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Introduction
Cost leadership techniques are helpful in consistent and reliable conditions. To achieve this, the Amazon Company has effectively implemented processes to lower employees costs and reduce expenses through lower-cost raw materials, manufacturing processes, and dissemination. Differentiation strategies might include trademark, innovation, service quality, distribution channel, and other factors (Kurt and Cemal 101). The Amazon Company does its sales online, providing a wider variety of goods and services to its immense customers.
The Amazon Company is no exception, investing heavily in technological advances, including a significant investment in Deliveroo, a UK grocery delivery service, and broadband internet for online customers. Because Amazon Company carries out E-commerce, it has a broader geographical market that operates worldwide. Amazons goal to become a significant participant in Filmmaking could lead to the purchase of Metro-Goldwyn-Mayer in the United States, thus raising its profits (Siewe Wadeu et al. 2). Therefore, this underlines the multiple conversations between the tech firm and the ancient television and film production.
Performance Analysis
Based on Amazons customer performance KPIs metrics, Amazon operates on the metric of the impact that stipulates that the commodity is designed to induce alterations in client conduct. As a result, according to Denning, it has a customer satisfaction score of 82 (12). Compared to a customer performance metric of 74% of one of its fierce competitors, Walmart, Amazon has proven to enhance a good CRM (Martínez et al. 72). Second, about marketing KPIs, on the cloud service marketplace, Amazon, Google, and Microsoft represent a combined 60% of all consumers (Purcarea 15). It, therefore, means that the remaining 40% is shared among its competitors that deal with sales of commodities.
Lastly, considering its financial KPIs, the income statements or the balance sheets provide positive growth of its transactional activities compared to its competitors. In the first quarter of 2021, Amazon had a total quarterly gross margin percentage of 27.26% (Humborstad 40). Comparing the quarterly gross profit margin performance to eBay, which stands at 72.78% (Humborstad 40), shows that other online businesses such as eBay are rising. The Amazon Company has excelled in operating massive scale technology infrastructure. The Amazon Web Service offers a wide range of services that span almost every facet of contemporary network infrastructure (Humborstad 40).
Various systems may interface with others and form advanced techniques, one of the primary points (Humborstad 40). The RD service is one of the programs available (Humborstad 40). Humborstad suggests that the RDS can connect to various standard systems and supplements database systems such as Amazon Aurora (40).
The Amazon Company is failing in customer relationship management, and this has seen Costco surpass it in terms of quality customer satisfaction. Among the most compelling examples of Costco CRM is private brand merchandise (Chen 24). The fact that Amazon owns a more significant share of the online market than its competitors has made it less focused on the physical market, thus affecting its annual net income. It also points out the reason other companies such as eBay are becoming more prominent.
External Analysis
Amazon operates in a perfect competition market among eBay, Costco, Walmart, and Target. Amazon operating in such a market poses competitive risks in terms of the overall market share and gross profit margin. The Amazon Company is in the maturity phase of the industry life cycle characterized by intensified competition (Binz 1262). The mentioned characteristics are evident considering the recent competition it faces from Costco and eBay. Amazon has been trying to redefine itself with the numerous market diversification such as technological advancements to attain greater markets.
Porters five forces of influence in studying firm competitiveness can be an effective instrument. Considering the power of buyers, because of the low pricing that Amazon gives to buyers who make purchases of books on their platform, such customers are likely to become frequenters (Sadq et al. 68). As Amazon continues to develop the power of suppliers, its ability to create a fruitful agreement with suppliers continues to rise. Amazon is a competitor because it was among the first organizations to enter the E-commerce market, and as such, Amazon gains a good elevation of calm in the market. It would be difficult for new arrivals to challenge Amazon in the main contemporary markets effectively.
Consequently, at least for the time being, Amazon does not face a significant risk of substitution. The available external opportunity for Amazon is that it may continue expanding its marketplaces globally to keep its dominance in the E-commerce business. The threat that Amazon faces is the surface of an opponent of its level, shattering all Amazon has created over the ages (Sadq et al. 68). The external environment that encompasses the economic and technological environments, for instance, the current economic downturn, has wreaked havoc on the world financial markets since 2008 to date (Sadq et al. 68). Thus presenting a significant risk to Amazons market by lowering its annual profits.
