Business-Level and Corporate-Level Strategies

Business-Level and Corporate-Level Strategies

Amazon is a leading multinational company that dominates the global retail industry. The company has established strong brand equity globally by fusing its strengths and collaborating with stakeholders to eliminate threats. Its success is also attributed to its business strategy linked to its innovative culture. This research reviews Amazon’s corporate-level and business-level strategies, competitive environment, and the likelihood of its long-term success in slow-cycle and fast-cycle markets.

Business-Level Strategies for Amazon

According to Evans (2013), a business strategy is a defined set of actions, goals, and plans outlining how a business intends to operate in a specific market or many markets with a product or various products and services. The main aims of a business strategy are to enhance a company’s effectiveness, direct behaviors, and effort for long-term organizational success, mobilize resources, identify and utilize opportunities, face threats and challenges, create a competitive advantage, and gain control over a situation. Business-level strategies are the strategies relating to a specific business that are often developed by top management by converting a company’s vision and mission into solid strategies.

Amazon uses its business-level strategies to maintain its sustainability. One of the strategies is regularly expanding into new segments and niches. Amazon has ventured into artificial intelligence, e-commerce, consumer electronics, cloud computing, digital distribution, entertainment, autonomous cars, and business-to-business distribution. The company regularly conducts market research to identify new segments and niches that can boost its performance and profitability while looking for solutions to challenges in its business operations. The second strategy is the acquisition strategy. Amazon expands into new markets using acquisition. For instance, it acquired MGM company to improve the performance of its streaming services in Prime Video. The company has also acquired various companies in the cloud computing sector to improve its cloud computing services. Some of the main acquired companies that have played a vital role in the company’s growth in cloud computing are Thinkbox Software, GameSparks, and Harvest.ai.

The third strategy is investing in digital technology that supports its innovative ideas. For instance, the company has invested in robotics, drones, and artificial intelligence. The company established Amazon Prime Air to facilitate the production of high-quality drones. It has also acquired various patents on the delivery of drones, floating airships, and parachutes, and patents for drone designs. Artificial intelligence has been applied in Alexa and autonomous cars. Another business strategy that has played a significant role in Amazon’s growth is partnering with companies with the resources required to produce high-end products. For instance, it partnered with Microsoft to conduct thorough research in Artificial Intelligence where Alexa and Cortana would communicate with one another and provide high-quality personal assistant services to users.

The most important business strategy for the firm’s long-term success is expanding into various segments and niches. This expansion is a good choice for the company because technological advancements create new segments and niches that require a lot of capital to venture into. Apple has already established an innovative culture and has the capital and resources to implement innovative ideas from technological advancement. Therefore, it can expand into new niches and segments before competitors do, thus creating a competitive advantage. The company has also established a solid brand identity and widespread global brand awareness, thus increasing the chances of success in new segments and niches because customers will be eager to try out its new products and services.

Corporate-Level Strategies for Amazon

Amazon’s corporate-level strategies include concentration, integration, diversification, and defensive strategies. Concentration strategies include market development, market penetration, and product development. Amazon focuses on meeting various customer needs and preferences, thus serving a large customer base. The company also uses online sales to increase its products’ availability to different markets worldwide. Amazon also uses aggressive marketing campaigns to increase product awareness, thus creating a competitive advantage. Market development includes entering and expanding operations in new markets across the world. Amazon has created an e-commerce platform that operates in more than ten countries globally, thus increasing sales and competitive advantage. The company also conducts market research to identify regions with potential customers for continuous market development to stay ahead of competitors. Currently, the company has developed markets in the United Kingdom, India, and China. Product development includes developing new products. Amazon has developed various high-quality products in consumer electronics and artificial intelligence. The company uses research and development to identify new products to develop and advertise the products through marketing campaigns before launching them.

The integration strategy includes vertical, backward, and forward integration. According to Mukherjee (2015), vertical integration happens when customers either purchase or start a company and integrate it into their existing business. Amazon’s operational model includes building operational efficiencies in its services. After these services gain a competitive advantage over similar services, the company offers them to other users and corporations (Paul, 2020). Amazon’s vertical integration also includes publishing books and offering a publishing platform for independent authors. The company also launched Kindle to eliminate middlemen in its publishing services, thus gaining full control of the book cycle after an author writes it, which redefined customer interaction with and relation to e-books. Amazon applies forward integration by expanding its business activities to incorporate control of the supply of its products. Backward integration is applied through mergers and acquisitions. Amazon has acquired various companies such as Whole Foods Market, Elemental Technologies, and Kiva Systems to improve its products and services, thus creating a competitive advantage. Amazon’s diversification strategy includes generating revenue from different business segments. The company uses its infrastructure to expand its products and services, thus increasing its customer base. The defensive strategy includes divestment used when a company downsizes its business activities’ scope. Amazon applies divestment by laying off employees to reduce its workforce and selling part of its stock.

The most important corporate strategy for the firm’s long-term success is diversification. Offering a wide range of products creates a competitive advantage by increasing the customer base. This will help Amazon gain a large market share worldwide, hence increasing profitability through more sales. Diversification will also give Amazon long-term success by enabling it to take advantage of new market niches and segments. According to Thompson & Norris (2021), diversification also enhances business sustainability by enabling the company to find new revenue streams, hence maintaining cash flow to run business operations. Therefore, Amazon should focus on producing different products and services in different business segments to enhance its long-term success and sustainability.

