Introduction
Amazon is the biggest internet retailer in the world. Although it began as an online bookshop, Jeff Bezos was inspired by the company’s success in expanding the types of products it sells online. Additionally, Amazon has grown internationally and now employs a combination of regional distributors and international delivery systems to conduct business worldwide. Amazon’s ability to use economies of scale, use technology as a foundation for developing a competitive advantage, and enjoy the benefits of efficiencies among its internal assets and external variables has inspired numerous rivals to copy and enhance its business model.
This approach is centered on using the technological potential for business growth and adhering to a cost leadership strategy that emphasizes providing consumers with the most value at the lowest cost. Additionally, Amazon is aware that its consumers are the primary online retailers for their purchases. Undoubtedly, this strategy has been successful, as seen by the reality that Amazon is the major online retailer on the globe and has constantly led the market categories in which it competes.
In addition to this, Amazon’s vision is influenced by its pillars of competitive advantage. In particular, it concentrates on integrating the advantages of economies of scale and exploiting the synergies from linkages between its external forces and resource capabilities. Additionally, Amazon maps user behavior using big data analytics. The corporation has embraced big data to the point that it can now market it as a new service option for vendors on its website.
With same-day delivery available in many regions and the prospect of deploying drones for quick delivery, Amazon’s present approach is also centered around accessibility so that customers do not have to visit a physical bookshop or even stand in line for their orders to come later (Mack et al., 2016). Additionally, Amazon has a focus on non-retail product categories like cloud services. This indicates that the business is tackling both the issue of over-reliance on cost leadership and the problem of distinction.
One-click selling, where buyers may purchase anything offered on an online store with a single click, has gained popularity thanks to Amazon. It is undeniable that Amazon’s corporate strategy is “clicking” with its consumers based on the company’s growth pace. Having said that, Amazon must continue to grow, and the market must continue to grow. Due to its near-monopoly position in the market, Amazon has a wide range of tools at its disposal to react to shifting political and economic conditions.
Additionally, the fact that the firm has not turned a profit in several quarters over the previous three years concerns it. Its overemphasis on cost leadership may be one factor in this. And last, Amazon has to adopt a local strategy in its global markets, modifying its global business model to suit its local logistics and supply infrastructure. This will effectively establish a localized distribution network where anybody, anywhere, at any time, may purchase goods. The below discussion will focus on the essentials of Amazon’s business strategies, appealing to extensive data sets and justifying its considerable flaws to offer possible solutions to the issues identified.
Responses of Amazon to Socio-Economic and Political Changes
One of the key reasons why Amazon became successful in terms of bringing political and socioeconomic change is the existence of structural separation. It relates to how the platform operates available information and takes regulatory action when necessary. For example, socioeconomic and political changes accomplished by Amazon could pertain to policymaking and proper competitiveness associated with the products promoted by the company (Wu and Gereffi, 2018). In this case, structural separation provides all significant brands under Amazon’s name with multiple competitive advantages. This also shows how the company watches over any potential conflicts of interest and separates services and products to appeal to larger target populations (MBA Skool, 2022). This eventually helps Amazon remain a non-discriminatory organization where changes occur due to improved administration and an enhanced approach to logistics.
Being practically a monopolist of the industry, Amazon has an extensive set of instruments to respond to economic and political changes. Particularly, in case of apparent shifts in the economy and the appearance of new players, the company acquires them and adjusts its regional campaigns and policies. Moreover, it has the necessary resources and influence to even change policymakers’ decisions. For instance, Amazon organized to get it overturned after Seattle city councilors enacted a “head tax” on big firms operating there (Semuels, 2018). It vowed to quit the city if the tax persisted and delayed work on a new headquarters building. The council finally decided to remove the tax because it was not worth the effort to fight Amazon for weeks in an attempt to get a referendum issue against it on the ballot.
Another vital step for Amazon was to ensure that customers and suppliers could be protected from the effects of unfair practices. Market competition has to be perceived as a limited practice that can lead to further monopolization of the marketplace (Aversa et al., 2021). Political and socioeconomic changes become more visible with Amazon because the company utilizes all of its resources to attain competitive advantages and ensure that critical services are provided to stakeholders regardless of their position (Liu and Guo, 2021). This is also why Amazon leverages monopoly to a certain extent while gaining access to crucial benefits that can be associated with monopolization.
