MGT 498 Week 5 (1050 words excluding reference)

Introduction

Company leaders including Amazon must establish their long-term goals and objectives and follow the strategies they have in place which include vertical integration and their strategic alliances. Following these strategies will help guide that company to having a competitive advantage over their competing firms. Amazon has many different headquarters with their main being in Seattle Washington, Amazon is now considered multi national and are involved in selling products from other companies to include their own all over the world.

Long-term Goals and Objectives

Amazon has a very well established strategic formula that is working as intended for what their organization is all about. Their strategy hasn’t really changed much since the inception of the company, their mission statement has also remained the same which is, Farfan (2018), “Our vision is to be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.” (para. 3). This mission statement has inspired customers and businesses alike to affiliate themselves with this company as they provide a network for a company to sell their product and sell high quality products at a great price for the consumer. Amazon is at the forefront of this type of business that many companies have tried to imitate but often fail, they have been able to keep innovating and providing their customers with new and exciting products for them. With the start of Netflix and its major success Amazon came up with Amazon Prime Video where their prime members get access to a wide variety of television shows and movies, this subscription also includes access to almost any song you can imagine that you can stream while doing work or anything.

The most important task of a strategic plan is how you formulate it, which is an extremely long process and quite tiresome. A strategy formulation is the process in which a company must choose the absolute best course of action that is relatable to their organizational goals and objectives which in the end will help them to achieve their ultimate objective. (Winter, 2016). There are 6 main steps in strategy formulation, Amazon uses each step to create the best possible scenarios for their products and setting them up for success instead of failure. Amazon has developed a great strategy formulation and have hired a quite diverse group of employees which helps them to promote diversity in the work environment.

One of Amazon’s most important strategies was the implementation of Amazon Prime. Amazon Prime is a yearly membership that allows consumers to get free 2-day shipping on all products from businesses that participate in Amazon Prime. Customers who use Amazon often will benefit greatly with having a no cost shipping method and the membership eventually pays for itself throughout the year. Amazon took a step further and offered all Prime members access to a streaming service that allows you to watch television shows and movies with the same price point as the original Prime membership. This strategy allowed them to gain more customers that don’t use Prime enough to justify the cost of a membership but not since they added a streaming service it allows the customers who were on the fence of buying a membership to allow them to justify the cost of it.

Another major strategy for Amazon was listening to their customers feedback, listening and improving upon their product will help them to gain new customers and increase their bottom line over time. Amazon monitored this feedback and improved upon their Prime membership even more by adding music streaming and then went a step further and partnered with a company called Twitch that allowed Prime users a free monthly subscription to a streaming channel they like which is a $5 monthly value and helps to support their favorite streamer. Branching to these different streaming methods has helped Amazon stay ahead of their competition by offering unique products that other companies can’t compete with.

When Amazon was first founded it relied heavily on companies allowing them to sell their products online, now that they are the best online service companies come to them in droves to sell their products. This allows Amazon to pick and choose only the highest quality of items they choose to sell to their customers, which means they can keep their competitive advantage over their competition.

Business Management Strategy

Amazon’s business management strategy is to provide high quality products at the cheapest price possible and allowing their Prime members to take advantage of free 2-day shipping saving customers tons of money of shipping costs. Gordon (2015), "A compelling competitive advantage is sustainable when the advantage a company has over its competitors is on-going due to continuous innovation, the more difficult it is for competitors to complete, the more sustainable the competitive advantage." (para. 3).

Amazon hasn’t changed their strategy all that much, they have had to alter it with the changes in technology to keep up with it. This allowed them to stay at the forefront of the competition by keeping them relevant and providing new and exciting features for their most loyal customers.

Amazon utilizes vertical integration for their structure and business strategy. Amazon can control their products by this vertical integration, they can create more profits this way. Even though Amazon is big enough now to be self-sustainable they continue to partner with new companies to achieve their goals and cover a wider area of potential customers.

Amazon it seems, will always have a competitive advantage over their competition because they are such a massive company that can adapt to changes quickly and spend the money they need to provide new innovative products. Having a Prime membership that has a multitude of features for almost every consumer is what has given them the competitive advantage they need to keep them ahead of everyone else.

Conclusion

Amazon created their mission statement and business management strategy for the long-term, this requires strategy formulation that is ever evolving. These strategies include vertical integration and strategic alliances with other companies. The strategies they utilize make sure that the company will remain at the forefront of competition for years and even decades to come. Amazon just needs to remember to keep the focus of the company on providing high quality products at an affordable price for the consumer and they will do just fine.

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