Abstract
Amazon is a highly successful online retailer and one of the companies that pioneered the industry. The corporation has made efforts, through research and new product development, to achieve a market competitive advantage over its other competitors. The purpose of this strategic plan is to assess the effectiveness of current and future business operations and strategies at Amazon. In addition, a SWOT analysis will be performed to assess the strengths, weaknesses, opportunities and threats that Amazon faces. This strategy will also examine the company’s competitors, as well as its financial projections and strategic plans.
Introduction
Amazon is one of the world’s largest and most influential technology companies. It has invested heavily into brick-and-mortar stores, online marketplaces, the entertainment industry, transportation networks, and cutting-edge manufacturing facilities. It was founded and is currently directed by Jeff Bezos, and it has its headquarters in the nation’s capital. Through strategic acquisitions, the Amazon.com, Inc., has positioned itself as the leading online retailer in the world (Majed et al., 2018). Its retail division has seen a number of recent successes thanks to better running processes. Due to their remarkable success in sales, the company was able to expand its workforce and become a much larger operation.
Mission and Vision Statement
Amazon mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience” (Amazon, 2020b). The purpose of this statement is described in detail, making it easy to see what it sets out to achieve. In terms of the first component of the purpose, Amazon offers low, reasonable prices for its products in an effort to cater to people with lower incomes, who may have trouble affording basic necessities now that the costs of many of these items have risen sharply due to their increased quality. Amazon’s mission is to provide good products at affordable prices for people with modest means. The company will have an advantage in the market as a result of the increased sales.
The second component of the mission statement is to provide the best possible selection, with the goal of expanding the company’s product offerings across a wide variety of categories, including but not limited to technological gadgets and software, forms of entertainment, and other goods. The result will be a greater degree of success due to its increased popularity. The final part of the mission statement focuses on providing the maximum level of convenience. Amazon’s focus is on providing the best possible online purchasing environment for customers. That’s just one of the ways we’re making it easier for people to do things without having to leave the house. As a means of achieving its long-term objectives, Amazon has developed a set of strategic vision pillars. The firm’s vision is “to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online” (Amazon, 2020b). The company’s future is envisioned as one in which it serves customers all over the world with every service and product they might possibly need.
Corporate Values & Culture
According to the company’s mission statement, Amazon is a business that is focused on satisfying the needs of its customers. One of Amazon’s Leadership Principles is “customer obsession,” which serves as the foundation for the company’s business practices and corporate ethos (Amazon, 2020a). Amazon’s mission is to earn and keep the trust of its customers, and the company believes that doing so requires constantly putting the consumer first. Other principles include questioning any action that could jeopardize the company’s objective and being open to feedback and constructive criticism in order to grow professionally and personally. Amazon encourages managers and workers alike to take personal responsibility for the company’s success.
Operations
Amazon operates on a global scale from its headquarters in Seattle to its many distribution centers, its vast logistics and shipping network, and its many physical retail locations. The demands of Amazon’s stakeholders are at the center of all of the company’s operational goals, and this requires it to strive for operational excellence in every way. Stakeholders consists of everyone or any group that has a vested interest in the company’s well-being. Amazon foots the bill for its own advertising, website and web service creation, product and service R&D, foreign growth and acquisitions, and improvements to existing offerings.
All employees are expected to create and simplify all aspects of the company’s operations, from the most basic tasks to the most complex. Amazon’s continued status as one of the most inventive firms in the world depends on a research and development strategy that is critical to achieving business objectives (Amazon, 2020b). It continues to expand its market share by prioritizing the needs of its customers and other stakeholders while developing and releasing new products and features. Increased revenue and brand loyalty are the results of its ongoing efforts to improve the online purchasing experience.
Budget and Resource Allocation
Allocation of resources and capital expenditures might vary significantly from one organization to another. When it comes to their budgeting and capital spending, Amazon is up against a lot of issues and obstacles. It’s possible that the level of cynicism surrounding Amazon is not quite as high as it was back when the company was still in its financially unstable and struggling for existence (Denning, 2019). Internet stocks are thought to be volatile, yet Amazon continues to perform well since the company has solid revenue, a healthy growth rate, and other positive financial criteria that are evaluated by analysts.
The context of a company’s market and sector is crucial to its success. After all, a company whose primary function is online (like Amazon) will function differently from one whose primary function is on the ground. However, the distinctions between these businesses are beginning to blur as more and more companies, Amazon included, adopt a hybrid strategy that addresses both online and offline concerns (Denning, 2019). Because of this, it is crucial that the budgeting and capital planning involved address all fronts simultaneously and efficiently, regardless of the funding source. Financial budgeting and resource allocation must consequently take into account the organization’s overall complexity and performance, which is becoming increasingly important as enterprises become more dynamic and are obliged to function in both online and physical stores.