The ultimate reason to side with Amazon in terms of how the company resolves its issues is the presence of adequate protection against exploitation and abuse. Partially, because of Amazon, new legislation was passed to ensure fair treatment of employees and regulate the employer-worker relationship (Jindal et al., 2021). Even the development of improved safety standards could be attributed to how Amazon’s efforts were welcomed at state and federal levels, allowing for collective bargaining and right-to-work provisions.
Impact of Amazon on Economic Development
One of the two positive factors that have to be reviewed when discussing the positive impact of Amazon on the economy is the fact that the company kills inflation. With traditional retail being disrupted successfully, it becomes vital for Amazon to take care of how consumers and other retailers treat the market. This is why the organization tends to pick strategies that allow Amazon to function on a thinner profit margin while still keeping the production rate intact (Rana et al., 2022). This is a crucial element of economic development because Amazon’s impact could be quickly turned into a strategy where consumers have to cover some of the costs. Additional disruption directed by Amazon could reduce the rate of unemployment and create more jobs for locals willing to contribute to the economy.
On the other hand, this increased competition has to be considered when it comes to various mergers and third-party relationships. Even though the pandemic forced Amazon to cut quite a few jobs, the company reduced the cost of its products and services to eliminate as few employees as possible. Innovation and technology go hand in hand with Amazon’s development strategy because the company also works closely with small businesses and helps them thrive (Clemons, 2019). The retail mogul’s infrastructure creates enough room for improved customer reach and shorter times of delivery. It benefits further job creation and extends the reach of Amazon’s products and services (Rikap, 2020). Overall, weakened inflation and a larger number of jobs can be seen as the key strengths that Amazon has to capitalize on to continue going forward.
The biggest problem that can be associated with Amazon’s impact on economic development, in turn, is the fact that the company contributes to inequality and wage depression. With the majority of resources coming from low-wage jobs created at Amazon, the organization creates an environment where wealth is generated based on independent businesses that give their money to the retail mogul (Tallman, Luo, and Buckley, 2018). On the other hand, wage depression can be associated with how Amazon facilities drive down the largest salaries, especially in the warehousing sector. The problem is that such attitude toward potential employees affects other businesses in the region as well.
The second negative factor that is worth mentioning within the framework of the current paper is how Amazon undermines local budgets and businesses. Due to the strong presence of Amazon, tens and hundreds of smaller enterprises went bankrupt, causing significant trouble for independent business owners in the area. According to van der Aalst, Hinz, and Weinhardt (2019), sales and property taxes are handled by Amazon differently to create benefits that are going to affect the company only. Even Amazon’s employees are often put at a disadvantage for the sake of attaining larger objectives for financial stability. This is also why many ventures do not survive, as they do not risk going against Amazon and its stifling initiatives.
Global Strategies About the Long-Term Success of Amazon
It is crucial to recognize Amazon as one of the companies that were extremely successful in terms of diversifying their business model. Even if Amazon could be perceived as an online store, its revenue increases with the growing number of third-party businesses partnering with the platform (Betz, 2018). On a long-term scale, this approach has to be seen as one of the core ways to build customer loyalty and maximize the cash flow.
Additionally, there are quite a few elements that cannot be viewed separately from Amazon’s business model when discussing long-term strategies. For example, the company’s extremely visible online presence contributes to how Amazon is perceived by consumers and potential third-party partners. The overall scalability of Amazon’s business initiatives represents the core reason why customers’ needs are always superior to any other objective pursued by the organization (Narayan, 2022). Therefore, the business efficiency of Amazon depends on how closely the company monitors its cash generation effectiveness and the quality of retail business operations carried out by the organization. From e-commerce to data analytics, the company uses all the available competitive advantages to ensure that the quality of the final product is going to be decent.
Another global strategy applied at Amazon is the power of differentiation. While diversifying the product mix and services provided to clients, the company also ensures that products can appeal to various customer groups at the same time. Amazon’s unique fixation on high-quality service is what makes the company stand out and differentiate itself from other retailers, no matter how large (Weinstein, 2020). Attention is paid to employees as well because they have to be trained properly to provide relevant services and know how to utilize the most up-to-date technologies deployed by Amazon. New product designs and service packages are released continuously to make more clients interested in partnering with Amazon on a long-term basis.
