GLOBAL BUSSINES STRATEGY

FINAL PROJECT: AMAZON

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 Index:
1. Backgrounds – Summary...........................................................................3
2. Vision...........................................................................................................4
3. Mission........................................................................................................ 5
4. Corporate governance...............................................................................5
4.1. Organization and Membership...............................................................5
4.2. Purpose of the Committee......................................................................5
5. Environmental scanning............................................................................8
5.1. General forces: PEST analysis...........................................................8
5.2. Industry analysis: Porter’s Five Forces..............................................11
5.3. SWOT Matrix.......................................................................................15
6. Key Values.................................................................................................16
7. Corporate culture......................................................................................18
8. Policies...................................................................................................... 19
9. Strategic objectives..................................................................................20
10. Strategies...............................................................................................21
10.1. Corporate strategies...........................................................................21
10.1.1. Directional strategies...................................................................21
10.2. Business strategies............................................................................24
10.2.1 Competitive strategies................................................................24
10.2.2 Cooperative Strategies..................................................................24
10.3. Functional Strategies.....................................................................25
References.......................................................................................................27

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 1. Backgrounds – Summary

As we know, Amazon is an American company that is one of the most popular

in the world. It began in 1994 when Jeffrey Bezos quit his job and moved to
Seattle, a city in Washington. He decided to create a new business idea and at
that time, Amazon was founded, but with another name. It was first created as
Cadabra. After a year, Jeffrey implemented the name Amazon that is the
representative until these days. The name was based on the Amazonas River,
the longest existing river and because it was a differential name.
The first web page created was in July 1995, which led to the company being
known and began to have a notorious growth. During that time, after a month,
Amazon started selling books in more than 45 countries and 50 states in the
United States. This was a sign that the founder understood and decided to
expand the company and create different ways to maintain customer loyalty. In
August of that same year, the company raised approximately $20,000 per week.
By 1996, Amazon had more than 2000 visits per day and sales increased by a
high percentage. However, Amazon was sued by Barnes & Noble but it was
solved. Similarly, Walmart did the same by saying that Amazon stole their
commercial and business strategies. Although all this has happened to the
company, the profits were increasing. For some years, Amazon had dominance
in the market. In 1999, a well-known magazine called Jeffrey Bezos as “The
king of cyber commerce.”
Jeffrey Bezos knew that the key to success depended on how much could be
expanded in the marketplace. In 2002, Amazon created Amazon Web Services
but he was not comfortable with the results. Three years later, Amazon Prime
was launched, offering many benefits to customers and increasing sales. During
the period between 2000 and 2010, Amazon had 30 million clients and in 2017
it received $177 867. Finally, in 2018 the company was positioned in the
number 8 in Fortune 500.
Nowadays, Amazon is based on different lines of products to satisfy any need
of their customers. Known as a reliable company that offers products like
clothes, foods, furniture, videogames, and others. It is the company of
wholesale most recognized in the world, where people can find exactly what
they want to find. It is important to mention that this company has direct contact
with United States, France, Germany, Italy, Spain, Japan, United Kingdom and
others, but they can attend clients from all over the world.
It is important to mention that the success of this company was not only to catch
its customers and engage them with the offers and products, but also to
establish an adequate relationship with them, thinking about what they really

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 want and taking into account their claims in order to improve the service offered.
Quality is an element that characterizes the company. So far, Amazon has
nominated the entire e-commerce industry and has improved the ability to
facilitate its customers when buying any product.

Figure 1: Amazon's revenue when it first started

Figure 2: Amazon's revenue in 2015

2. Vision: “To be earth’s most customer-centric company, where

customers can find and discover anything they might want to buy online”

- First of all, Amazon’s vision made the best company of e-commerce

around the world. The important characteristics are the following:
Global reach, customer-centric approach and widest selection of
products. All is about international leadership of the e-commerce
market, which it aims to continue expanding globally.

- Maybe for amazon, could be very attractive to focus on one of the

4P’s which is place, maybe the customers could have more trust on

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 the company, and the sales could be faster than online. They have to
keep in mind that not all of the people that would like to acquire a
product, feels comfortable waiting a long time for the sale.

3. Mission: “We strive to offer our customers the lowest possible prices,
the best available prices, the best available selection, and the utmost
convenience.”

