Sept 2022 Week Four

2

Strategic Options

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Strategic Options

Discussion 1

Amazon has dominated the online shopping industry for considerable number of years. This dominance can be attributed to a number of strategic opportunities. The dominance of online shopping is one strategic opportunity that enables the organization to thrive in the competitive online industry. It has the biggest share of the ecommerce industry. At the end of 2021, Amazon’s ecommerce sales were recorded at 56.7% of the total ecommerce market share in the U.S.A. This figure indicate that the organization’s dominance of the industry is indeed a strategic opportunity that it can put into good use. Amazon has used this opportunity wisely by diversifying and developing new products lines. The dominance has helped the organization to gather and analyze vast amounts of client data that it uses to analyze consumer behavior. Amazon records higher user activity on its website as compared to its rivals. The information gathered from its platform allows for tracking of consumer buying patterns, preferences, and identify the target clients for various products (Kohan, 2022).

One strategic threat that is affecting the organization is declining profits. While the recent decline in profits in the last 3 months can be attributed to the shift in normal shopping after COVID-19 situation, the profits of the company continue to decline, and this indicates the existence of a threat faced by the organization. Promotional activities such as free shipping for goods could be eating into the company’s profits. The costs incurred in these promotions could be unreasonably high that it affects its cost efficiency. The other promotion that seems to affect the organization is the Amazon gift card that is offered to buyers. Gift cards give a business the opportunity to increase the level of sales, but the cost incurred in the promotion exercise is sometime very high that affects the level of profits (Ferrell, Hartline & Hochstein, 2021).

Discussion 2

The strategic options presented can be implemented depending on the situations of a company. Retrenchment would not be a good option for Amazon since it is not struggling to stay afloat. Retrenchment is recommended for companies that are struggling financially and therefore releasing the workforce is an option to avoid the burden of labor cost. Staying the same would not be the best strategy for Amazon since it operates in a highly competitive industry. Staying the same would make Amazon redundant and noncompetitive. The strategy to recommend for Amazon is growth. The organization has all the opportunities for growth (Flamand, Wisher, & Riley, 2020). Unlike the other two strategies, growth as strategic initiative entails identification of new products, ideas or services to provide to new or existing markets. One strategic growth that Amazon should pursue is global expansion. There is need for Amazon to leverage its synergies as well as actualizing on economies of scale.

Setting up portals that support localization in identified global markets would be the best move for global expansion. Such portals should accommodate local language and culture. Other than this, there is a high population of internet users with high income in some Scandinavian nations that are not targeted by ecommerce businesses. The other strategic growth opportunity is expanding into physical stores. Even though, this strategy is currently being pursued through acquisition of already established stores, Amazon needs to be aggressive in approach and open more physical stores (Siewe Wadeu, & Ndjuta Bidzoh, 2021). Other than expanding into these countries, Amazon should expand its cloud-based services. Amazon currently offers its cloud-based services in the U.S.A, it should expand the services to Europe (Flamand, Wisher, & Riley, 2020).

References

Ferrell, O. C., Hartline, M., & Hochstein, B. W. (2021). Marketing strategy. Cengage Learning.

Flamand, O. J., Wisher, A., & Riley, S. (2020). Strategic Plan: Amazon.(PDF). Retrieved from.

https://scholarworks.umt.edu/cgi/viewcontent.cgi?article=1330&context=utpp

Kohan, E.s. (2022, April 28th). Amazon loses $3.6 billion in profits but Andy Jassy is not concerned. Forbes. Retrieved from https://www.forbes.com/sites/shelleykohan/2022/04/28/amazon-loses-38-billion-in- profits-but-andy-jassy-is-not-concerned/?sh=26670094656e

Siewe Wadeu, D. J., & Ndjuta Bidzoh, C. (2021). Strategic diversification through acquisition: The move of Amazon to acquire Metro-Goldwyn-Mayer (MGM). Strategic diversification through acquisition: The move of Amazon to acquire Metro-Goldwyn- Mayer (MGM)(May 27, 2021).