Amazon - Strategic Capability
This report has been designed to identify Amazon's strategy between 2007-2010 and also to pinpoint the company's strategic capabilities. Internal and External analysis reveals Amazon's position against its competitors as well as sources of value creation and cost reduction in its value chain.
Amazon.com is a leading e-retailer and is a globally recognized brand, but is facing increasing competition from bricks and mortar companies setting up an online presence and current e-retailers increasing their geographical and product scope. Amazon.com also faces strong rivalry in its Web Services Business where more specialized web services companies are able to offer more products and have a broader geographical presence.
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Amazon is also able to implement this strategy much more effectively through its investments in technology. Amazon’s stores are built upon its own proprietary back end system while most rivals depend on third party providers for their back end solutions. This lowers Amazon’s operational costs and improves its process efficiency. By having an internally integrated back end solution, Amazon is able to better manage its storage and handling costs, cutting lead time. Amazon is also able to differentiate itself from its rivals through its customer centric focus and strive to achieve convenience for its customers. The differentiation strategy is aimed at offering benefits that are appreciated by the target market where the company are the leaders in service offering, quality or technology (Vranesevic et al, 2006) .The Company is able to achieve differentiation from its rivals by offering services such as its “1 click” checkout system, recommendation and suggested items personalized to each individual customer. Due to Amazon’s investments in technology, Amazon was also able employ non-competitive strategies. Amazon’s development of the Amazon Kindle electronic reading device is part of this non-competitive strategy that Amazon adopts. The Amazon Kindle unveiled in 2007 enabled customers to download reading materials available on