- Amazon’s mission, promises an attractive e-commerce services in

order to generate satisfaction on their target customer’s needs. They
are very focus on the price (low prices are the crucial point of the
company that makes attractive in the market), selection and
convenience (Amazon use this in order to evaluate the response of
their customers).

- So, maybe this important company which is Amazon, should focus on

their potential target too, because this people could be a considerable
percentage of the sales in the year. The potential target, doesn’t
means that you can leave them aside from the marketing plan of the
company.

4. Corporate governance

Amazon organizational structure can be classified as hierarchical. Senior

management team include two CEOs, three Senior Vice Presidents and
one Worldwide Controller, who are responsible for various vital aspects
of the business reporting directly to Amazon CEO Jeff Bezos. There are
seven segments such as information technology, human resources and
legal operations and heads of segments also report to Amazon CEO.

4.1. Organization and Membership

This charter governs the operations of the Nominating and
Corporate Governance Committee of the Board of Directors of
[Link], Inc. The Committee is required by the Board and
consists of at least two Directors. They review this charter
periodically and recommend appropriate changes to the Board.

4.2. Purpose of the Committee

 Review and assess the composition of the Board,
 Assist in identifying potential new candidates for
Director.
 Recommend candidates for election as Directors, and
 Provide a leadership role with respect to corporate
governance of the Company.

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4.3. Review and Assess the Composition of the Board

 The Committee recommends to the Board assignments of

committee members and chairs for each committee.
 The Committee reviews the qualifications of Directors for
continued service on the Board.
 The Committee assists the Board in the annual CEO and
Director self-evaluations.

4.4. Identifying Potential New Candidates for Directors

The Committee develops and recommends to the Board criteria to

identify and evaluate prospective candidates for Director. They
periodically review the policy for Director candidates
recommended by the Company's shareholders and identify the
qualifications of the candidates for Director.

4.5. Recommend Candidates for Election as Directors

The Committee recommends to the Board candidates for election

or reelection as Directors at each annual meeting of stockholders
and recommends candidates to be elected by the Board as
necessary to fill vacancies and newly created Directorships.

4.6. Provide a Leadership Role with Respect to Corporate

Governance of the Company

The Committee periodically considers and reports to the Board on

general corporate governance matters, reccomending to the
independent directors an independent director for appointment to
serve as lead director pursuant to the Corporate Governance
Guidelines.

They develop and periodically review the Corporate Governance

Guidelines and recommend changes to the Board, aswell as
compensation for newly-elected Directors.

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Figure 3: Amazon's board of directors

Figure 4: Amazon’s Organizational Chart

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5. Environmental scanning
5.1. General forces: PEST analysis

 POLITICAL FACTORS
A dependency on stability, Amazon is an e-commerce offering an
online catalog of products for users all over the globe, because
they operate overseas, Amazon must abide by political and legal
regulations in each location. But many of them can interfere with
online purchases. Amazon relies on government support to
implement, distribute and profit- all thanks to the internet. Now,
they are expanding into physical locations. Regardless, this
company relies heavily on political stability (in all countries) and
e-commerce support, but they are also affected by cybersecurity
bills too. Amazon can closely analyze the following factors before
entering or investing in a certain market.
 Risk of military invasion
 Level of corruption - especially levels of regulation in
Services sector.
 Bureaucracy and interference in Catalog & Mail Order
Houses industry by government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Services
 Favored trading partners.
 Anti-trust laws related to Catalog & Mail Order Houses.
 Pricing regulations – Are there any pricing regulatory
mechanism for Services.
 Taxation - tax rates and incentives.
 Wage legislation - minimum wage and overtime.
 Work week regulations in Catalog & Mail Order Houses
 Mandatory employee benefits
 Online customer’s information protection laws