Impact of Global Value Chain Analysis on Competitive Advantages
Competitive advantages available to Amazon have to be viewed through the prism of value chain analysis because the company always strives to create new ways to develop the business. It shows that Amazon mostly focuses on customer satisfaction and enhanced profit margins that can contribute to the overall improvement of activities and procedures carried out by the team (Ives, Cossick, and Adams, 2019). In other words, the global value chain could become the key to effective outcomes in terms of technological advancements and the overall infrastructure. The human workforce is also capitalized on because Amazon expects to satisfy the demand and maintain the prominence of its solutions. This is why powerful supply chain management is one of the core advantages available to the retail mogul at any given moment.
Amazon’s value chain has to be viewed as the connection hub between consumer needs and product quality offered by the company. In a sense, the organization extends its value chain to attract more verified sellers and bring more suppliers to the bigger picture. On a long-term scale, this could be one of the key reasons for consumers to stick with Amazon and invest their resources in what the company has to offer (Jindal et al., 2021; Daugherty, Bolumole, and Grawe, 2018). Even if the majority of sellers represent third-party partners, customers will gain access to all the benefits provided by original suppliers and manufacturers. Global value chain analysis enhances the company’s logistics web and creates an environment where clients put their trust in Amazon to achieve mutual benefits that can be turned into even more profits over time.
Global Partner Network and Its Sustainability
Global Partner Network (GBN) is a community that includes stakeholders about Amazon who have been able to satisfy specific criteria. This partner program appeared as a means of building solutions that could leverage technology and create an environment where practically anyone can market vital solutions and offer crucial background information to Amazon. One of the main reasons why GBN became so popular is the fact that all the stakeholders could contribute to the company’s success while also unlocking specific benefits that could be exploited by them as well (Betz, 2018). Various categories of consumers can be associated with GBN because of the popularity of Amazon and the smooth transformations supported by the company.
With so many innovative technologies at hand, Amazon has become one of the key players in the industry that can drive change and mediate the business environment. With GBN, higher levels of sustainability can be achieved because of the growth opportunities associated with Amazon’s resources and fundamental activities carried out by the organization (Manchaiah et al., 2019). For instance, the company tends to address issues in time to fix resource availability and create scenarios where there are no gaps between technology and manpower capacity (Aversa et al., 2021). The growing number of bottlenecks linked to technology use is another important variable because the existing marketplace is too saturated. It means that business needs and services can be ignored by larger corporations to focus on individual objectives.
Ultimately, the value of GBN has to be viewed through the prism of the immense potential held by Amazon and all the technologies it manages at the moment. The company stays ahead of the curve because it recognizes the importance of collaboration and continues to contribute to local economies and scale the latter. The current marketplace needs a sustainable partner network similar to Amazon’s because it transforms into an ecosystem expected to contribute to the most cost-effective solutions (Liu and Guo, 2021). Returns on investment can be maximized only in the case where the proposed solution is sustainable and considers consumer interests in addition to the company’s aspirations. Regardless, Amazon’s GBN can be enhanced by attracting more international stakeholders and contributing to the deployment of a significantly larger network.
Amazon’s Internationalisation and Business Strategies
The biggest question that has to be answered by Amazon is how the company could grow and extend exposure to the outcomes of internationalization. The answer is that the online commerce market can survive throughout the pandemic by targeting new customers and making sure that all ventures are aimed at the development of a more powerful brand image (Clemons, 2019). The core consideration for the organization should be to pay closer attention to consumer behaviors and create an environment where the company can appeal to any type of customer. The existing popularity of Amazon in the marketplace is an internationalization strategy in itself because the company offers the best prices to all customer categories.
Another vital business strategy is cost variability, which is vital to explore. To achieve particular objectives associated with profits, Amazon came up with the Prime subscription and allowed customers to make the best use of various discounts to reach a higher level of exclusivity than its competitors. According to Wannakrairoj and Velu (2021), Amazon Prime represents an opportunity for the company to penetrate different markets and utilize the organization’s competitiveness to appeal to the international market. The variability in shipping costs, currency exchange, and respective taxes also contribute to how sellers approach potential consumers, especially with the pricing model fluctuating by audience interest (Sadq, Sabir, and Saeed, 2018). Amazon is not afraid to capitalize on strategies that involve mobile devices and trends that can be linked to smartphones and tablets.
