Amazon is one of the biggest and most well-known e-commerce companies in the world. As of 2021, its online sales accounted for 41% of the market share in the U.S. compared to other e-commerce retailers (“Market Share of Leading Retail E-Commerce Companies”). Moreover, apart from its main activity, the company is also involved in online video streaming, provision of cloud computing services, movie production and distribution, and artificial intelligence development through numerous subsidiaries. They include such companies as Twitch Interactive, MGM (Metro-Goldwyn-Mayer) Holding, Audible, Alexa Internet, and Amazon Web Services, to name a few. Although such a success is explained by various factors, effective strategy development on various levels of the firm activity can be considered as one of the most important determinants of the business’s competitive advantage. In this regard, the current article intends to identify what are Amazon’s business-level, corporate-level, and international strategies.
On a business level, the company seeks to minimize its operational costs and provide better quality products. From the perspective of Porter’s Generic Strategies framework, such a strategy can be denominated as ‘cost leadership’ (Jiang 357). It is primarily achieved through ownership of numerous large warehouses that leads to significant savings in regard to product storage due to economy of scale (Suleman et al. 170). Additionally, the organization invests substantial amounts into the development of network technologies and artificial intelligence, which helps Amazon optimize its operations (Suleman et al. 170). Last but not least, the company puts a heavy emphasis on the automatization of the processes, which allows it to minimize mistakes and reduce labor expenses.
As for the corporate-level strategy, Amazon diversifies its business activities through mergers and acquisitions as well as through internal development. For instance, the most recent company acquisitions are MGM Holdings (2021), Wickr (2021), Umbra 3D (2021), and Strio.AI (2022). According to Li and Chen (3), such an approach allows entering new markets with lesser risks and costs. On the other hand, the internally initiated promoted diversification initiatives include Amazon Web Services, Amazon Books, Amazon Games, Amazon Publishing, and Amazon Fresh, among others. Generally, it can be argued that the company is extensively diversified and operates in many not-related spheres. As such, the company is present in the markets of books, audiobooks, movie production and distribution, hardware and software, artificial intelligence, cloud platforms, automobile development, pharmacy, grocery, clothes, and shoes online retail.
Finally, Amazon’s international strategy includes constant expansion to the new regions and adaptation to the needs of the locals. Currently, Amazon.com operates in 13 countries, but the customers are able to receive international packages from other locations (Adcock). The primary considerations when operating in foreign states include the service providers in the customer’s native language, shopping habits, and using marketing that considers local tastes (Rayapura). For instance, when Amazon entered the Indian market, the analysis revealed that most citizens in this country prefer making purchases in physical locations where they can interact with the seller (Rayapura). To address this issue, the company decided to cooperate with local sellers and distributors who could be an intermediary between the customer and the business. As a result, consideration of and respect for foreign tastes, traditions, and culture ensures the organization’s success in the international arena.
In summary, the current research revealed what Amazon’s business-level, corporate-level, and international strategies are. As for the former, it was shown that the company seeks to reduce its costs through the economy of scale, investments in network technologies and artificial intelligence, and the process of automatization. On the corporate level, Amazon’s strategy encompasses extensive diversification in various, often unrelated spheres. Lastly, the business’s international policy seeks to include as many countries as possible and to adapt to local preferences and habits.
Works Cited
Adcock, Phillip. “How Many Countries Does Amazon Operate In? – A Full List.” Shopping Behaviour Xplained, Web.
Jiang, Haoze. “Strategy Decision Making in E-commerce: A Case Study of Amazon.” 2021 12th International Conference on E-Education, E-Business, E-Management, and E-Learning, 2021, pp. 355-359, Web.
Li, Boya, and Shou Chen. “Corporate-Level Strategy and Firm Performance: Evidence from China.” Chinese Management Studies, 2019, pp. 1-15.
“Market Share of Leading Retail E-Commerce Companies in the United States as of October 2021.” Statista, Web.
Rayapura, Aarthi. “Going Global: Lessons from Amazon.” Zuora, Web.
Firoz Suleman, Marwa, Mona Rashidirad, and Saffa Firoz Suleman. “The Applicability of Porter’s Generic Strategies in Pure Online Firms: A Case Study Approach.” Strategic Change, vol. 28, no. 3, 2019, pp. 167-176.