In the use of this strategy, the company recommends to its customer’s products on which buy through the use of data based on to the customers browsing history and the mapping of their previous buying to the likelihood of buying the same commodity in the future.
Some of the other factors affecting the company are brought about by external forces. In order to determine the external factors affecting the operations and expansion of the Amazon, the PEST analysis focusing on the factors of broad dimensions which are not categorized within the control of the company but affects the company’s decision through the decisions and policies set by other external players (Gupta 2013). Most of the external factors that affects the company can be categorized as being social, economic, political, and technological. Each of this factor may provide both advantages and disadvantages to the company.
Amazon has most of its customers based in countries that have already developed with their political states being stable. As a result, the countries offer golden opportunities for investment and often accruing profits and avoiding losses. The government of this countries are normal on the forefront to fight cyber-crimes which provides Amazon with the opportunities to operate without fear of cyber-attacks since their operations are very prone and susceptible to cyber-attacks. In addition, the various moves by the governments to promote e-commerce, provides Amazon with the rare opportunities to provision of its online businesses and enables its global customers to able to freely transact and acquire Amazon services and products without stress, thus making the company very reliable. On the other hand, the governments moves to develop their e-commerce industry provides other companies with the opportunity to establish more online retails which bring and poses threat tom Amazon in its operation. To counter this move, the company has developed strategies that have ensured location of physical stores in all its major markets where customers are able to acquire anything they want from the company.
Economic environmental factors have also affected Amazon differently in both a positive and negative manner. Economic degradation or shutdown of any country that the company operates in would automatically lead to the company being affected in its operations. (Shin, 2009). The positive economic growth in America and Europe however provides the company with a growth opportunity since as the economies grow, the peoples purchasing power are increased which acts as an advantage to the company as people are able to spend more in their buying.
The other external factor that Leeds to the development of the company and facilitates its entry into the high street is the social factors. As an opportunity, the company enjoys the changing purchasing trend in the online shopping. According to Beldad & Steehoulder the people’s faith with their online transactions is on the increase which helps present an opportunity to the online traders such as Amazon and the traders sales get to grow (2010). Due to this reasons, the company has been able to develop a strong sales growth rate in both its online and store outlets.
Exploration of Developing Markets.
Amazon has in the past been known in the past to focus its trade on the already developed markets. However, the company adopted the strategies of trying other global markets that it did not have its roots into. In china for example, the company was able to make a good performance despite the Alibaba dominance. The success in china gave the company the drive to explore in other countries in order to expand its trade and profits.
Rethinking of the Pricing Strategies.
In order to protect the company from small profit margins risks, Amazon regularly revisits its pricing strategies since the company suffered losses in the past due to low profit margins. The company is however very keen not to overcharge their products so as to remain competitive in the market. Overcharging or overpricing would have a negative impact on the company as it would chase away the customers who would seek cheaper prices.
On its part, Walmart has also involved a variety of approaches focused on managing the inventory and the supply chain in addition to the company’s sale performance. The company attributes its success to its effective performance in its retail operations. Walmart uses its ten strategic decision in the promotion of its business both online and in the high street.
Goods and Services Design
Under this decision area, the company makes strategic characterization on its retail products. Despite offering the retail products, the company also provides its customers with its own brands of goods. Such goods include Sam’s Choice and the Great Value. Considerations of the retail service designs by the operation management of the company emphasizes the variable of cost effectiveness and efficiency of the company. Provision of this kind of goods and services have enabled the company to be in a position to enter the high street through the setting up of collection stores here customers can get their unique orders from.
Quality Management
This operational management decision is reached through three quality standards tiers. In the specification of the lowest tier, the expectation of the minimum quality of the majority buyers is specified. On the other hand, the specifications of the middle tier are on the average quality of goods and services for the retailers under the low-cost category. The company uses the tier for some products and some employees such as the sales people. Lastly the highest tier is used in the specification of quality levels that exceeding the market areas in the company’s retail industry. The company uses the tier only on those goods that are on the minority of the company’s output like the goods categorized under the Sam’s Choice brand.
Through the use of the three tiers, the company is able to satisfy its quality management objectives in the operational management strategic decisions in the entire retail business organization. As a result, the company is able to expand its roots to the retail market both online and on the high street.
Capacity and Process Design
Walmart uses its decisions to utilize the forecasting, behavioral analysis, and continuous monitoring of its business operations. The analysis of the business such as the analysis of the brick-and-mortar is carried out by the company. Through this strategies, the company is able to e. The behavioral analysis helps the company in the determination of the next move to take or the next product to offer.