Internal Analysis
The following vital resources are inbound logistics, marketing and sales, and online services. The inbound logistics are deployed at the logistic part of the supply chain, marketing, and sales at the advertisement and promotion level of the supply chain, whereas the online services are at the final consumers level. The mentioned three essential resources are all costly to imitate since the amount of money a competing company may use to copy them is hefty.
These elements using VROI analysis are how they rate the trustworthiness of domains concerning a push notification, how it engages with businesses looking to promote alongside inquiries, and how much it costs users (Onyusheva et al. 59). Furthermore, VROI analysis places Amazon as having a bold and innovative method of gaining entry to various market segments (Onyusheva et al. 59). Therefore, Amazon has positioned itself as the sectors leading player with a truly global client base.
Some of the internal environment strengths of Amazon Company include taking advantage of the movement in commerce to cloud hosting (Onyusheva et al. 57). The threats include Amazon user software is expected to improve as prices continue to fall, implying that e-books will become more costly. There are many entrants on the scene, and payment solutions for Amazon over the web would have to face competition from players all around the globe. As a result, the internal environment presents a loss of online market with the increasing cost of e-books.
Conclusion
Amazons cost leadership strategy seems perfectly working as it has emerged as a top online business. However, its online strategy has neglected its physical market, thus losing a greater hare to Costco. Amazon could pursue mergers and acquisitions and increased technological innovations. Mergers and acquisitions would help reduce competition and increase its total market share as compared to its competitors.
Consequently, improved technological innovations would help improve customer service, thus leading to more outstanding CRM. Merging and acquisitions could also pose a greater risk of administrative costs and challenges due to the long-chain in administration. Compared to lesser rivals, Amazon has a considerable competitive advantage. Due to offering the best E-commerce experience, the engagement with its customers, and the duration of its client relationships, Amazon has grown and prospered due to its successful expansion hence becoming lucrative.
Works Cited
Binz, Christian, et al. Catch-up Dynamics in Early Industry Lifecycle Stagesa Typology and Comparative Case Studies in four Clean-tech Industries. Industrial and Corporate Change, 2020. Web.
Chen, Jiangpei. Marketing Strategy Management of Costco: Analysis and Comparison to S-Group, 2021. Web.
Denning, Stephen. How Amazon uses Metrics to Drive Success. Strategy & Leadership, 2019. Web.
Humborstad, Trond. Database and Storage Layer Integration for Cloud Platforms. MS thesis. NTNU, 2019. Web.
Kurt, Ali, and Cemal Zehir. The Relationship between Cost Leadership Strategy, Total Quality Management Applications and Financial Performance, 2016. Web.
Martínez, Ascensión Barroso, Ramón Sanguino Galván, and Samsul Alam. Financial Analysis of Retail Business Organization: A Case of Wal-Mart Stores, Inc. Nile Journal of Business and Economics, 2017. Web.
Onyusheva, Irina, and Tanatthon Seenalasataporn. Strategic Analysis of Global E-commerce and Diversification Technology: The Case of Amazon.com Inc. The EUrASEANs: Journal on Global Socio-economic Dynamics, 2018. Web.
Purcarea, Ioan Matei. Marketers Reskilling within the Digital Transformation, a Todays Essential Task for Approaching New Digital Roles. Holistic Marketing Management Journal, 2019. Web.
Sadq, Zana Majed, Hawre Nuraddin Sabir, and Vian Sulaiman Hama Saeed. Analyzing the Amazon Success Strategies. Journal of Process Management. New Technologies, 2018. Web.
Siewe Wadeu, Dr Justin, and Catherine Ndjuta Bidzoh. Strategic Diversification through Acquisition: The Move of Amazon to Acquire Metro-Goldwyn-Mayer (MGM), 2021. Web.
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