Nevertheless, the most important shortcut utilized by Amazon is a crucial focus on cross-border operations and international partnerships. The company encourages third-party resellers to expand their client base and provide products and services even outside the original country. It helps the retail mogul push forward the key categories and enhance the feasibility of offers managed by the company (Jindal et al., 2021). Further internationalization increases the number of potential consumers reached by Amazon while also reviving certain brands and making it possible to popularise Amazon’s services worldwide. Even though some of the countries across the globe currently do not have access to the aforementioned offers, it can be safe to say that Amazon’s approach to internationalization generates great profits. One more reason why the company succeeded in terms of organizational performance was the ability to adhere to various socioeconomic and cultural norms attributed to different markets.
International Organisations and Trade amidst the COVID-19 Pandemic
It is crucial to engage in international trade to establish an extensive institutional framework that would support increased cooperation. The need for a stronger response to the COVID-19 pandemic forces organizations to develop an agenda that helps process information quickly. The speed of recovery and the volumes of information available to respective organizations will grow in a geometric progression if the latter choose to cooperate (Qin, Hassan, and Adhikariparajuli, 2022). Communication channels will include various stakeholders, including government representatives. In turn, it must aid responsible organizations in finding ways to respond to similar threats in the future. The presence of an international status makes it even more important for larger organizations to establish new instruments and share them with stakeholders for maximum effect. Without common solutions, international organizations would not extend their reach to resolve the pandemic challenge.
The current context also hints at the fact that international organizations hold enough potential to collect necessary evidence and turn it into detailed support strategies. New ways to adapt to the given circumstances will have to be developed to protect organizational consistency in terms of performance and customer relations. According to Qin, Hassan, and Adhikariparajuli (2022), crisis management during the COVID-19 pandemic became one of the hardest tasks for executives because of the lack of experience and decision-making strength. In the future, joint efforts can be expected to bring even more positive outcomes because of the stronger impact of internationalization on partnerships. Many international companies can develop revised platforms for enhanced effectiveness and quality of the instruments of mediating the environment (Wannakrairoj and Velu, 2021). Such international instruments have to be utilized to support a sustainable environment and promote intergovernmental solutions.
Conclusion
Due to its early acceptance of big data ideas and its incorporation into its corporate strategy, Amazon has developed beyond its roots as a library website. It has also made significant investments in the creation of exploratory apps and big data processing. Additionally, the business has been able to create a technical roadmap that addresses customer concerns and improves the ability to track consumer habits and safeguard shopping, distribution, and transaction processes, among other things. This proves that Amazon’s success in dominating e-commerce is correlated with the extent of regulation over the enormous amount of information, the degree of team cohesion skills, and the essence of the technological toolkits utilized to represent its long-term vision.
The study concluded that Amazon’s strategic plan is built around pursuing low-profit margins through price reductions, choice diversification, and the creation of tools to enhance consumer experiences. Additionally, the variety, adaptability, and application integration of Amazon’s technological tools have led to great information management oversight and more thorough and efficient evaluation of their client data. Through the creation of more polarised relevant outputs for consumer issues, the incorporation of big data into Amazon’s corporate philosophy has contributed to producing significant added value. By offering aggregation solutions, automation, explorations, and big data analytics to businesses, Amazon is now attempting to streamline and make accessible its accumulated expertise.
Big data analytics produces a variety of reasonably important and comprehensive results. To reduce the danger of presuming that all outcomes are completely relevant to the user base, Amazon must rectify and assess the extent of unpredictability. Data is challenging to categorize and manage because of Amazon’s extensive market reach, especially when trying to clarify its dimensions because it pertains to groups that have different likes, lifestyles, faiths, and other characteristics. This necessitates taking into consideration other factors relating to the amount of spending, level of transparency, product quality, and average pricing in each location.
Further internationalization expands the pool of prospective customers that Amazon can reach, revitalizes some brands, and makes it feasible to spread awareness of Amazon’s services around the globe. Even if the aforementioned deals are now unavailable in some nations across the world, it is reasonable to state that Amazon’s strategy for internationalization brings in considerable revenues. The company’s capacity to follow varied socioeconomic and cultural standards specific to numerous regions was another factor in its organizational success.