Location Strategy
Under this area, the management of the company is focused on the material movement, business information, and human resources efficiency. Under the location strategies, the company majorly considers the location for their stores. The location selection has to be strategic for easier accessibility and marketability. The company strives to locate its stores in urban areas and in areas that are populated in order to maximize their market reach and consumer reachability (Smithson, 2020). The company also makes items and goods available for the customers and employees through strategically locating its warehouses.
Layout Design and Strategy
Walmart accesses the employees and the customer’s behaviors in order to design the layout of the store location, and their warehouse location. Through the analysis, the company is able to come up with the design where additionally the needs of the goods rapidly moving goods are used in the determination of the store location.
Using your analysis of each organisation ‘strategy’ outline the advantages and dis-advantages to the organisation and its stakeholders of pursuing this strategic direction.
Amazon
Amazon as a company strives to maintain initiatives of corporate social responsibilities targeting the interests of its main groups of the stock holders. Various stockholders exact pressure to the company in matters concerning their interests. In response to this, the company has designed its corporate social responsibility to address and satisfy the interests of its stakeholders. The highest priority is given to the customers who are considered to be the most important stakeholder in the company’s operations. The customers are considered as the source of the company’s success especially due to the fact that they are the sources of the company revenue. According to the company’s vision and mission the customers are the most important stakeholders of the business.
The interests of the customers are based on the service convenience, fair pricing of the goods and services offered, and security in the online transactions between the company and the customers. As an advantage to the customers, Amazon strives to satisfy the customers interests through the company’s emphasis on the services and technology (Ferguson, 2017). The customers for example enjoys the company’s use of advanced communication and information technologies for the secure transactions in addition to the efficient purchase of goods from the company and their efficient delivery process. To ensure more customer convenience, the company employees are undergoing the training that ensures that the technological benefits are maximized and the customer convenience is promoted. Additionally, the availability of several sellers on the company’s online retail websites ensures competition among those sellers which in turn results to fair pricing of the company’s goods and services. The strategy of the market-based pricing is also facilitating the accrual of fair pricing on the company goods thus favoring the employees as a stakeholder.
As a disadvantage, the technological advancement may have some negative effect to some customers who lacks the skills of operating the technological devices used in the purchasing of goods for the case of online buying. Additionally, some customers may be limited to acquiring the goods if they are remotely located or if they are in areas with no internet accessibility.
Employees are part of the stakeholders who plays a major role in determining the performance of the organization and other corporate social responsibilities both to the company and the customers. The main interest of this group from the company is the development of their career and the competitive compensation. Amazon views its employees as being important because, they support the company’s competitive advantage through the company’s organizational culture. As an advantage to this stakeholder, the company satisfies their interests through the development of the leadership and compensating them appropriately basing the compensation policies on the high growth potential of the organization (Ferguson, 2017). In an example of the compensation packages, the company provides high compensation for the people in the IT department who are involved in the development and maintenance of the technological assets of the online business. The continued growth of the company also creates an opportunity for the company’s career advancement and other employee opportunities such as in the management and leadership positions. The organizational cultural support and the company’s competitive compensation are the main the main ways of ensuring that its employees are taken care of. As a disadvantage, the company expansion creates a room for more work which brings about the overworking of some workers in some situations.
The third stakeholders to the company’s operations are the communities surrounding the business. The community as a stakeholder to the business are important because they participate in the influencing of the consumer’s perception on the goods and services offered by the company. Some of the main interests of the communities includes, the developmental support which can be achieved through the company’s primary community support arm, the Amazon smile. Through the support of the developmental projects, the company achieves it’s the strategy for its corporate social responsibility in the satisfying of the community’s interests. As a disadvantage, the establishment of the business in some communities ends up causing the closure of small businesses in those communities as they cannot favorably compete with the company. In addition, establishment of the company in some communities poses a threat to the community’s culture as the business comes with new materials and new cultures.
Walmart
The company has four main stakeholders which are categorized as Investors, Customers, Employees, and Suppliers. The company prioritizes its investors more followed by the customers, then employees and lastly the suppliers. However, the company considers all of the stakeholders in the decision making processes.
Investors
The main interests of the investors are the profits made by the company just like any other investor of any other company. The higher the profits, the higher the dividends the investors accrue (Meyer, 2017). The other interests by the investors are the minimization of the operational costs by the company and as a result, the company continuously cuts its costs in its strive to generate more profits through which the investors enjoy the prioritization of their interests.
There are also disadvantages of the company policies to the investors. In some business transactions, or financial years, the company may accrue some losses or low profits. As a result, the investors dividends translates to being low or even none in some situations.
