Due to Amazon’s broad market and product diversification they are nowadays exposed to a highly complex and competitive environment. The Porter 5 forces analysis helps us to construe the whole environment and to identify the individual, influential strengths of the company. By doing so, the emphasis is put on the five forces “Competitive Rivalry”, “Threat of New Entrants”, “Bargaining Power of Suppliers”, “Bargaining Power of Buyer” and “Threat of Substitutes”.
Table of Contents
1. “Avanced Strategic Management”
1.1. Industry analysis of Amazon – Porter’s Five Forces
1.2. Roadmap of Amazon’s strategic intent – Pros and Cons of their strategic choices
1.3. The logic behind Amazon’s full retail stores – a strategic rational between location and technology
2. “Business Development”
2.1. Amazon’s strategy during the period 2007 to early 2010
2.2. Amazon’s strategic capabilities
2.3. Amazon’s diversification strategy
2.4. Development and justification of a possible Amazon’s future strategy
3. “International Business Game”
3.1. Explanation of “Network Effects” and its impact on Amazon and the “International Business Game”
3.2. Explanation of “Transfer Prices” and an Outline of its application at Amazon and the “International Business Game”
3.3. Excess liquidity and its influence on long-term debt’s interest rates in the “International Business Game”
Objectives & Core Themes
This term paper explores the strategic management and business development of Amazon, analyzing the company’s evolution through various competitive frameworks and real-world market applications. The central research objective is to examine how Amazon maintains its market position through strategic decision-making, diversification, and the effective use of internal resources.
- Strategic analysis using Porter’s Five Forces and SWOT.
- Evaluation of Amazon’s customer-centric business model and "Three Pillar" strategy.
- Interpretation of diversification strategies and market development.
- Application of economic concepts like network effects and transfer pricing in business environments.
Excerpt from the Book
1.3. A few years back, the reduction and total disappearance of physical stores were a wide-spread assumption in almost every industry. Nowadays, it is obvious that the lifetime of physical stores is not unlasting cf. (Trefis, 2016). Therefore, Amazon hoped on this trend for five major reasons as described in the following. Firstly, this new strategy dates back to their core value “customer-centricity”. By building physical stores Amazon anticipates creating more emotions and proximity to their customers by bringing back traditional shopping patterns. Moreover, in terms of technology it seems like the right fit, because due to Amazon’s high technological standards it is not necessary to acquire new employees for their shops through their inventions like a digital cart and automatic payment in their Amazon Go shops cf. (Robischon, 2017). Another fact that led to the strategy to build physical stores is the opportunity for these to function as a showroom. In the last couple of years, Amazon invented some great products. But until now it was impossible to experience and discover these physically, unless they bought them. In the sense of marketing these stores functioning as showrooms would provide a huge upgrade for the presentation of products like “Kindle”, “Amazon Echo”, “Amazon Fire Phone”, “Amazon Fire TV Stick” and many more. Another incentive constitutes the grocery industry. Alone in the US this business represents $ 675 billion per year cf. (Kestenbaum, 2017). The grocery industry is a to big market to ignore and due to Amazon struggling successfully operating in that industry with their online channels, grocery stores would be the perfect solution.
Summary of Chapters
1. “Avanced Strategic Management”: This chapter analyzes Amazon’s competitive environment using Porter’s Five Forces and examines the strategic rationale behind their shift towards physical retail stores.
2. “Business Development”: This section focuses on Amazon’s global expansion between 2007 and 2010, detailing their strategic capabilities, diversification methods, and future growth potentials via a SWOT analysis.
3. “International Business Game”: This chapter applies theoretical economic concepts such as network effects and transfer pricing to analyze business decision-making and the impact of excess liquidity on debt interest rates.
Keywords
Amazon, Strategic Management, Porter’s Five Forces, Business Development, SWOT Analysis, Diversification, Customer-Centricity, Network Effects, Transfer Pricing, Cloud Computing, Market Penetration, Corporate Strategy, Data Security, Supply Chain, Competitive Advantage
Frequently Asked Questions
What is the primary focus of this paper?
The paper fundamentally explores the corporate strategy of Amazon, evaluating how the company leverages its resources and capabilities to maintain a competitive advantage in a complex, globalized market.
What are the core thematic areas discussed?
The core themes include strategic management, diversification strategies, the integration of new technologies, and the application of financial and economic mechanisms like transfer pricing within multinational corporations.
What is the central research objective?
The main objective is to analyze Amazon’s strategic decision-making processes—from its early focus on online book retail to its current status as a diversified global entity—and to apply these observations to broader business game scenarios.
Which scientific methods are employed?
The author utilizes established business frameworks, including Porter’s Five Forces, Ansoff Matrix, and SWOT Analysis, to critically evaluate Amazon’s strategic choices and market positions.
What topics are covered in the main body?
The main body treats Amazon’s strategic intent, its three-pillar strategy (selection, price, convenience), its capabilities regarding warehousing and technology, and the theoretical underpinnings of network effects and transfer pricing.
Which keywords characterize the work?
Key terms include Amazon, Strategic Management, Customer-Centricity, Diversification, Network Effects, Transfer Pricing, and Global Expansion.
How does Amazon use transfer pricing to its advantage?
Amazon utilizes transfer pricing to reallocate investment costs and profits between subsidiaries located in different tax jurisdictions, such as Luxembourg, to legally minimize their global tax base.
Why did Amazon decide to open physical stores?
The decision was driven by the need to create emotional proximity to customers, provide physical showrooms for their innovative products like the Kindle or Echo, and reduce transportation costs by leveraging customer self-pickup.
What role do network effects play in the “International Business Game”?
Network effects illustrate how the value of a service increases with the number of users or complementary products; in the business game, this is a critical determinant for market share and long-term success of technologies.
How does Amazon's treasury management handle excess liquidity?
The paper explains that while excess liquidity can improve creditworthiness and lower interest rates on loans, companies must balance this against the opportunity costs of holding cash rather than investing it efficiently.
- Quote paper
- Tobias Hinterwimmer (Author), 2018, International Marketing. Analysis & Decision-Making, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/427101
