Case Study: Amazon’s Competitive Advantage

Amazon.com is a multinational E commerce company, which was founded by Jeff Bezos who is considered to be one of the world’s top innovative executives. Amazon.com started as an online bookstore and expanded with time to sell almost everything. The role of information system in this company is a leading role, because the company is an online retailer. The company started as an online store for books to rapidly expand to sell everything such us beauty items, auto parts, apparel, electronics and groceries. Amazon’s logo shows an arrow that stretches from A to Z, which also forms a smile to indicate Amazon’s care for customers’ satisfaction.

Case Study: Amazon's Competitive Advantage

Core Competency

The core competencies for Amazon has been identified as customer convenience and accessibility, unlimited options for selection, custom-made services, the superiority of the content of the web site, the efficient and good quality search tool to find the items of one’s choice and price. Amazon is building the core competencies through online market development and based on customer needs, also they use internet technology for financial issues and make easy for their customers. Using its Core Competency Agenda, the core competencies of Amazon are used in every segment of its matrix, excluding one. The competencies are being built in the new markets of live auctions, electronics items, greeting cards and tailoring of customer needs; the new core competencies are also being developed in the markets of e-commerce by financially collaborating themselves with internet technology companies such as Exchange.com, Accept.com and Alexa.com, which are emerging tools for the internet marketplace. They are continuously getting advantage by growing their services and selections they offer such as readers, game players, and music listeners. The firm is not presently molting any out-dated competencies and not be at the position in the development cycle to have any disused competencies.

Strategic/Competitive and First Mover Advantages

Amazon has three main strategies which lead to competitive advantage, firstly cost-leadership, customer differentiation and focus strategy. The first strategy based on offer produces same quality with lower price than the market, the second strategy related to the bigger amount of selection than competitors, and the third one is focus on niche customer through applying one of the two strategies. Also Amazon values affect positively to competitive advantages, the company has two strong values: customer satisfaction and operational frugality, these two factors complement Amazon.com’s operational approach in obtaining and sustaining an efficient competitive benefit and bolstering employees and firm’s performance. Because of its economical approach towards paying less base salary to its employees with respect to its competitors it focuses much more on its business expansion and branding with its saved cost.

However, the company maintains its employees’ loyalty through the distribution of the company shares among the employees. By doing so, it wants to convey the message to the employees that when the company is going to be benefited or earn profit, the employees are also going to be the part of this profit through the shares. The strategic initiatives for Amazon is target multiple categories through technology and information. It applies segregation, novelty, and growth through alliances. It highlights building sales volume externally while minimizing cost internally. Amazon has built organization which is more difficult for competitors to attack. To the extent Amazon is successful; it may be followed by the other e-commerce firms in the future. The Amazon’s vision was to be the earth’s largest bookstore, but now it has changed to the earth’s largest selection. It is the first successful online retailers in the U.S. and in the world.

The competitive advantage is the number of selection from the world which in a one site that is easy to comprehend and pilot, and a good reputation for reliability and the main resource for that is technology advancement and innovation. Amazon has developed infrastructure by investing huge amount of money to make exploration easy for customers to buy any product. Amazon seems to have the first mover advantage; in terms of the first major company to move into a new market of electronic commerce, most of the resources think that Amazon is the first but some think it is not, however Amazon gained the advantage and position because of being the first company of its type in the world to provide the services through internet. It keeps the first-mover advantage in two different ways; through partnership with borders and offering more and more products. This annulled any customer predilection for purchasing from Barnes & Noble by becoming a much bigger, one-stop-shopping destination.

The internet business of Amazon is a very positive and growing business for the company also because the major selling items like books, CDs are such belongings which do not intensify the customers’ desires to go and personally touch and feel the product before going for it. The sufficient and required information is enough to get the objects of consumers’ choice. The other problem of making the products are also handled by the company very efficiently and made the product available as early as possible enhances the trust and loyalty of the consumers towards the firm. Amazon.com has gained its wide popularity because of its perfect quality, quick services, and wide verities of products which lured consumes towards going for its products. Its unique way of doing marketing through the internet also came at such time when the graph of dot com bubble was on its peak. There was a huge opportunity for businesses also to go for such purchasing through internet. The consumers also got a new way of going for this market of books, and CDs. So, the company quickly spread its wings and captured the whole market as a part of first mover advantage in this business.

Interpretation of Strategic Advantages

Amazon’s innovative approach of online marketing undoubtedly put it in the fore-front in terms of cost leadership. But, the company needs to look for other ways of obtaining the competitive advantages as well. The competitors are also finding the ways to achieve the cost optimization to compete with it. Even this technology is not that defendable in the long run seeing the adoption of advanced technology by many other competitors. Amazon needs to look for not only maintaining its existing customer base but also needs to look for market niche by constantly analyzing the threats of its close competitors. The other most important part of the company is to keep its skill work force and not let them go out. The company needs to revise and upgrade the salary based on the regular period of time with respect to the performance of its employees, as the current salary of its employees may not be at par with its competitors. This is the reason company gives certain share to its employees to fulfill the deficit of the salary. Finally, the constant innovation should be the key focus for the firm. If Amazon adopts the changes as per the quickly pace of the global market and its competitors it will definitely remain as the market leader of the online business.

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