Customers
Just like in any other business, customers are very important to the Walmart company. The interests of the customers are the provision of low prices or provision of affordable goods. Walmart addresses the interests of its customers through provision of incentives that acts in the favor of the customers such as discounts and promotions. The company has actually made its name for its low pricing policies which acts as an advantage to the customers. On the other hand, the customer’s experiences disadvantages when the company’s pricing strategies are not in their favor.
Employees
Another significant consideration by the company are its employees. the company should always consider the employees in its managerial decision making. The interests of the employees to the company can be categorized into two, that is the high pay and job security. The employees require the company to guarantee them of their retention in its continued operations. The employees enjoy the company’s programs and policies that offers the with considerable job security degree. However, the employees experience hard times with the company as it maintains its position on the low wages. Due to this policies, the company fails to effectively address the employee’s interests.
Suppliers
Another important stakeholder to the company are the company’s suppliers whose interests are on provision of more of their products to the company. Inclusive of the supplier’s interests is not just the provision of the goods to the company but also provision of those goods at acceptably profitable prices. In addition, the supplier’s interests are that the business sells their products at higher prices in which since the increase in the prices, would have a significant impact on the prices the company buys from them.
As a disadvantage, the suppliers are at the bottom of the list of the company’s prioritization of its stockholders. The company also has more power than its suppliers which leaves the suppliers with no choice but sell to the company at its decided prices. The company’s interests are on the suppliers to offer their products at low profits so as for the company to be competitive and to be able to make more profits. As an advantage, the suppliers enjoys the fact that Walmart provides them with an outlet for their goods which provides them with the certainty that they will always have a place to sell their goods.
Draw a conclusion based on the evidence researched and discussed outlining which organisation strategy is the most successful in today’s market trading environment. Within this discussion highlight the main areas within both organisations that require further ‘strategic’ alignment to achieve their aims.
To facilitate their growth and developments the companies are making strategic moves that are aimed at focusing on more investments. Global companies have laid down strategies aimed at expanding their markets and maximizing their profits. Strategy formulations are left on the hands and responsibilities of the company executives. According to the analysis, formal strategic planning does not evolve along a similar direction for the different companies. Evidently, companies segment their progression into different phases mostly into four sequential phases. Each phase is normally marked by the advancement from the previous phase (Gluck et al., 1980). Both Walmart and Amazon have been plactically striving to analyze and strategize their strategic management policies to ensure their competitive advantage. Part of their success are greately attributed to the company’s core values and missions. The mission statement of Amazon for instance states that the company is willing to do whatever it takes in order to make its customers happy. In addition, its success has been brought out to be facilitated by its strengths which are exhibited by thr company’s relentless commitment to its customer’s experience. The company’s plans all their strategic moves guided by their goals to become the most profitable and customer-centric. The companies have been brought out to strive to serve their customers in the most possible ways.
Amazon for instance has been able to grow and expand its territories all over the world. They have succeeded in their mission and have introduced several wide innovations that have led to the revolution of the ecommerce. The customers have been able to identify the company as a preferable place to shop. The location of access stores has for instance promoted the company reachability by those customers that cannot access the internet or have no knowledge of using the internet. Additionally, those customers that do not trust online business and online trading are able to access the stores and buy the goods they require.
Amazon’s success has been brought out to be mostly facilitated by its strengths which includes the company’s culture of testing the ideas rigorously and then narrowing down to the selection of the things that are effective. Amazon has shown their will of not being afraid to fail and is willing to risk money in the development of products and services despite the involvement of any risk. The company has been able to target the customers through a process that they are supposed to create personal accounts with it. This accounts ensures that the customers retain their loyalty to the company.
Amazon has been able to establish itself all over the world through its influence on any market that it joins. The company leverages its brand recognition globally which poses the company as a global threat to any market that it enters. Additionally, the company has logistics systems that are superior than other global retailers. As a result, the company has been found out to be able to deliver on all its goals of being categorized as the most customer centric company. To improve their efficiency, the company has been seen to invest deeply in the logistic systems that revolves around the areas of establishing distribution centers near the large cities for easier accessibility to engaging the use of advanced robotic systems that improves the company’s efficiency.
Through its worldwide move, the company has been able to be recognized which has been highly facilitated by the company’s powerful influence on its new markets. The company has been brought out not to choose the goods it deals with. Its fragmentation has enabled it to deal with all sorts of product provisions thus enabling it to accrue more profits.
However, Amazon needs to improve on its imitable business model in order to limit competition from companies which copy the very same model Amazon uses. Additionally, Amazons ability to penetrate developing markets has been one of the company’s weaknesses. The management of the company should strategize and come up with policies that will enable the company to easily and freely penetrate new markets. The move will enable the company to maximize its profits which will be accrued from the new markets. Additionally, the company move to join the high street is limited by the few physical stores which makes the customers hard to feel them. Addressing this challenges, the company will require to invoke some changes and make necessary corresponding adjustments in its management and strategic planning.
