Write an essay on Market Evaluation of Amazon.
Amazon is selected as an organization for logistic and operation Management. It is the world’s largest online retailer and a provider of prominent cloud services. The company started its business by book selling and has expanded its business by selling a wide range of consumer goods and digital media, which includes Kindle Fire, e-book reader, streaming media adapter (Rangel, 2015). Here in this report consumer electronic products of Amazon have been selected. The products are digital or electronic equipment's that are used daily in private homes. The products include DVD players, iPods, remote control cars, etc.
Market Evaluation of Amazon
The organization manages logistic and operation management properly. Logistic and operation management helps the company in covering design, operation and management of the system for proper placement of physical services, raw material, finished goods and related information and services. There are several competitors of Amazon in the electronics and general merchandise market (Cheung et al. 2016). The competitors of Amazon include Best Buy, Family Dollar, RadioShack, Wal-Mart, etc. The report suggests that there is a growth of 34% in the shares of market sales every year. To exist in the market, Amazon is optimizing itself for operating on skinny profits. Amazon has highest market shares in consumer electronics market. Amazon has 39% of market shares of sales (Aguzzoni et al. 2016)
Application of different Operation Strategies on Amazon
Operation strategy is a plan that provides information about how a business can use its production to achieve its goals. The business managers provide operation strategy to its subordinates to present the business plan for achieving the goals and objectives of the organization (Slack et al. 2013). There are four processes of operation Strategy Stages. The stages include operation strategy formulation, implementation of strategy operation, monitoring of operation strategy and control of operations strategy (Borner et al. 2014)
Formulation of operations strategy
Strategy formulation is defined as a process in which every organization selects its appropriate course of actions that are helpful in achieving the goals and objectives of the organization. Every organization formulates the strategy as it provides a framework for achieving success (Holweg and Helo, 2014).
Amazon formulates its strategy plan in order grab the consumer electronics market. The company has selected the most important course of action in order to achieve the vision of the organization. The company has used six steps for operation strategy formulation. The steps include:
Setting the objective of the organization: In the first stage, Amazon sets its objectives in order to achieve success.
Evaluating the environment of the organization: Amazon evaluates the economic industrial and environment of the organization. It helps the company in reviewing its competitive position in the market (Ward and Peppard, 2016).
Setting targets that are quantitative in nature: in this step, the company sets up a quantitative target. The idea helps in comparing the long-term customers for evaluation of contribution that is done by different product zones of Amazon (Klaus, 2013)
Aim according to the divisional plans: contribution made by each department of the company is analyzed and identified according to the strategic plan of the company.
Performance plans: It helps Amazon in analyzing the gap between reality and the desired performance by the company. It is also helpful for the organization as with the help of the performance plan, and they estimate the future condition (Kumar, 2014)
Strategy choice: This is the final stage in operation strategy formulation. The main course of action is chosen after considering the goals, strengths of the organization, limitation as well as external opportunities (Börner et al. 2014)
Operation Strategy Implementation
Strategy implementation is a process in which a selected strategy is translated into actions of the organization, in order to achieve the goals and objectives of the organization. It is also a process or a manner, which helps the organization in developing and utilizing the structure of the organization, control system culture, etc. (Ward and Peppard, 2016).To implement the operation strategy, Amazon uses some steps. The steps are:
- It develops the organization in such a way so as to carry out the strategy properly
- For essential strategy activities, Amazon disburses abundant resources
- Creating policies that are strategy encouraging
- For constant improvement, Amazon employs best policies
- Linking reward structure
- Use of strategic leadership
Operations strategy monitoring
Continuous monitoring of operation strategy helps an organization to be on financial track. It always helps in providing a direction to the employees who improve time management and increases the productivity of the company (Slack et al. 2013).
Amazon monitors strategy operation to track its financial status. The company does it in several steps. The steps include:
- The specific form of measurement is created in order to determine the level of the workplace, operational productivity, performance of the employees, etc.
- To determine operational progress, a stem is developed
- Accountability system creation
- Comparison of employee documentation with gathered information
- Creation of open work environment(Börner et al. 2014)
- Hiring of additional steps which sometimes help in improving the operation of workplace
- Investment should be done in new technology in order to improve the productivity of the company (Ward and Peppard, 2016).