Exposure to the current study has resulted in issues that are closely connected to the aforementioned restrictions, which may open up a variety of viewpoints to address the processes and techniques of closing the gap. From the other perspective, the present investigation contends that the best area for potential studies could focus on how to incorporate the human aspect in the big data procedures of Amazon. Such an assumption comes from the fact that technologies and software alone are unable to interpret data securely and enable people to make more informed decisions. In addition, the oversight of the quarrying and assessment processes by the human element also helps to improve the flow of data and comprehend the motivations, backgrounds, and standpoints of people.
Reference List
Van der Aalst, W., Hinz, O. and Weinhardt, C. (2019) ‘Big digital platforms’, Business & Information Systems Engineering, 61(6), 645-648. Web.
Aversa, P. et al. (2021) ‘Customer complementarity in the digital space: exploring Amazon’s business model diversification’, Long Range Planning, 54(5), 101985. Web.
Betz, F. (2018) ‘Strategic sales – the case of Amazon’, In Strategic Business Models: Idealism and Realism in Strategy, Emerald Publishing Limited. Web.
Clemons, E. K. (2019) ‘Resources, platforms, and sustainable competitive advantage: how to win and keep on winning’, In New Patterns of Power and Profit (pp. 93-104), Palgrave Macmillan, Cham. Web.
Daugherty, P. J., Bolumole, Y. and Grawe, S. J. (2018) ‘The new age of customer impatience: an agenda for reawakening logistics customer service research’, International Journal of Physical Distribution & Logistics Management. Web.
Ives, B., Cossick, K. and Adams, D. (2019) ‘Amazon Go: disrupting retail?’, Journal of Information Technology Teaching Cases, 9(1), 2-12. Web.
Jindal, R. P. et al. (2021) ‘Omnichannel battle between Amazon and Walmart: is the focus on delivery the best strategy?’, Journal of Business Research, 122, 270-280. Web.
Liu, K. and Guo, H. (2021) ‘Digital innovation and transformation to business ecosystems’, In International Conference on Enterprise Information Systems (pp. 793-803), Springer, Cham. Web.
Mack, O., et al. (2016) Managing in a VUCA world. Springer. Web.
Manchaiah, V. et al. (2019) ‘Benefits and shortcomings of direct-to-consumer hearing devices: analysis of large secondary data generated from Amazon customer reviews’, Journal of Speech, Language, and Hearing Research, 62(5), 1506-1516. Web.
MBA Skool (2022) Amazon Porter five forces analysis. Web.
Narayan, D. (2022) ‘Platform capitalism and cloud infrastructure: theorizing a hyper-scalable computing regime’, Environment and Planning A: Economy and Space. Web.
Qin, Z., Hassan, A. and Adhikariparajuli, M. (2022) ‘Direct and indirect implications of the COVID-19 pandemic on Amazon’s financial situation’, Journal of Risk and Financial Management, 15(9), 414. Web.
Rana, N. P. et al. (2022) ‘Understanding the dark side of artificial intelligence (AI) integrated business analytics: assessing firm’s operational inefficiency and competitiveness’, European Journal of Information Systems, 31(3), 364-387. Web.
Rikap, C. (2020) ‘Amazon: a story of accumulation through intellectual rentiership and predation’, Competition & Change, 1024529420932418. Web.
Sadiq, Z. M., Sabir, H. N. and Saeed, V. (2018) ‘Analyzing the Amazon success strategies’, Journal of Process Management and New Technologies, 6(4), 65-71. Web.
Tallman, S., Luo, Y., and Buckley, P. J. (2018) ‘Business models in global competition’, Global Strategy Journal, 8(4), 517-535. Web.
Wannakrairoj, W. and Velu, C. (2021) ‘Productivity growth and business model innovation’, Economics Letters, 199, 109679. Web.
Weinstein, A. (2020) ‘Creating superior customer value in the new economy’, Journal of Creating Value, 6(1), 20-33. Web.
Wu, X. and Gereffi, G. (2018) ‘Amazon and Alibaba: internet governance, business models, and internationalization strategies’, In International Business in the Information and Digital Age, Emerald Publishing Limited. Web.
Semuels, A. (2018) ‘How Amazon helped kill a Seattle tax on business’ The Atlantic, Web.