 ECONOMIC FACTORS
The extension of internet access and the emergence of huge
service providers under its umbrella have revolutionized the
market both on the supply side -companies- and on the demand
side -consumers-. This phenomenon has resulted in a drastic
reduction of transaction costs and an increase in competition in
numerous sectors with an obvious benefit for consumers.
However, a good number of academics, politicians, governments,
regulators and, of course, competitors see companies like Amazon
or Google, to name two emblematic cases, a medium and long-
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 term risk for the preservation of competitive order, and even, for
individual freedom because of its possible control of information
and, with it, the achievement of uncontrolled power.
The impact of digital commerce on classic business models, on
consumer expectations and on competition supposes a drastic
change of paradigm to which it is not easy to adapt. Not only has it
substantially altered habits and forms of consumption, but it has
made obsolete a good part of conventional distribution systems.
If a large consumer base uses a social network, for example
Facebook, Linkedin or XING, this attracts others to join it, because
the possibility of finding valuable contacts increases. Indirect
effects are generated if the number of consumers of a good or
service in an X market attracts those who operate in another. And
this happens because the existence of a high number of sellers
and the variety of products offered, paradigmatic case of eBay,
makes these platforms more attractive to more potential bidders.
The combination of these two phenome’s makes extensive
platforms necessary for their efficient use.
This leads to the generation of economies of scale and,
consequently, to the configuration of quasi-monopolistic
companies with a relevant weight in the markets within which they
operate. That said, from the point of view of competition policy,
what is relevant is not the degree of concentration existing today
or tomorrow if not something very different; namely, do the
hegemonic companies on the internet owe that position to the
existence of barriers to entry or to their technological and
innovative superiority? Can they prevent the appearance of other
competitors?

 SOCIAL FACTORS

Society’s culture and the way of doing things impact the culture
of an organization in an environment. Shared beliefs and
attitudes of the population play a great role in how marketers at
[Link], Inc. will understand the customers of a given
market and how they design the marketing message for Catalog
& Mail Order Houses industry consumers.

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 ANALYSIS:
Source: LRanalistas.
Innovation in retail is far from stopping. Every time there are
going to be more consumers buying from the cell phone and
wanting to buy in stores without making lines in the boxes.
This is what Amazon has achieved, the social impact in which
people choose with their consumption or acquisition via internet
versus attending a store and making the purchase directly. Not
only has it affected its direct competitors, but also companies
such as Toy Rs Us, which recently closed its last store with a
total of 735 stores, in the same way Sears, which closed 78
stores in the United States, and because this happens, according
to CNN money is given because these companies did not know
how to adapt to changes in consumers' buying habits or to invest
in technology that would make them more competitive.

 TECHNOLOGICAL FACTORS

Technology is fast disrupting various industries across the board.

Technological advances must be seen as opportunities to
develop faster and more efficient ways to send products or to
design platforms for customers to see. A firm should not only do
technological analysis of the industry but also the speed at which
technology disrupts that industry. Up to today we can find
incredible advances such as robots, drones and efficient apps
that make operations much easier and more accessible to
everyone.
CASE STUDY:
Source: [Link] /EconomiaDigital.
“Amazon kept until the last instances the secret of its first fleet of
autonomous robots to deliver. Scout, the Amazon robot, began to
work in test mode almost to the moment when the world knew its
existence.

The arrival on the streets and sidewalks of this small autonomous

vehicle was so surprising that lawmakers in Washington had to
run to start a debate on how to regulate delivery robots in cities. At
the moment, Amazon Scout travels the public space according to
its own rules, since it does not yet have a regulation with which to
measure itself.

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 But Scout is just part of the plan. The incentive to automate the
entire retail process is not trivial: KPMG has said that autonomous
cars will facilitate faster and cheaper shipments, and McKinsey
estimates that the technology could represent savings of up to
40% compared to the cost of delivering the traditional way”

The technology was added to a round of financing of 530 million

dollars in the autonomous car startup Aurora Innovation, led by
engineers from Google, Tesla and Uber.

In addition, Amazon led a round of financing of 700 million dollars

in the automotive company Rivian, which developed a modular
electric chassis that can be adapted to almost any vehicle, which
is another step forward in automation. The technologies of Aurora
Innovation and Rivian will bring to Amazon the total automation of
deliveries in the future.
In other words, we see how the industry will be affected in its
entirety, with amazon competitors who will have the same
regulations if they are accepted by governments for the use of
these technologies”

February 23th, 2019

5.2. Industry analysis: Porter’s Five Forces

In order to be even more aware of possible opportunities and threats in

the environment, it is recommendable to perform an industry analysis.
With the model of Porter’s Five Forces a company will be able to
understand the roles each stakeholder plays in the industry and how this
will affect the firm.
In the specific case of Amazon, we are talking about the massive e-
commerce industry.
 Rivalry among competitors:

Along with Amazon, there are many other big sized companies in
the market, being the most similar in terms of business model,
EBay and Alibaba. EBay is the second American option
consumers will think of when mentioning the term “e-commerce”,
and Alibaba takes over most of the Asian customer market.
However, these are not the only ones competing with Amazon.
We must also think of companies that operate in the offline world

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 with physical stores, but that also have achieved to develop an
efficient website to attract clients. Among this list of we can find
firms like Walmart, Otto, Costco and Target. Furthermore, some
other enterprises have emerged that operate under an online
business model, but that focus on a specific product segment, in
order to be more specialized. Spotify or Apple music can be a
good example of this. Others decide to go for a low-cost strategy,
importing good from China and this way making it possible to
offer very competitive prices. These are companies such as Wish,
Romwe and Club Factory. Having reviewed the list of
competitors, we can say that the number is high. When it comes
to industry maturity, we must consider that online shopping offers
great advantages, for both industries and clients, and that
technology is still improving to offer a better experience every
year, so the industry has not reached its highest point yet. Fixed
costs are rather low when it comes to the online world, being this
a great plus for this business model, and making the industry very
attractive. Differentiation is something these companies struggle
with, as most of the products that are offered are very similar, and
the competition is rather based on the quality of service and
prices. Taking all these factors into account we can come to the
conclusion that competition in this industry is very aggressive.

 Threat of entrants:

As said before, e-commerce can be very attractive for anyone

who intends to start a new business. Creating a website online or
even beginning just with social media presence is very easy and
cheaper in comparison to having to rend a local and advertising
offline. Reaching targets is much faster than it would be with a
physical store. Once established, fixed costs are also lower, as
there is little need to pay for general services. When it comes to
barriers of entrance, we could maybe think of the difficulty of
becoming noticeable, as there are so many websites offering
different products, but this depends on the capacity of each
entrepreneur to be creative and develop a good marketing and
differentiation strategy. Taking this in mind we can also say that
the threat of entrants is rather high.

 Threat of substitutes:

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 For online retailers a substitute can be as simple as an offline
service. Many customers, overall elderly people, still prefer to go
to a physical store, to talk to employees, get recommendations
and pay in cash. This is even truer in countries like ours, where
trust in online purchases is not as high as in North America or
Europe. Reality is, face to face interaction cannot be entirely
imitated online, and if the client seeks for this experience, it is
difficult to switch to online firms. Society is changing and
modernizing, but there will always be the possibility to just drive to
the nearest store (little cost change for clients) and purchase in
person, which is a threat for online retailers. In terms of prices is
where online companies can take advantage and attract
customers to buy on the website. We can see an example of this
on the website pages of physical stores, such as Saga Falabella,
where products are cheaper than they would be on store. Having
said that, the threat of substitutes would be from medium to
high.

 Bargaining power of suppliers:

Amazon is a powerful company, and to keep offering the great

quality it is famous for, there are basic standards that the
company demands for its suppliers to be accomplished.
Furthermore, Amazon purchases in great quantities and very
frequently, so the company represents an important client for its
suppliers. Suppliers must respect Amazon’s policies and beware
of keeping the company satisfied with the service they are
providing. Additionally there are smaller suppliers, just as ordinary
people who want to sell some of their products: in these cases
they have even less power, as Amazon is a giant platform and
sets the rules for the new user. Cost changes to other suppliers
are not very high for Amazon, unless we are talking about the
technological resources the company has implemented recently
through its drones and products such as Alexa. Therefore, the
bargaining power of these stakeholders is low.

 Bargaining power of buyers:

Today’s buyers are very disloyal, and overall in the digital

medium. Deciding not to buy a certain product and switching off
to the next website can be done in seconds. Also, with internet,
blogs and reviews, people have a greater possibility to inform
themselves about prices, quality, delivery time and different firms
more as ever before. Unless a buyer “falls in love” with a brand, it

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is very likely that purchases will be made from different
companies according to personal preferences, and it is not
assured that if the client buys you today, he will also buy you
tomorrow. It is for this reason that many companies seek to
personalize the tastes of the client and build profiles to serve
them in a better way and try to build loyalty over time. According
to their behavior, new prototypes are also developed and various
discounts are aggressively offered all through the internet. This
are some of the motives why the bargaining power of customers
is high.