- With the help of production goals, motivate employees.
Control of operations strategy
Operations strategy is controlled in order to ensure that the day to day activities are constant with established plans and actions of the company. The strategy is obtained from the requirement of management control system. It includes several actions, which are training, motivation, leadership, discipline, or termination (Kumar, 2014).
Amazon uses control operation strategy for evaluation of value chain analysis for measuring quantitative analysis, Benchmarking, key factor rating, etc. Amazon analyses and evaluates value chain analysis in order to identify and describe the potential of resources and capabilities (Slack et al. 2013). Amazon uses a technique known as benchmarking, in order to learn high quality things from other organization. The control of operation strategy helps Amazon to improve its performance in financial, marketing and human resource field (Börner et al. 2014)
Competitive strategies of Amazon
Competitive Strategy is defined as a long-term plan of a company to gain a competitive advantage over the competitors of the company. The three important competitive strategies are:
The strategy is used by business for creating low cost of operation. The strategy is mainly used in order to gain an advantage by reducing the operation cost. The company gains the advantage over the competitors (Ritala et al. 2014)
Amazon uses cost leadership strategy to achieve lowest production and distribution costs with the help of economies of scale. The strategy has provided strength to Amazon for purchasing, manufacturing and distribution, which help the company in managing costs. Amazon uses the cost leadership strategy to set lower prices of products to grab the market share (Gouvea, 2015).
Differentiation strategy is a process that is employed by every business for increasing the perceived value of the brand. The strategy is used in a company, where a company has clear competitive advantages for sustaining an expensive campaign related with advertising. Through competitive pricing, distributor location, distribution timing, product customization, etc., the companies achieve the process (Brynjolfsson et al. 2013).
Amazon targets quality and value-seeking consumers that have minimum premium contributions and strong brand equity by using differentiation strategy. To pursue the strategy, Amazon focuses on the smaller part of the offerings (Valdani and Arbore, 2013). Amazon uses this strategy because it is an integrated set of action. It helps the company to produce or deliver goods and services.
A company concentrates on its resources by entering or expanding in a market or industry segment in a process is known as focus strategy. The strategy is used in a company, where the company knows its segment, and the products of the company can competitively satisfy the needs of the consumers (Gouvea, 2015).
Amazon chooses to focus on one or more market segments in order to protect the company from the competition. The strategy helps Amazon when it has limited resources. The first type of strategy that is used by Amazon is for making the cheapest offering in a targeted market (Ritala et al. 2014). The second focus strategy that Amazon uses is for targeting the market segments with more specialized product lines. Both the focus strategies used by Amazon is helpful in competing when there are limited resources (Valdani and Arbore, 2013).
The improvement strategy refers to the goals and visions of the organization that will help the organization in achieving competitive advantage by addressing the deficiencies, waste, and plant assets condition. The use of strategic SWOT analysis helps in defining the strategy properly. For improving the strategy further, some steps are used by the companies (Kantor and Streitfeld, 2015).
The steps are:
- Scope or processes must be defined in order to improve
- Understanding the needs of the process
- Setting goals and benchmark (Holsapple et al. 2014).
- For achieving goals, tasks and steps must be set
Contribution of operation management to improve the Amazon’s strategy
The integral of operation management in many companies are the operations manager. Operation management has a great role in the development of the organization. The operation management has responsibility for collaborating with other managers of the company to determine how operational planning helps to contribute the long-term strategy of the company. The operation management provides the functional component of the operation of the company (Espinosa, 2012). Planning includes determining goals and objectives related to logistic management, budget management, and related service management (Street et al. 2016).
Operation management professionals provide direction to the various managers of the company for ensuring that planning is carried out in the company. It is the task of the operation management to ensure that all the workers are doing their task within the organization by maintaining the goals and budgetary objectives of the organization (Holsapple et al. 2014). The main task of the operation management professionals is to correct goals and objectives if they are not carried out properly.
Operation management also helps in achieving the organizational strategy by having a co-ordination between the various departments of the organization. Efficiency and focus of the company are improved by improving the relation between different departments of the company (Espinosa, 2012). They must be able to access the resources of the organization whether it is monetary or not. It is done for ensuring that the resources must be used efficiently. The operation manager accesses the resources for increasing the profitability of the organization (Kantor and Streitfeld, 2015).