Competitive Environment

Amazon operates in a highly competitive market. The competitors vary based on the business segment. For instance, in the retail segment, the company’s main competitors are Alibaba and eBay. However, Amazon does not face much competition from Alibaba in global markets because Alibaba concentrates on the Chinese markets. However, eBay has significantly reduced Amazon’s global market share because it dominates most of its markets globally. However, Alibaba is the main competitor because it offers similar products and has established a broad global presence and brand identity. Alibaba’s main business strategies are online-to-offline and consumer-to-business transactions. Its corporate strategies are integration and diversification. EBay’s business strategies, on the other hand, are expansion into global markets and product development, while its corporate strategy is diversification. Based on the analysis of Amazon’s business and corporate-level strategies and those applied by eBay and Alibaba, Amazon is most likely to be successful in the long term. This is because it focuses not only on growing its market but also on developing more products to expand its product portfolio and revenue streams. Amazon’s combination of a diverse corporate strategy and vertical integration also gives it a competitive advantage over eBay and Alibaba.

Moreover, Amazon faces competition from Netflix and iTunes (Apple) in the media segment. The three companies provide a platform similar to what Amazon offers, thus creating stiff competition. However, Amazon has tried to distinguish its services from competitors by providing a variety of media, such as movies and TV series via Prime Video and various songs. Netflix uses a generic strategy that focuses on maximizing its competitive advantage by increasing cost-effectiveness and efficiency in information technology. The company uses market penetration to increase its customer base and a differentiation strategy to increase revenue streams. Apple, which provides iTunes, focuses on market development, product development, and differentiation to improve its iTunes services. Based on the comparison between the corporate strategies used by Amazon, Apple, and Netflix, Amazon could be in a disadvantaged position. This is because Netflix is most likely to succeed due to its market penetration strategy and differentiation, focusing on content creation to meet customer needs and preferences.

Slow-Cycle and Fast-Cycle Markets

Slow-cycle markets are markets where a company’s competitive advantages are protected from imitation for a long time: imitation is made expensive to prevent competitors from using it to reduce its competitiveness (Hitt et al., 2016). Slow-cycle markets are closely related to monopolistic markets. Companies operating in slow-cycle markets protect their resources and capabilities from competing companies, thus maintaining a high competitive advantage. On the other hand, fast-cycle markets are markets where a company’s competitive advantage is not protected from imitation, thus limiting the sustainability of competitive advantage (Hitt et al., 2016). In these markets, competitive advantage relies on the ability to counterattack competitors before the source of advantage is eliminated.

If Amazon were operating in a slow-cycle market, it would be more successful in the long term because it offers a variety of products. Alibaba would be the least successful in a slow-cycle market because its cost-leadership strategy would create a scarcity of products, thus eliminating the need to attract customers using price. After all, prices would be high due to a limited supply of products. Therefore, the scarcity of products would reduce Alibaba’s sales, thus causing a reduction in revenue, and affecting profitability and long-term success. There would be no need to increase sellers because Amazon would be dominating the market, thus further increasing Amazon’s competitive advantage. Cost leadership would be the appropriate strategy to create a competitive advantage in a fast-cycle market. Therefore, in fast-cycle markets, Alibaba would be more successful in the long term due to its cost-leadership strategy applied in market penetration and when introducing a new product in the market. It would be better positioned to increase its customer base because competitors join the market. Amazon would also have a competitive advantage over Netflix because Netflix focuses on content production to create various content rather than increasing or reducing the price to increase market penetration.

References

Evans, V. (2013). FT essential guide to developing a business strategy: How to use strategic planning to start up or grow your business. Pearson UK.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts: Competitiveness and globalization. Cengage Learning.

Mukherjee, K. (2015). Vertical integration strategy. Wiley Encyclopedia of Management, 1-2. https://doi.org/10.1002/9781118785317.weom120180

Paul, L. A. (2020). Amazon business. Amazon für Entscheider, 375-388. https://doi.org/10.1007/978-3-658-27427-6_13

Thompson, P. B., & Norris, P. E. (2021). Sustainability and business. Sustainability. https://doi.org/10.1093/wentk/9780190883249.003.0002

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In this assignment, you are to use the same corporation you selected and focused on for the assignments (previous assignments attached) Strategic Management and Strategic Competitiveness and External and Internal Environments.

Research the company on its own website, public filings on the Securities and Exchange Commission’s Filing & Forms page, Strayer University’s online databases, the Lexis Advance database, and any other sources you can find. The annual report will often provide insights that can help address some of these questions.

Use the Business-Level and Corporate-Level Strategies Template [DOCX] to ensure that your assignment meets the requirements.

Requirements
Write a 6-8 page paper in which you do the following:

Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether you judge this to be a good choice. Justify your opinion.
Analyze the corporate-level strategies for the corporation you chose to determine the corporate-level strategy you think is most important to the long-term success of the firm and whether you judge this to be a good choice. Justify your opinion.
Analyze the competitive environment to determine the corporation’s most significant competitor. Compare their strategies at each level and evaluate which company you think is most likely to be successful in the long term. Justify your choice.
Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets.
Use at least three quality references. Note: Wikipedia and other websites do not qualify as academic resources.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is as follows:

Determine business-level and corporate-level strategies for a corporation’s long-term success comparable to the competitive environment.