Business Level and Corporate Level Strategies – Amazon
‘Strategy’ is an increasingly important element of management that is concerned with making a decision between two or more options. Often, when selecting a strategy, the company chooses to pursue or implement one course of action instead of the other. Typically, these choices are determined by threats and opportunities in the company’s external business environment, as well as the internal core competencies, capabilities, and resources. In business management, this process of considering internal and external elements of a market is part of competitor analysis. Usually, based on these elements, a company can choose a business-level strategy or corporate-level strategy to drive its growth, enter a new market, or suppress competition. This paper, therefore, will focus on analyzing the business-level and corporate-level strategies Amazon can use to achieve long-term success and growth, as well as the competitive environment.
Business-Level Strategies
The term ‘business-level strategy’ refers to the synchronized, integrated, and harmonized set of actions and communications that a company employs to receive and grow a competitive advantage over its rivals in the industry by making the most of its core competencies in a particular product/service markets (1). These business-level choices are fundamental since a firm’s long-term achievement is determined by its strategies. The benefit of implementing this type of strategy in an organization is that a company can work towards meeting the needs of consumers. This simply implies that when instituting any business-level strategy, an organization must prioritize the needs and demographics of the customer, including their geographical location, consumption patterns, values, age, as well as gender. Thus, a good business-level strategy should work towards giving a company intimate and key knowledge about competitors and consumers.
Therefore, for Amazon’s long-term success, it is important that the company implements the ‘integrated cost leadership/differentiation’ strategy as its flagship business-level strategy. The cost-leadership strategy refers to a coordinated and integrated set of actions employed to supply or produce services/goods with features considered by consumers as acceptable but at the lowest cost possible, especially in comparison to that of competitors. For Amazon, this means selling standardized services/goods on its website – but considering the competitive levels of differentiation – to the sector’s most typical clients. On the other hand, the differentiation strategy refers to a set of actions integrated to develop or supply goods/services that consumers view as being different. Therefore, combining the two strategies means that Amazon not only looks for ways to minimize its overall costs but also seeks to give customers products that are unique and different from what competitors are offering. The company must, therefore, take advantage of process innovation, which requires designing new distribution and production techniques to be able to operate efficiently. To achieve this integrated differentiation/cost efficiency strategy, Amazon must engage in key value-chain support functions and activities that permit it to simultaneously achieve differentiation and low cost.
Corporate-Level Strategies
The term ‘corporate-level strategy’ refers to the steps/actions a company uses to stay ahead of its competitors by identifying and managing a set of businesses competing in various service/product markets (1). Typically, corporate-level strategies aid businesses in picking innovative strategic standpoints that are expected to boost their value. In general, businesses often adopt corporate-level approaches to grow their profits and revenues, although sometimes they could be used for growth. According to Hitt, Ireland, &Hoskisson, a company can pursue offensive or defensive strategies that create growth and, at the same time, have a different strategic intention. A firm can as well pursue market growth by entering a new geographic market. In addition, a business can decide to pursue horizontal integration by acquiring a new firm or vertical integration by purchasing a customer or supplier.
In that regard, one of the key corporate-level strategies that Amazon can pursue is service/product diversification – which is a tactic that firms often use to create a competitive advantage by varying or enlarging their range of services/products or fields of operations. Typically, diversification will not only boost Amazon’s overall performance but will also help create value through either unrelated diversification or related diversification. Furthermore, diversification can also help Amazon neutralize the influence posed by its competitors like eBay and Alibaba, especially in the European and Asian markets, respectively, as well as other emerging markets like Africa and South America. In 2019, Amazon reportedly posted annual profits of about $11.5 billion and revenues of nearly $280 billion. The company’s primary earner was its online store business (about 50 percent of the total revenues), followed by its Physical Stores, Amazon Web Services, and Subscription Services (2). The final two were the Third-party Seller Services business division and the Advertising revenues.
Therefore, because Amazon is already a diversified organization in terms of products and services, pursuing value-creating diversification strategies, especially related linked diversification, can help the company grow and sustain this competitive advantage for the long-term. The benefit of this strategy is that Amazon can build what is referred to by Hitt, Ireland, &Hoskisson as the ‘Economies of Scope’ – which are cost savings that a company can create by productively sharing capabilities, competencies, and resources built in one business to other businesses.
