Strategy in Practice â€Amazon

schema in Pr flakeice viragoSTRATEGY IN PRACTICE Amazon.comIntroduction to dodgeIn the Words of arseson Scholes (2002), St postgy is the direction and scope of an geological formation everyplace the presbyopic term which achieves advantage for the establishment by means of its configuration of resources indoors a changing milieu and to fulfil stakeholder expectations. In some view dodge bottomland be seen as a reflection of the attitudes and beliefs of those who wipe reveal the approximately influence on the organic law. fit in to Lynch (2000), the magnetic core of somatic schema is the identification of the employment of the organisation and the plans and actions to achieve that purpose. corporate system is often perceived as sensation of the most circumstantial managerial activities that bring together the organisations internal resources and its external traffichips with its customers, suppliers, competitors and the socio-economic environs in which it e xists. In his conceptualisation of the Strategy concept Lynch (2002) distinctly identifies three distinct aspects that defend been discussed belowResources Strategy Companies, logical argumentes and immobiles hold or acquire a wide range of resources. A firms resources and capabilities include every last(predicate) the financial, physical, human and organisational as personates used by a firm to develop, manufacture and deliver crossings or function to its customers Barney (1991). The purpose of strategy is to halt the best use of the available resources so as to outperform competition.environmental Strategy The term environment includes every aspect external to the organisation. No organisation bottom gain competitiveness with a lack of imaginativeness for its environment. Focus that is restricted b atomic number 18ly to what lies inside the boundaries of the firm is best criticised as incomplete and insufficient. Organisations need to and must be in synchronisation w ith their surroundings. It is here that strategy comes to play a major role.Adding Value Lynch has dysphoric on the notion of value addition. Apart from the above corporate strategy must meet the need to add value to the supplies brought into the organisation. To ensure its long term survival, the organisation must take the supplies, add value to them through its trading operations and then deliver its output to the customers. The purpose of corporate strategy is to bring the conditions under which the organisation is able to create this vital additional value. It must as easy ensure that the organisation adapts to the changes in the environment so that it can continue to add value in future.In essence Strategy provides Decision Support (Grant, 2004) to the extent that decision necessitaters are bound by bounded rationality, strategy in the form of guidelines and decision criteria can enhance the quality and consistency of strategic decision making. It as well helps in be tter decision making by pooling together the intimacy of some(prenominal) individuals and by facilitating the application of mingled analytical tools.Strategy too acts as a Co-ordinating device. The many tools and comp adeptnts of strategy i.e. Vision, Mission, Objectives etc. bring together the constitutional organisation as a superstar locomotive caputed in one direction. With either departments and personnel aiming towards the common goals, co-ordination can be achieved with greater ease. Strategy provides the organisation a target to work for. Strategy is forward facial expression it establishes a direction to guide actions. It also sets aspirations for the company that can act as motivators for the whole organisation.The strategy function, as is evident from above, permeates through all organisational membranes to pervade into all levels and is not restricted to any particular zone. much all authors in field of strategic Management acknowledge the prevalence of varied levels of strategy. Johnson Scholes (2002) believe that incorporated level strategy relates to the overall purpose and scope of an organisation and how value will be added to the different part ( trade units) of the organisation. It is also likely to be concerned with the expectations of the owners. It is the basis of separate strategic decisions and may headspring take the form of a mission statement. Corporate strategy deals with the ways in which a corporation manages a set of businesses together. (Grant, 1995) railway line unit strategy is about how to compete successfully in particular markets. Business Strategy deals with the way in which a single business firm or an individual unit of a large firm competes within a particular industry or market. functional strategies are concerned with how the component parts of an organisation deliver effectively the corporate and business level strategies in wrong of resources, processes and people. They deal with the day-by-day wo rking of the unhomogeneous sections in a firm. Operational strategies are to a greater extent about implementation than planning.Thus, Strategic counselling involves understanding the strategic home of an organisation, making strategic choices for future and turning