Strategy and Formulation
SWOT Analysis
Strengths. One of Amazon’s main strengths is that it possesses the most extensive geographic footprint of any online retailer, making it the most well-known and respected brand in the industry. Amazon strengthens its brand by providing a better shopping experience for customers in each region it serves through locally optimized websites. Amazon’s success can be attributed, in part, to the company’s broad product selection as well as its high inventory turnover ratio; this strength can be utilized in the company’s future undertakings. Amazon’s ability to generate the greatest revenues in the industry gives them an advantage over competitors because it allows it to make larger investments.
Weaknesses. Although there are undoubtedly positive aspects to working for a corporation of this kind, it is essential to be cognizant of the many drawbacks that come along with it. Amazon’s straightforward business model can be easily adopted by other companies. Any business can launch an online store selling a wide variety of products, much like Amazon. Amazon’s huge long-term debt, possibly from Whole Foods, is another concern. Amazon’s long-term debt in 2017 was $24.7 million, an increase of 221% over the $7.7 million it had in 2016 (Security and Exchange Commission, 2017). Because of this vast increase, Amazon’s interest expense will rise, which will have a negative impact on future profits. Amazon’s third flaw is that the pressures of worldwide expansion are putting a dent in the company’s management, operations, people, and resources.
Opportunities. Amazon is in a position to expand the company through a range of different chances that are currently available. One of the opportunities that Amazon has is to venture into new and developing markets. Amazon would have a significant competitive advantage if it could establish a foothold in emerging markets before its competitors. Buying Whole Foods gives Amazon a chance to increase its footprint in physical stores as well. Adding more Amazon-branded items to Whole Foods shelves is a smart move for Amazon, which will help the company boost sales and build consumer trust. They can also become more competitive by opening more Amazon Go retail shops. Last but not least, Amazon has a lot of opportunity to expand into new markets through e-commerce because the retail sector of the internet is the fastest expanding channel in the United States.
Threats. Amazon faces a number of challenges, the most significant of which being rivalry from both domestic and foreign firms. Amazon must boost its marketing budget in order to compete with the growing online retail presence of Walmart and Target. Amazon is also vulnerable to rising labor expenses, which, given the company’s size of more than 560,000 employees, can have a major effect on the company’s overall cost structure (Chesta, 2021). Amazon, like all other online stores, faces the ongoing risk of cybercrime. As always, Amazon must take all necessary precautions to prevent cybercriminal activity on its network.
Amazon’s Strategic Plan and the Planning Process
Amazon uses strategic planning as a business approach to define and identify its business plans, directions, and to make efficient and original business decisions in order to allocate the organization’s resources effectively. As a result, the company follows the recommended strategic planning cycle to establish long-term strategies that will help it better comprehend its place in the industry. Amazon has developed multiple strategies that will be implemented over the course of a five-year time frame. The strategies center on making investments in cutting-edge innovation, bolstering logistics, protecting intellectual property with patent laws, boosting the quality of the company’s online presence, expanding its reach through mergers and purchases, and boosting its profile in the entertainment industry. Amazon’s plan over the past few years has been to increase the variety of goods sold on the site, expand into new international markets, and develop the company’s auxiliary businesses.
Amazon uses a price-leadership strategy to sell its products online. Amazon’s goal is to keep expenses low and pass the savings on to customers. Amazon is increasing productivity and decreasing expenses by purchasing a robotics company which they have rebranded as Amazon Robotics and also installing more than 100,000 robots in their warehouses across the world (Dhaliwal, 2020). The expansion of new markets, as well as market penetration and product development, are essential to Amazon’s growth strategies. Whenever it expands into a new market, it gains access to a whole new population of internet users in that market. In order to expand into these new market’s areas, it will need to launch localized retail websites that cater to the specific wants and needs of each country’s residents while still offering the same convenient shopping experience it is known for worldwide.
Amazon’s intensive market expansion is prompted by consumers rising willingness to purchase products online. Amazon attracts and retains customers with its convenient website, large selection, outstanding service, and reasonable costs. Last but not least, Amazon’s long-term strategy depends on constant investment in product development across the board. Amazon works tirelessly to enhance its current products and acquire new products daily.
Strategy Implementation
In the strategy plan, the Amazons are deducible as investments in various technologies, boosting the entertainment sector, becoming a logistic powerhouse, and acquisitions. The time frame of five years has been decided upon as the requisite date to cover the process of implementation. They have implemented important factors at the risk assessment stage that act as a framework for beginning the plans (Chaffey & Ellis-Chadwick, 2019). Strategy development and implementation success depends on building connections between the outside world and one’s own internal dynamics. Regarding team members’ duties, Amazon has assembled a group of experts who will spearhead the company’s plans for rolling them out. The process of implementation necessitates a group of individuals and sector professionals, sufficient resources and structures, improved systems, and cultural consideration.