Competitive Environment
Competitor analysis is one of the primary tools firms can use to evaluate the level of competition and the power of competitors in an industry. Amazon is a tech company that has, in recent years, expanded from just e-commerce to artificial intelligence, digital streaming, and cloud computing. Today, Amazon’s portfolio has expanded significantly and includes retail goods, physical retail stores, Amazon Publishing, Amazon Local, Amazon Prime, Amazon Cash/Top Up, Consumer Electronics, AmazoSmile, Digital Content (Amazon Game Studios and Amazon Studios), Delivery (Groceries), Amazon Web Services, Amazon Home Services, Amazon Drive, Amazon Video, Amazon Publishing, as well as Private labels & exclusive marketing arrangements. However, Amazon often breaks down its business into five main divisions, including Amazon Web Services, Subscription Services, Third-Party seller services, Physical Stores, and Online Stores.
Amazon’s main competitors include Alibaba (in the web service industry) and eBay (third-party seller). One of the business-level strategies employed by the Chinese multinational tech firm Alibaba is differentiation. Similar to Amazon, Alibaba has differentiated its range of products and business divisions and now deals with cloud computing, shopping search engines, and electronic payment, as well as makes third-party sales in its web portals. Its main corporate-level strategy is diversification, with the firm recently targeting entering new markets, especially parts of the expansive Asian market, including India and Africa. On the other hand, eBay has traditionally used the ‘focus strategy’ as its primary business-level tactic. The company has ideally focused on delivering particular services that serve the needs of a specific market segment instead of differentiating. Specifically, eBay has focused on rendering only business-to-business services via its website, refusing to branch out to other divisions. In terms of its corporate-level strategy, eBay has, in recent years, pursued horizontal integration by acquiring GSI Commerce in 2011 for a reported $2.4 billion (3). The acquisition of GSI Commerce means that eBay can increase its digital marketing, multichannel retailing, and e-commerce services by integrating new technology services, such as customer care, fulfilment, payment processing, and order management.
However, despite eBay and Alibaba posing a greater challenge to Amazon, it is clear that Amazon is likely to prevail and outsmart them if it opts to implement the proposed ‘integrated cost leadership/differentiation’ business-level strategy as well as diversification corporate-level strategy.
Market Cycles
A ‘slow cycle market’ refers to a market in which the entry resources and avenues are much protected, and a single firm (or a few firms) monopolizes the market, making it difficult for competitors to penetrate or enter the market. On the other hand, a fast cycle market is defined as a highly competitive market in which businesses must continuously and creatively come up with novel products/services or ideas, as well as counterattack the competitive strategies used by competitors, to thrive (1). Based on these definitions, I believe my choices (Alibaba and eBay) in the Competitive Environment section would be different in the fast-cycle and slow-cycle markets. In a slow-cycle market, I believe only eBay would be the competitor because it is one of the first companies that rivalled Amazon in the 90s and early 2000s. It would have been very difficult for Alibaba or other new firms to penetrate the market. On the other hand, in the fast-cycle market, it is possible that Alibaba would be the only viable option as opposed to eBay because of its innovative strategy and adaptation to change through diversification. E-Bay is an old-fashioned company that has constantly refused to expand and diversify its portfolio.
Sources
Hitt, Michael, Ireland Duane, &Hoskisson Robert. 2020. Strategic Management: Competitiveness & Globalization Concepts and Cases 12e. Boston, MA: Cengage Learning.
Gennaro Cuofano. 2020. How Amazon Makes Money: Amazon Business Model in a Nutshell. https://fourweekmba.com/amazon-business-model/#:~:text=In%202019%20Amazon%20posted%20over,Seller%20Services%2C%20and%20Advertising%20revenues.
eBay Inc. Staff. (2011). eBay Inc. Completes Acquisition of GSI Commerce. https://www.ebayinc.com/stories/news/ebay-inc-completes-acquisition-gsi-commerce/
ORDER A PLAGIARISM-FREE PAPER HERE
We’ll write everything from scratch
Question 
Business Level and Corporate Level Strategies – Amazon
Analyze the business-level strategies for Amazon to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not 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 or not 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 are not as good as academic resources.