strategy into action.The strategic linear perspective is concerned with the impact on strategy of the external environment, internal resources and competencys and the expectations and influences of stakeholders.Strategic choices include understanding the underlying bases for future strategy at some(prenominal) the corporate and business unit levels and the options for developing strategy in terms of both the directions and methods of suppuration.Strategy into action is concerned with ensuring that strategies are working in practice. (Johnson Scholes, 2002)This root aims to analyse the strategy in practice at Amazon.com. Amazon.com is one of the most successful e-businesses and undoubtedly the champion of all onli ne retailers or e-tailers as they are often referred to. It has revolutionised the retail sector of business and is a guinea pig of innumerable studies and research in the current e-commerce era.The material used for tuition has been escapen from the Amazon.com baptistery study1 and the tissue found portal for the company Amazon.com2. The report shall use vivacious theory as a basis to fool how strategy has worked for Amazon.com in practice. Although it is challenging to capture every aspect of the organisations life so far, effort has been made to cite applicable examples so to get a glimpse of its strategic approach.The Amazon.com CaseA summary3 of the Amazon.com case shall prepare the grounds to lay the analysis in the sparkle of theories discussed. A number of strategic concepts shall be cited to gain deeper insights to particular issues.With the detonative growth in internet companies market capitalisation positions, one would take on if some hype is at play. But th e trend data clear reveal that the internet is for real. According to Forrester research the total value of goods and function purchased online exceeded US$43 billion in 1998. Amazon.com believes that it is well positioned to capitalise4 on this growth.According to Media Metrix 16% of web users visited Amazon.coms stores in December 1998. In a very short period of time Amazon.com has become one of the realitys most recognised trade names, verbalise Jaleh Bisharat, Vice-president, Marketing, Amazon.com.With Amazon.coms current strategy combined with the ongoing recruitment of entrepreneurial top circumspection squad for each business segment, the challenge for Amazon.com is on the strategic implementation front.Bezos had unceasingly been fascinated with technology. He came up with the statistic that the electronic world would grow at the rate of 2300% monthly. Bezos said, when something is growing that fast, every second counts.Bezos considered selling a figure of products o nline, but he settled for books because the worldwide market is large, the price arrest is low and the range of titles is large.Being unsure of the ideal side, Seattle was chosen because it was the location of book distributor Ingram, which has continued to provide 60% of Amazon.coms books. Seattle also provided a preferable sales tax climate and a hi-tech workforce.I know nothing about the book industryI can get them to the customer and forget about bricks and mortar, said Bezos in an attempt to raise funds for his venture.After its entry into the market, Amazon.com had no significant rivals and there were no overabundant traditional players. up to now at this time Amazon.com was providing a powerful search facility as well as a host of serve not provided by other online competitors. Analysts warned of a volatile internet sector with strategic plans constantly creation revised.Despite aggressive competitive entry, Amazon.com passed many milestones in 1997. The most not dex terity of these was its ability to raise net proceeds of almost US$50 million in May. This enabled aggressive investment in building the business.Amazon.com focussed on establishing its executive team, which include the recruitment of Richard Dalzell of Wal-Mart. In the same year, 1997, Amazon.com offered the last book prices anywhere in the world.Extensive promotional relationships with other dominant internet players were concluded which reinforced Amazon.coms momentum, e.g. Yahoo, Excite, AOL etc.In 1998 the company launched music, video and gift stores in the US and expanded operations to UK and Germany. Jimmy Wright of Wal-Mart joined the company in the same year.Amazon.coms blowup programme is evidence of a growth strategy via acquisitions, strategic relations and internal development. It received the Computerworld Smithsonian Award for having demonstrated vision and leadership in the innovative use of information technology. With its elevatedly qualified top management tea m and the success trends, Amazon.com continued to enhance the total customer exist of shopping, giving them wider product range to choose from and more than than sophisticated dos to complement them.The case study then goes on to list the various achievements of the company. It also provides detail information on the financial and personnel aspects of the organisation. These exposit have been passed over as they are beyond the scope of this paper.The analysis of Strategic PracticesThe Basic ApproachThe Internet is one of the most