Having analyzed each force, we can resume our ideas on the

next graphic.

Bargaining
power of
suppliers:
Low

Threat of
Threat of Rivalry among substitute
entrants: competitors: products:
High High Medium to
high

Bargaining
power of
clients: High

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Figure 5: E-retail industry analysis

5.3. SWOT Matrix

STRENGHTS

One of the most important things is the amount of time Amazon

has been in the online market. Through this time the company has
managed to build an image for themselves where they are a
symbol for quality and efficiency. As of today Amazon can enjoy
being in the top of mind of customers and thanks to this they have
been able to enter new markets throughout the years. Because of
this characteristics as well as the reliability they show people
consider the company to be more trustworthy. Also they are a
customer-oriented Brand because they assist their clients in their
everyday needs. Moreover despite of all their competition they are
still the leading e-commerce company. The most amazing thing
Amazon did was to develop their very own logistics and
distribution system that has been a model for so many other
companies in the recent years.

WEAKNESSES

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It is a business model that is being used by most brands
nowadays in order to reduce cost. This kind of model is very easy
to copy and they don’t really have a differentiating factor anymore.
In order to lure more people into using the website, Amazon offers
free shipping but this far from bringing benefits has made them
lose margins especially in places like India. In this developing
countries Amazon is still struggling in order to make the business
profitable and while they are still working on it the overall
profitability of the group suffers and is resulting in a high debt. Also
in recent years Amazon has tried to change their strategy to
diversification making them loose their focus on their core. Even
though it is good because they didn’t want to fall behind on what
was going on in the e-commerce area, they started losing their
strategic advantage. On top of this there is the tax avoidance
issue where there has been some bad publicity for Amazon
because they have been accused of avoiding taxes in Japan, US
and UK.

OPPORTUNITIES
Every day new people start buying and selling things through the
internet. It is a very big and growing market not only for customers
but manufacturers as well. It is very important not only to take
advantage of the new potential customers with creative ways of
making them gain interest in the webpage but also to pay attention
to the forgotten part of the market that would much rather go to a
physical store than buy online. Gaining the trust from people that
are already in the market but don’t trust e-commerce would be a
great benefit because those are the kind of clients who are most
likely to be faithful to a Brand. This are the reasons why Amazon
should take advantage of having a well-known brand in order to
open more physical stores so that they can increase the brand
presence and customer loyalty. As well as taking steps into
expansion this would greatly benefit them because they would
make the company grow and at the same time reduce
competition, by doing this they can also have more specialized
departments in the company.

THREATS
As it was stated before e-commerce is a very active and growing
market. Nowadays most brands are looking to have online
presence. Not only the big companies launch their web pages and
online stores but small businesses start using apps or creating
their Brand pages through social media in order to reduce costs.

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 Anyone can create a webpage and try to sell things online
because they are not only reducing the cost of having a physical
store but also increasing the chances that their actual potential
market sees their advertisement because of all the tools social
media has nowadays. Additionally there are low entry barriers in
this market so that’s the main reason why competition is so tough.
Amazon also has a big competition in different segments not only
products which are Walmart and EBay but also in the
entertainment segment which is Netflix among others. Another
threat to Amazon is cybercrime the reason for this is that Amazon
is a juicy target for any hacker because millions use it and put their
credit card and personal information in this platform.

6. Key Values

 Customer Obsession
 Ownership
 Invent and Simplify
 Learn and Be Curious
 Hire the Best
 The Highest Standards
 Think Big
 Bias for Action
 Earn Trust
 Deliver Results
BRIEF SUMMARY:
How can we introduce some values in a Company like Amazon? Here, some
analysis about how values motivate the 67% of Amazon employees. For
example, the employees say that one of the most important things to them is
the work-life balance and career advancement opportunities because one of the
values is "think big and hire the best."
ANALYSIS:
 Obsess over customers, not competitors
The CEO explains that sometimes, companies used to copy or "just follow"
the innovational ideas so fast. The Amazon Company’s goal is not
obsessing with competitors. It is listening and introduce customer's need in
their business model. That's why Amazon built its Amazon Web Services
(AWS) how the program which solves the problems in open-source
products, the idea is design and give easily support.
 Ownership: Make employees think like owners

