to be a staple of Amazon’s growth in the foreseeable future (“Annual report,” 2017). Yet, by 2016, the report openly admitted that the company “may not be able to hire, train, retain, and manage required personnel” to compete successfully in foreign markets (“Annual report,” 2017, p. 8). Thus, one may conclude that the focus on carefully selecting and attracting employees was conducive to the company’s organizational goals within the USA, but not necessarily a success on the international scale.
Still, internationalization offers its advantages in terms of greater strategic flexibility. One risk specifically identified in the report is “the existence of works councils and labor unions” in the foreign markets where Amazon expands (“Annual report,” 2017, p. 7). The long-term strategy to mitigate this risk is concentrating on regional rather than merely national presence for the logistical advantages it provides. Such regional presence would allow enduring temporary conflicts with specific national-level unions by temporarily shutting warehouses in a given country and rerouting purchases through other countries until the conflict is resolved.
To summarize, Amazon’s growth since 1997 indicates that most, if not necessarily all of its long-term strategies outlined in 1997 successfully proved conducive to its organizational goals. The focus on growth and product range expansion were both successes, although the expanding company did not fare as well in terms of attracting employees. To mitigate the risks represented by the unions when operating on foreign soil, it is advisable to concentrate on regional presence for the logistical advantages in case of acute conflicts.
Reference
2016 Annual report. (2017). Amazon. Web.