matter to products of the developments in information technology. It received mixed reactions from the public and the entrepreneurs. While most of them were overwhelmed with the possibilities and others called it an over hyped mania, only a few saw it as a business opportunity. Jeff Bezos had the vision that created Ex ante limits to competition (Peteraf, 1993) and gave Amazon.com the First-mover advantage.Among the various lenses or attitudes toward s Strategy that have been theorised, Amazon.coms approach can be regarded as that of an Ideas lens. The ideas lens (Johnson Scholes, 2002) sees strategy as a terminus of brisk ideas that can come from anywhere in the organisation. It promotes innovative persuasion and does not inhibit experimentation. This is well evident in the very beget-up of Amazon.com as an enterprise. Further, this approach is better characterised as Emergent than Prescriptive (Lynch, 2000). The dynamic record of the internet environment makes a planned and prescribed approach unsuitable. Amazon.coms strategy evolved largely during the course of its life depending on its position at that instant in time. In the words of Miles Snow (1987) Amazon.com as an entity is a Prospector who looks for new opportunities and is willing to take risks to be able to exploit the same. tell in general, Amazon.coms strategy is an ambitious one.Pattern of Strategy developmentIn his business development Bezos attempted a Tr ansformational change in strategy through the creation of an entirely new service. The change resulted in success because it created new expectations that did not exist earlier Amazon.com was ahead of its time. Further, the ability to convert the transformational change into a business winner comes from the fact that as the strategy for the firm was emerging, there was little mismatch between the think and the realised strategy (Mintzberg Walters, 1985). It is important to strike harmony among the understanding of the environment, identify opportunity, the strategy intended to capture such(prenominal) opportunity and finally the genuine resultant strategy that was implemented. Without this happening, the transformational change would most often end in a failure.Stakeholder MappingStakeholders are those individuals or groups who depend on the organisation to fulfil their own goals, and on whom in turn the organisation depends (Johnson Scholes, 2002). For Amazon.com the major stak eholders were its customers, investors and Jeff Bezos himself. With respect to the Stakeholder Mapping drawn up by Savage et al (1991) Bezos and the investors can be referred to as Dominant Stakeholders while the customers would identify as Dependent Stakeholders.EnvironmentThe internet industry is characterised by a high degree of Changeability (Lynch, 2000) i.e. there is a greater number of new problems and each problem is more complex than in other sectors. just it is not very Predictable due to a high rate of change and uncertainty of future circumstances. This made Amazon.coms business environment highly turbulent. As a new entrant Amazon.com had to cope with all these difficulties but once settled these factors acted as Barriers to entry (Porter, 1985) for its competitors. burnishCulture within an organisation consists of the shared basic assumptions that have worked well decent to be considered valid and passed to fellow employees over time (adapted from Schein, 1985). It r efers to the way we do things around here. While there can be some(prenominal) factors affecting the culture at a work place, in case of Amazon.com it is the ownership and technological factors. Jeff Bezos is the leader of the organisation and also the cultural head bringing in ambition and motivation to the organisation. The work practices, routines, plans, the entire business is largely governed by the technological abilities inside and the advancements outside the organisation.The Cultural web is another important aspect that has a definitive impact on the strategy an organisation pursues. The Cultural Web (Johnson Scholes, 2002) consists of the Routines Rituals, Stories, Symbols, Power Structures, Control Systems and the Organisational Structure. For Amazon.com its brand name acts as a major symbol that binds together the various components of the system. It symbolises the scale of operations that Bezos aimed at, thus cultivating an aggressive work culture. If one was to draw out the power structure at Amazon.com, it would be a like a shot pyramid with Jeff Bezos at the peak. Although the investment came from outside, Amazon.com was his dream and his venture. He did not prognosticate any profits in the number 1 5 years, but his combine in the idea won the investors confidence. All this clearly indicates the prevalence of a Power Culture at Amazon.com (Handy, 1993).Key Strategic HighlightsBased on its first mover advantage Amazon.com was able to capitalise on the heterogeneousness of its resources. It reaped benefits from the Ex post and Ex ante limits to competition (Peteraf, 1993). Its technological knowledge behind the search engine was imperfectly imitable for the competitors. Even if the rivals came up with second-stringer systems, the first mover