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One of the CEO'S culture is given more opportunities to young and talented
employees. In 2017, he had 230000 and planned to hire 100,000 full-time
employees. The versatility of their process is helpful to focus on hiring and
retain people who have a different mentality, think over the box and feel like
an owner, because the company it's for everyone, not just for the CEO. New
people increase significantly incomes with projects and goals that they
propose for the company. Amazon also knows the key to success; it's to
motivate them, and each of whom must think like, integrity and be their
leader.
 Invent and Simplify
How is it possible to have a large company and talk about the simplified
process? That's possible, and Amazon did it, but it's essential to keep
people up to date, work in their creativity and innovation's goals, simplify its
means decide to understand the process and divided functions with the
perfect timing, but for this they need teams always prepared to be not limited
and accept new things.

 Learn and Be Curious

How do people improve themselves? Being curious, looking around,
listening very well, and then you learn by yourself. Just like as a little child,
when the only thing to do is exploring, ask, and ask again, but finally, trying
to do great things.

 Insist on the Highest Standards.

Highest standards drive to the most top results.

 Earn Trust
Know how to listen, give constructive criticism, speak with respect and
openness; these are the things leaders value today, that is why they apply it
because without a doubt this is much more difficult than solving the enigma
of a future project.

 Empower people — up to a point — to avoid bureaucracy

The big question is, what is the point of engagement people? Researchers
have found the employees are more satisfied with their work when they hold
a position of power. If you talk about your family and your career, you
probably find the power of continuing with your life, that's the same in
business. The idea is to avoid bureaucracy because they do not want to
have employees face a higher likelihood of frustration, burnout,

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 disengagement, low productivity. Amazon's goals are to keep empowered
employees showed engagement levels.

7. Corporate culture

Trompenaars’ Model of Organizational Culture – Guided Missile

Culture applied to Amazon
The base behind Amazon's workplace is leading and developing leaders
throughout their organization, as shown on Trompenaars’s model in which
he examined the huge influence cultural backgrounds have on employers
and employees. As a result, organizational structure depends on its
company’s members and determine organizational culture. This model is
built on three aspects of organizational structure that help Amazon go
straight and make strong business decisions, have good instincts and insist
for the highest standards:

1. General relationship between members and their organization

 Earn Trust of Others

 Vocally Self Critical
 Bias for Action
 Frugality

2. Vertical or hierarchical system of authority defining superiors and

subordinates
1. Ownership
2. Hire and Develop the Best
3. Deliver Results
3. General view of employees about the organization’s destiny, purpose
and goals and their plan within
1. Insist on the Highest Standards
2. Your Brand is formed by what you do, not what you say.
3. Always, put customers first.
4. Invent and Simplify. Invent and Be Patient. Revolutionary
ideas need time to be realised.
5. Accept your limitations and work your way out of the box
by invention. Constraints are an opportunity for critical
thinking.
6. Embrace Failures and Double the number of Experiments
every year.

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 7. Customer Obsession: For which Amazon is famous
8. Think Big
9. Dive Deep
10. Have Backbone; Disagree and Commit

Analysis - Guided missile culture in Amazon

This organizational culture is characterized by reaching a target whereby the
way to do so is of no interest. As Jeff Bezos preachs, work is done in groups
without any formal structure, which makes the employees equal. Teams are
built only for as long as needed to complete the task. They are flexible and
dynamic and can react quickly on environmental changes. Guided missile
culture can be seen throught almost every process in Amazon’s
organizational culture.

