Amazon Growth Strategy Recommendations
Amazon Inc, has been experiencing rapid growth including penetrating different markets across the globe. The SWOT analysis results have showed that the company has opportunities and strengths that it can use to fuel its growth and global expansion. At the same time, Amazon can focus in minimizing the possible weaknesses and threats to make its strength more sustainable. The SWOT analysis provides in-depth information about the current position of the e-commerce retailer. The recommendations presented in this paper provide ways in which Amazon can maximize its growth strategy by taking advantage of opportunities and strengths while reducing weaknesses and threats to increase its global positioning in the international market.
Amazon should utilize its low-cost structure to improve its profitability and competitive advantage. The above company’s cost leadership position will be improved by investing in technologies aimed at providing efficient services to customers at affordable prices compared to its competitive rivals such as Walmart (Jorgenson). Amazon’s low-cost strategy will not increase the pool of customers, but also increase its market share. And compete favorably with competitors. Amazon should also consider increasing the economies of scale to enhance overall efficiency. For example, the company take advantage of its low-cost structure to maintain its market position in the global market and at the same time use such opportunity to increase product diversification. Amazon will still be profitable while offering the lowest prices compared to competitors since due to increase sales volume.
Amazon enjoys a strong brand both locally and internationally, which it can use to expand its markets globally. Through an already established international brand, Amazon will develop new products, and continue widening its clientele base in the global arena.
As an innovate and leading company in the e-commerce industry Amazon can invest in advanced technologies such as AI to retain its global position in the market through the integration of different techniques to provide quality services (Al Imran). Increased investment in technology will lead to production of quality products that will help to retain the existing customers as well as attract the new clients. The company should create world-class products to enhance its competitive advantage leading to improved brand image. The organization should improve its brand image in the global market through social media platforms.
Amazon should initiate strategies to minimize weaknesses. The company should improve its Delivery Service Partners to leverage their network and third-party providers to establish efficient cost controls (Al Imran). The organization should create new delivery stations through a partnership with other companies to enhance its profit margin. The free delivery and shipping system that lowers the profit potential of the business should be replaced by engaging third parties to shift costs to customers.
The organization should expand the brick and mortar business segment in the next five years in different locations to increase its physical presence. For instance, Amazon should allocate 10 percent of its annual budget towards creating physical stores across the globe to reduce its online appearance that faces stiff competition from startups and established e-commerce businesses such as Alibaba. The physical presence is likely to put the company on the competitive edge in markets that have not fully adopted e-commerce such as developing countries (Greenspan). The brick and mortar stores will enable Amazon to expand its market and increase the popularity of its brands in emerging markets.
The company should focus on a customer-centric innovation to create products aimed at meeting customer needs. The organization should study the market and consumer trends to provide tailor-made products that can compete favorably with those of competitors (Greenspan). For instance, Amazon should develop high-quality smartphones with low chances of defects to compete with established brands such as Apple. The organization’s research and development initiatives should focus on creating unique products to improve Amazon’s competitive advantage.
The customer-centric innovation initiative is likely to reduce the threat of substitute products because of the focus on quality services. Product quality is expected to be driven through continuous innovation to attract loyal customers. For instance, the organization should improve the usability of its website to enhance customer experience (Greenspan). The customer-centric innovation requires more financial investment in research and development programs of the entity. For instance, the current R&D budget should be increased by thirty percent for the next five years to implement the initiative.
Amazon has market expansion opportunities in developing countries. The organization should make a strategic entry into markets in developing countries that have not adopted online shopping (Greenspan). The new markets provide growth potential as there is a limited threat to new entrants and competitive rivalry that is experienced in advanced markets such as Europe and the United States. Amazon should gain entry into new markets to take advantage of the current business opportunities that have not been undertaken because of the perceived high costs of innovation and integration of technology. The organization should allocate more resources to acquire physical stores in the developing markets to improve its brand.
Amazon Company should undertake a backward integration strategy to transform its brands into distinct categories leading to product differentiation. Amazon should undertake backward integration to differentiate its products from those of competitors such as Walmart (Greenspan). The strategy will enable the company to address customer needs by offering customized products as it will be in control of the production processes other than relying on external suppliers. The organization will be able to access the production units along the supply chain to market itself differently from competitors like Walmart.Backward integration process will enable the company to acquire or control suppliers thus reducing the threat of new entrants as producers will not sell to competitors. Amazon will also acquire production technologies and patents from suppliers thus making strategic decisions on how to modify products to look different to gain a competitive advantage (Greenspan). The company will need to set up funds amounting to thirty percent of its annual budget to undertake the backward integration strategy. It needs to increase its mergers and acquisitions strategy to improve product differentiation and diversification leading to increased profitability, low cost structure and competitive advantage in the global market. Backward integration strategy is viable since the organization has taken steps to acquire new businesses in the market.
Amazon can take different strategies to address its weaknesses and threats while taking advantage of strengths and opportunities to increase its market share and profit growth. Amazon should use its low cost structure benefit to increase investments in innovation to develop new products. The organization should reduce prices to penetrate a larger portion of the market. Amazon should use advanced technologies to improve quality of services to promote its brand that has gained popularity in the recent past. The company should strengthen its Deliveries Service Partners program to reduce costs associated with free shipping. Amazon should expand its brick and mortar segment to increase physical presence globally. Customer-centric innovation should be undertaken to create products that meet the needs of consumers. The organization should expand its operations to new markets in developing countries. Amazon should differentiate its products through a backward integration strategy. The company should undertake the strategies within the next five years. The initiatives should be funded through yearly budget allocations for the next five years.