position always allowed an edge in favour of Amazon.com. Employees and technicians at Amazon.com learnt to adapt and innovate better than the competitors, simply because the latter were merely copyin g what Amazon had done.The Knowledge at Amazon.com was rare, valuable, not easily imitable and well organised to allow the company to enjoy a resource based competitive advantage over its rivals (Barney, 1995).The technological skills were Amazon.coms core competence that was used to create the Search facility their core product which was at the heart of Amazons web based store/services the end product (Hamel Prahalad, 1990). However, it also needs to be mentioned here that the Amazon.com was juicy in dynamic capabilities (Teece, 1997) to be able to successfully carry out the above. The top management team which consisted ex-Wal-mart employees, were aware of their strengths as well as the business environment to be able to identify their core competence. They ensured carrying out the best use of their resources and maintained the momentum gathered from the initial push. Even with the best resources and opportunities a business may not succeed, if those managing it are not aware of their responsibilities. It is the management that lays out the strategy and takes all decisions that are critical to the overall success.ExpansionGiven the knowledge of Ansoffs Matrix Amazon.com for a start pursued Market development i.e. offered the existing products to new markets. It also used Cost leadership (Porter, 1985) to expand its customer base. As the website served more and more customers over time, Amazon.com introduced new products to the existing market a product development effort. Finally, with a secure market position Amazon.com was capable of diversification i.e. offering new products to new markets.Not all of Amazon.coms offerings were indigenous. It had partnered with several(prenominal) other wed based companies. While most of the early partnerships were aimed at gaining a greater exposure to the target audience, later excusive relationships were created to add to the existing list of products and services that were offered on the website. The motive behin d these alliances was largely consumptive (Koza, 1998). Such business alliances were primarily aimed at tapping into each others customer bases and try on mutual benefits to the parties involved.Amazon.coms approach to collaboration is well explained by the M-B-A (Make, Buy, or Ally) matrix. It allied with services such as Yahoo and Excite because the service was not important to Amazons business it sought more traffic. However, in case of similar companies such as Bookpages and Telebook, Amazon.com preferred a Buy because of the importance to the business activity. It also had the requisite skills to run these companies. Amazon.com did not want to allow these smaller companies to grow and later pose a threat to them.ConclusionAmazon.com can be easily regarded as a strategy champion. It had all the components of a great Entrepreneurial tale, and shall be cited in many more academic works in future. However, it must not be overlooked that for the first five years Amazon.com did no t make any profits. Moreover, with the growth in market share, loss per share also grew. If all other competitors would have grouped together to attack Amazon from all fronts, it could have been a different story.Essentially, Amazons first mover advantage was crucial. The fact that Amazon possessed the above resources and capabilities at the emergence of e-commerce is of vital importance. Therefore, it is questionable whether or not Amazon would have managed to achieve similar results if it were to launch today in 2004 in such a hypercompetitive market. Primarily, Amazons success was due to effective leverage of its resources, especially knowledge and managing the capabilities derived from these resources.REFERENCESBarney, Jay B.. Firm resources and sustained competitive advantage From ledger of management vol 17 (1) 1991 p.99-120.Grant, R. M. (Robert Morris), 1948- Contemporary strategy analysis concepts, techniques, applications / Robe.. 5th ed . Oxford Blackwell, 2004John son, Gerry. Exploring corporate strategy / Gerry Johnson, Kevan Scholes. 6th ed.. Harlow Financial multiplication/Prentice Hall, 2002.Lynch, Richard L.. Corporate strategy / Richard Lynch. 3rd ed. Harlow Financial Times Prentice Hall, 2003.Mintzberg, Henry. Strategy crusade the complete guide through the wilds of strategic manage Harlow Financial Times Prentice Hall, 2001.Mintzberg, H. and Waters, J.A. Of strategies, deliberate and emergent Strategic management journal. John Wiley and Sons Inc. Vol 6 (1985) p.257-272Peteraf, M. 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London Thomson Learning, 2001 1861523777Footnotes1 Amazon.com from start up to the new millennium, Stockport Street in Johnson Scholes (2002)2 www.amazon.com3 This is a self disposed(p) summary using the information provided in the Amazon.com Case study by Stockport Street. The purpose of the summary is informative and allows connection with the report it has therefore been included in the main text.4 Such text in bold are exhibits of strategic highlights