8. Policies

As we know, policies are rules that a company must follow to create an

adequate environment. These rules must be adapted by the entire organization,
including employees, bosses, and managers, among others. It helps to improve
the achievement of the goals and influences people to behave or have certain
responsibilities to complete. The decisions and actions taken must be aligned
with the stablished policies because it is an obligation of the organization.
These principles must be related to values, so that people will use them
correctly as a guide for the decision making.
The rules presented in the company are those that Jeff Bezos implemented in
the organization, such as the austerity policy. He thinks that moral standards
have to be around the identity of the company. Additionally, it is common to see
that the employees must comply with the equality policy between them and their
superiors. According to this, they know that all their clients are equal and do not
have to discriminate them in terms of physical disability, gender identity, and
others. They have the responsibility of serving all types of customers.
Additionally, as we know, Amazon has a wide variety of products to offer, but as
one of the well- founded policies, there are some products that the company
cannot sell to its clients. All the products must meet the requirements and laws
of each country that must be applied to each one. It is not allowed to sell
dangerous or illegal products. Some categories need a prior license to be
available on the page. Some of the restricted products are animals, laser
products, plants, food and beverages, weapons, explosives, and others that

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may endanger the name of the company. There exist some inventory
requirements and storage fees that apply to its customers.

Figure 6 & 7: Policies illustration

9. Strategic objectives

In general terms, Amazon want to increase the number of monthly visitors from
the current number (199 million) to 205 million by the end of 2020. Also, the e-
commerce sales that nowadays represent an amount of 234.6 billion dollars,
are intended to be increased by 5% per year.
When it comes to its others business lines, Amazon aims to increase its shares
of 1.3% on food and beverage sales by the end of this year which exceeds
Walmart’s market by 2.4%. This is because they want to spand their business
and they want to compete with different groseries selling companies. A clear
example is the online market selling. And in this way to try to increase its
income.
Another objective for Amazon is to be able to create more than 4000 permanent
job positions by the end of 2019 through the opening of many facilities in the
United Kingdom and other European countries dedicated to product distribution.
This is going to help to increase the number of job opportunities for people who
are not employed.

10. Strategies

To be where the company is right now, multiple strategies had to be designed

and followed. In this paper, we are going to detail the most important ones.
10.1. Corporate strategies

10.1.1. Directional strategies

a. Growth strategy:

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 Vertical Integration

When it comes to growth strategies, Amazon has followed various

vertical integrations throughout the years. Examples of backward
integration are the warehouses that Amazon owns, were products
are stored, as well as packaged, with the help of robots,
automatizing the process, and making it more efficient. This idea
came from Jeff Bezos himself, as a way to reduce costs and to be
more competitive in the industry. Nowadays, Amazon even offers
these services to other companies, having in this way an extra
income in addition to its normal operations.
Another illustration is Amazon Web Services, a cloud software
created by the company, capable of storing huge databases and
applications. This resulted in a competitive advantage for the
company, since most of Amazon’s operations are performed online,
and therefore, the online platform has to work perfectly. Just as the
other example that we have explained before this turned into
another profit source for the company. Amazon Web Services is
highly demanded by online based businesses’ and is recognized as
one of the best cloud systems in the world.
Now, talking about forward integration, in 2018, the company
decided to launch its own distribution system, called Shipping with
Amazon, which incorporates innovative operations using robots and
drones. This way, Amazon is able to fully control the supply chain.
But it does not stop here, additionally, Amazon has released debit
cards in countries like Mexico, where people usually prefer to pay in
cash and many do not possess credit cards. To solve this problem
and be able to attend this market too, Amazon has not recurred to
any bank, but has developed its own cards, who can be easily
recharged at local stores when needed.

 Horizontal integration

The advantage of operating primarily online, is to have access to

most part of the world through a simple click. This is how Amazon
has achieved to be present on the majority of the globe.

Some countries in which Amazon decided to increase the number of

services provided, in terms of B2B business supplies, are U.S.,
Germany, United Kingdom, Japan, India and France, adding Spain
and Italy in 2018. Amazon saw a great opportunity in these markets,
since all of them include large metropolitan cities with a high number

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 of enterprises, which demand high quality parts at a competitive
price.

 Diversification strategy

In the last years, Amazon has opted for concentric diversification,

since it has chosen to mainly remain focused on the retail sector, but
to explore outside its rutinary operations, by for example entering
the grocery shopping world. Being a big company with a great
positioning and brand recognition, Amazon has taken the
opportunity to also go out to the physical world, with Amazon Go.
Amazon Go is a completely innovative concept, since it goes
beyond a normal supermarket. It is indeed the first store that does
not need employees to carry out transactions, and that automates
purchases through a smartphone application. For now these stores
can only be found in the United States, but the plan is to expand to
other areas later on.