It is concluded from the report, logistic and operation management is very much important for Amazon. The company uses different competitive strategies that help in focussing on various market segments. The strategies are advantageous in order to protect the company from the competition. Amazon formulates different strategy plan in order grab the consumer electronics market. It has selected the most important course of action to achieve the vision of the organization . Amazon analyses and evaluates value chain analysis to identify and describe the potential of resources and capabilities.
Logistic and operation management is an area of business where improvement is needed to satisfy the customers. For improvement, several steps need to do on a regular basis. The steps include:
- Verifying the requirements of the customer: assessing the needs and requirements of the customer will be helpful in defining the total need of the logistic services
- Competitive performance tracking: with the help of competitive assessments, one can compare the performance of its organization with the most appropriate competitors. This is exactly done to measure the perception of the market place.
- Internal assessment: for keeping the assessment of the company totally objective, it is always recommended to conduct the internal assessment by an expert from outside the organization. An expert from outside the organization can identify the gaps and opportunities and compare them with the best practices in the organization.
Aguzzoni, L., Argentesi, E., Ciari, L., Duso, T. and Tognoni, M. (2016). Ex Post Merger Evaluation in the UK Retail Market for Books. The Journal of Industrial Economics, 64(1), pp.170-200.
Börner, J., Wunder, S., Wertz-Kanounnikoff, S., Hyman, G. and Nascimento, N. (2014) Forest law enforcement in the Brazilian Amazon: Costs and income effects. Global Environmental Change, 29, pp.294-305.
Brynjolfsson, E., Hu, Y.J. and Rahman, M.S. (2013). Competing in the age of omnichannel retailing. MIT Sloan Management Review, 54(4), p.23.
Cheung, J.H., Burns, D.K., Sinclair, R.R. and Sliter, M. (2016). Amazon Mechanical Turk in Organizational Psychology: An Evaluation and Practical Recommendations. Journal of Business and Psychology, pp.1-15.
Espinosa, O. (2012). To Be Shipibo Nowadays: The Shipiboâ€Konibo Youth Organizations as a Strategy for Dealing with Cultural Change in the Peruvian Amazon Region. The Journal of Latin American and Caribbean Anthropology,17(3), pp.451-471.
Gouvea, R. (2015). Designing a Nano Infrastructure for Brazil’s Amazon Water Resources: A Quadruple Helix Approach. Journal of Water Resource and Protection, 7(01), p.72.
Holsapple, C., Hsiao, S.H. and Pakath, R. (2014). Business social media analytics: definition, benefits, and challenges.
Holweg, M. and Helo, P. (2014). Defining value chain architectures: Linking strategic value creation to operational supply chain design. International Journal of Production Economics, 147, pp.230-238.
Kantor, J. and Streitfeld, D. (2015). Inside Amazon: Wrestling big ideas in a bruising workplace. The New York Times, 15.
Klaus, P. (2013). The case of Amazon. com: towards a conceptual framework of online customer service experience (OCSE) using the emerging consensus technique (ECT). Journal of Services Marketing, 27(6), pp.443-457.
Kumar, R. (2014). Managing ambiguity in strategic alliances. California Management Review, 56(4), pp.82-102.
Rangel, D. (2015). DynamoDB: EVERYTHING YOU NEED TO KNOW ABOUT AMAZON WEB SERVICE'S NoSQL DATABASE.
Ritala, P., Golnam, A. and Wegmann, A. (2014). Coopetition-based business models: The case of Amazon. com. Industrial Marketing Management, 43(2), pp.236-249.
Slack, N., Brandon-Jones, A. and Johnston, R. (2013). Operations management.
Street, K., Bari, A., Mackay, M., Amri, A., Maxted, N., Dulloo, M.E. and Ford-Lloyd, B.V. (2016). How the Focused Identification of Germplasm Strategy (FIGS) is used to mine plant genetic resources collections for adaptive traits. Enhancing crop genepool use: capturing wild relative and landrace diversity for crop improvement, pp.54-63.
Valdani, E. and Arbore, A. (2013). Competitive strategies: Managing the present, imagining the future. Palgrave Macmillan.
Ward, J. and Peppard, J. (2016). The Strategic Management of Information Systems: Building a Digital Strategy. John Wiley & Sons.