The business environment consists of the factors that affect the operations of a business. These factors are identified through the environmental analysis, which is conducted either in the form of the SWOT or the PEST (EL) analyses (Powell, 863). Resources and capabilities are used by the business to gain the competitive advantage.
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These are the inputs available to a business that makes it operate successfully, and these may either be tangible or intangible (Warf and Stutz 113). The coordination of resources is the key to the success of a business.
On the other hand, capabilities refer to the capacity of a business to either coordinate or deploy the resources within an organization, and are developed progressively. In the case study, Amazon, the leading online retailer, and supercenter, can outdo the competition by the adoption of new IT procedures to enter into the bookselling industry.
This acts as turnaround in the aforementioned sector.
One of the key environmental factors for Amazon is the competition within the industry due to the emergence of many publishers, and also due to the existence of other bookselling stores such as B & M stores and Barnes and Noble.
Owing to the first mover advantage and development of new IT marketing policies, such as the use of the internet for selling books, Amazon had a large clientele base and it was difficult for its competitors to attract customers the way it did (Hill and Jones 272). Another key factor is the customers (consumers).
The company’s mission emphasizes on the goal of Amazon to be the most custom-centered company in the globe. After the enrollment or signing up to its website, it was difficult to get the customer sign into other firms’ websites due to the loyalty attached to the Amazon products (Hill and Jones 272).
Finally, the industry itself was another key factor. After taking the first mover advantage, Amazon turned around the bookselling industry by offering fresh competition to bookselling giants such as the Borders (Hill and Jones 272).
Amazon possesses key internal resources and capabilities. To begin with, the incorporation of a first mover advantage through the use of patented customer-oriented software would be of a great value to Amazon. Moreover, adopting exceptional IT policies would help in reducing the competition.
Furthermore, shifting focus to the web-based approach of buying and selling books online would enhance its performance. As it is an online-based company, that offers its customers immediate and instant access to its books in print form, it helps to boost its sales.
Finally, embracing the formation of strategic alliances with the largest book publishers would ensure that Amazon’s customers get products without any delays in the distribution.
The key strategic choices undertaken by Amazon are outlined above, including formation mergers with the well-established firms in the IT industry. This has helped it to increase the profit margin significantly.
Amazon has also acquired other websites such as ‘Exchange.com,’ ‘Jungle.com, and ‘Planetall.com’ as a way of developing new and superior website techniques in order to enhance efficiency and retain the clientele base.
Amazon launched the digital bookstores, video and music, and also the Amazon’s ‘Kindle Reader’ in order to give its customers varied options. Finally, Amazon’s movement into the ‘cloud’ computing and leveraging of its key competencies helped it to realize the value of its assets, vital for global expansion the drawbacks notwithstanding.
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The successful implementation of Amazon’s roadmaps enabled it gain the advantage over its competitors. Consequently, it realized record profits in the year 2011.
Hill, Charles, and Jones Gareth. Strategic Management, An integrated approach (10th edition). New York: St. Martin’s, 2014. Print.
Powell, Thomas. “Competitive advantage: logical and philosophical considerations.” Strategic Management Journal 22.6 (2001): 863-865. Web.
Warf, Frederick, and Stutz Barney. “The World Economy: Resources, Location, Trade and Development.” Online Journal on Economic 16.1 (2007): 110-113. Web.