 External growth

But Amazon does not only grow internally; in fact, it spent 1.65
billion dollars on acquisitions in 2018, according to a new regulatory
filing from the firm. In 2017, Amazon, spent a very large sum of
13.963 billion dollars on acquiring the American supermarket chain
Whole Foods, to also be present in all the states of grocery
shopping that costumers have. According to Amazon these are: On-
the-go (covered by Amazon Go), the home one (Amazon Fresh,
Alexa and Prime Now), and flexible (now covered by Whole Foods).

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 Figure 8: Amazon's Services on the Shopping States

Other acquisitions have been the one of Ring, producer of smart home
technologies, and Pill pack, an online pharmacy company, thus showing
the interest of Amazon not only for technology, but for costumer health.

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 Figure 9: Amazon M&A spending (in millions per year)

This year Amazon has focused on acquiring many firms from different
countries (US, Canada India and Israel) related to the technology
industry, more specifically to robotics and software services. This, to
improve even more their supply chain and saving costs on efficiency.
Some of these companies are: Cloud Endure, TSO Logic and Canvas
Technology.
On the other hand, Amazon has also made strategic alliances with
manufacturer companies to keep developing innovative products. One
specific case was in 2015, when Amazon launched “Dash Button”, an
engine that could be attached to any device and that automatically
reordered consumable goods such as diaper or detergent. Also, a so
called DSR system was developed, that helped firms to reorder supplies
from Amazon. To promote and commercialize this new invention, the
company entered with a partnership with firms such as Brita, Brother,
and Whirlpool.

10.2. Business strategies

10.2.1 Competitive strategies

 Differentiation:

What Amazon applies is the differentiation strategy because they

always try to offer high quality products with the best service
possible in every single one of their categories. As seen on previous
parts of this project, the entire supply chain is designed to avoid
mistakes and delays, being able to offer a superior service to the
client. Their products, being available for the whole internet
community are offered to a broad target, who tends to choose
Amazon because of the value promise the company provides. For
more demanding clients, the firm also offers premium services,
which promise to deliver products under the 24 hour period. Besides
this differentiation strategy, we can also see that Amazon puts effort
in lowering prices. We can find examples of this not only in products
but also services, this is the case of “Prime Video”, which is a video
streaming service and their direct competitor is Netflix but Amazon’s
service is cheaper and has more movies that Netflix.

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10.2.2 Cooperative Strategies

 Strategic Alliances:

Amazon stablished strategic alliances with Uber and Jimmy John’s

in order to improve their delivery services creating Amazon Flex.
This companies worked together to create a better process for the
delivery of fresh products and provide the best service possible.

10.3. Functional Strategies

 Marketing:

During 2018 Amazon focused on increasing their popularity on all

social media platforms. One that particularly stood out in USA was
the one they did with Snapchat where people could scan any object
with their camera and find it in Amazon having the opportunity to buy
it straightaway with attractive discounts in many cases. This can be
identified as a push strategy. Nevertheless, Amazon also has
performed pull strategies, with regular advertising on platforms like
YouTube.

When it comes to product strategies, Amazon focuses on product

development. As mentioned before, the company is keen on
constant innovation to be able to offer new competitive products to
its customers. One great example of this is Alexa, one of the first
virtual assistants available in the market.

Talking about pricing, Amazon uses the penetration strategy. When

the company launches a new product, it usually offers attractive
discounts so that customers are encouraged to buy. Such is the
case of electronic readers, as well as books that can be found
online.

 Purchasing:

Here, Amazon uses the soles sourcing strategy, since the company
tends to rely on only one supplier to produce its goods. This is the
case for products like the electronic reader “kindle” which is
assembled by the Taiwanese firm quanta computer.

 Logistics:
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 Amazon is well known for their supply chain management and last
year (2018) they launched a new one called FBA which stands for
Fulfilment by Amazon and it is basically divided into 4 parts which
are warehousing, delivery, technology and manufacturing. All of
them have been checked to the most minimum detail and they are
using high end technology for every step including robots and
drones.

 Research and development strategies:

Always at the forefront of innovation, Amazon is classified as a

technological leader. In fact, it has an innovation center to be able to
anticipate the next demands of the consumers and be able to face
the aggressive competition it has. Here is where the robots and
drones are tested and improved, and also where new ideas for
products emerge.

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