Amazon has been the successful retail industry, and the company has used this position to its advantage to become dominant in the retail sector. Amazon’s success over many years can be attributed to a few basic principles that the company has consistently adhered to. Amazon is committed to bringing about innovation and change that is both timely and consistent with industry standards. As a strategic leader, Jeff Bezos is committed to anticipate the market’s demands and emerging trends. This motivates Amazon to go ahead of the market and work toward their goals. In addition, the data-driven business sees database management and analysis as crucial to its success, since it facilitates the identification of customers and the development of targeted advertising and subscription packages as well as the monitoring of their purchasing patterns. Amazon’s primary criteria are as follows:
- Long-term consideration: Amazon has been a disruptive force in the market, introducing new innovations, but it has yet to share those profits with its shareholders. They put their earnings back into developing and releasing more of their products and services. The company has a long-term perspective and is committed to innovation.
- Deep customer focus: Since the start of the company, Amazon has made its customers its first priority. The company’s model and approach have always been responsive to the wishes of its customers.
- Risk and Failure Lesson: Amazon has been putting an emphasis on risk and failure in order to advance its reputation for innovation and customer excellence. The company’s competitive edge and ability to expand while maintaining high standards of compliance will both benefit.
- Reinventing the office environment: Amazon thinks that changes to the office culture and the way meetings are held are necessary for a more creative environment.
Reassessment of the Strategies
The brand bases its operations on the principle of trial and error to determine what its clients want most. Principles and procedures that the company has developed over time have contributed to its success. The future of the business depends on the company’s operations and business plan. By analyzing Amazon’s foundation, we can identify potential areas for innovation.
- Amazon’s focus on its customers is part of its effort to maintain its position at the top of the industry and the market. It achieves this goal by prioritizing the needs of its consumers and providing them with unique solutions that address their concerns.
- Innovation: The company’s initiative ideas, and commercial expertise have allowed it to introduce novel concepts and ethical business methods. Amazon’s exploration into Artificial Intelligence shows that the company can explore creatively beyond the realm of novelty. Innovating in this way has helped Amazon strengthen its position as the dominant player in the e-commerce sector and increase customer loyalty.
- Corporate agility: This means that the company is able to act quickly, and adapt to new circumstances in order to achieve growth. The company has been able to stay competitive and grow due to its adoption of agile strategies and operations. o maintain their position as a market leader, online stores must be able to adapt quickly to changing conditions.
- Optimization: Since businesses rarely adhere to a single set of ideas and viewpoints, maintaining a high level of product and service optimization is a significant challenge. When it comes to optimizing processes and plans, the main goals are to increase productivity and the value provided to customers. All efforts are focused on enhancing the client experience and reducing operational expenses.
- Data driven: Amazon has dominated its industry not simply by virtue of its dedication to learning via trial and error but also by its use of data-driven strategies for gauging and responding to customer preferences and comments. This data-driven procedure is useful for learning about and responding to customers’ purchasing behaviors and preferences.
Conclusion
Each company needs a strategic plan to reach its objectives and ensure its continued viability in the near future. To enhance operating profits and increase margins, businesses should develop plans that are both feasible and implementable. Company visions and missions should be established with a clear and attainable aim, so that all employees can buy into the company’s purpose. Amazon has developed a comprehensive strategy that will allow it to achieve all of its stated objectives. By focusing on these objectives, Amazon will be better positioned to compete on a global scale. These strategies will improve many people’s lives and provide them with new opportunities.
References
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Amazon. (2020b). What We Do. US about Amazon. Web.
Chaffey, D., & Ellis-Chadwick, F. (2019). Digital marketing: strategy, implementation & practice. Pearson uk.
Chesta, R. E. (2021). A New Labor Unionism in Digital Taylorism? Explaining the First Cycle of Worker Contention at Amazon Logistics. Digital Supply Chains and the Human Factor, 181–198. Web.
Dhaliwal, A. (2020). The Rise of Automation and Robotics in Warehouse Management. Transforming Management Using Artificial Intelligence Techniques, 63–72. Web.
Denning, S. (2019). How Amazon Tames the Budget. Forbes. Web.
Majed, S., Nuraddin, S., & Hama, S. (2018). Analyzing the Amazon success strategies. Journal of Process Management. New Technologies, 6(4), 65–69. Web.
Security and Exchange Commission. (2017). Amazon.com, Inc. United States Securities and Exchange Commission. Web.