Walmart on its part has also been able to achieve major developmental growth through the establishment of its various strategies. The company’s major achievement has been on the retail market which have been accrued to the company’s marketing and performance strategies. One of the company identification was the fact that most companies have saturated the Ecommerce marked. Walmart have an incredible business model that which they have implemented to be able to compete favorably with its competitors. In its tally, the company serves over two hundred and seventy million customers with boosting over eleven thousand seven hundred stores.
The company has been able to establish a business strategy that has been based on the company striving to be competitive and to achieve their goal of being profit maximization. The company has two main strategies which are one-stop shop and Every Day Low Cost strategy. The strategy is one of the company’s ultimate commitment in its strive to control the company’s expenses. The company has however been seen to have poor payment policies to its employees which have led to continued strikes and work resistance among the employees. The company is however focused on providing the customers with the quality products at the lowest possible prices in its strive to attract more customers.
Additionally, Walmart has been outlined as being critical in its strategic management and policy development. This strategy has been categorized as to revolve around the areas of goods and services provision strategies. The other policies are based on the fact that the company provides goods of good quality and better design. This policy is aimed at ensuring that Walmart’s customers feels protected and cared for by the company.
However, Walmart needs to be more concerned about the welfare of its employees. The company has been known to have poor payment policies for its employees. The company needs to adopt measures that are more appreciative to its employees as this would cause more commitments of the employees to the company. In addition, the company should look for ways to increase its profit margins as they are on the low margins.
Another challenge facing Walmart was outlined to be the possibility of their business model being easily copied. The company should come up with a business model that is not easy to copy so as to remain among the top of the market (Smithson, 2018). The company is also faced with a competitive disadvantage against sellers who are specialized in their particular field. Walmart should therefore engage professionals of that particular fields so as to gain the same competitive advantages as those sellers.
Compile a Set of Strategic Options for Each Organisation Outlining how they can Resolve or Improve Their Strategy.
Amazon can be viewed to represent a company which is most complex in the mankind history, which features at least a dozen profit centers. In order to grow, the company needs to expand its core footprint which will cause almost all businesses to be impacted. To achieve all this future growth, the company would need to come up with new ways of doing things. Some of the strategic moves the company should take, should be aimed at resolving or improving their strategies. Amazon should conduct proper planning as a business strategy in order help it identify the key steps that the business will take in order to reach its goals. Proper planning helps organize the business and its functionality and therefore it would be very crucial for Amazon to ensure that every strategy it lays down or takes, is properly planned for. The company should also check and strategize on its efficiency in the resource allocation and product delivery among other business transactions. Efficiency as a policy would help in the facilitation of effective business resources allocation. Additionally, the more efficient the business becomes, the more the customers get to trust and rely upon that particular business.
Amazon should also ensure that it has total control over its activities in order to reach the companies organizational goal. Control helps the company understand the path it is taking which helps it assess whether the company’s activities are getting it close to its goals. Evaluation of the company’s competitive advantage is another strategy that Amazon needs to put more emphasis upon. Amazon should focus on capitalizing its strengths and using them to its advantage so as to make itself unique.
Amazon should Cross-sell their products, which means that the company should be focused to sell more products to the same customers. This process helps increase the average cart price by the customers which intern relates to impacting the profitability of the company significantly without the company having to spend more money to look for more customers.
Amazon can also develop the most innovative products and services. Uniqueness in the products provided by companies creates specific impacts on the market as the customers are attracted to buying that particular product. The company should be able to define its innovative moves and strategies.
Additionally, the company should strive to grow sales from the new products which can be done through investment in research and product development. The more sale the company is likely to make, the more profits it’s going to accrue and the more the likelihood the company is going to expand.
The company should strive to improve its customer service. Having an excellent customer service usually focuses the company’s objectives on provision of services such as online support or provision of a more effective call center. An excellent customer service tends to make the customers more comfortable and by this, they most likely becomes part of the returning clients.
Another move that large companies are making is the formation of a young market through buying out the competitors or merging with them. Acquisition of ne companies would allow Amazon as the large company to favorably compete in new markets that It previously did not impact and at the same time be able to retain the customers.
For the case of Walmart, improving on the already existing strategies or coming up with new strategies is also important in the company growth and facilitation of its expansion. Just like Amazon, Walmart operations are based on the desires to being the best in the market and accruing more profits. The company can achieve this through improving or acquisition of new strategies.
One of the strategy that the company can bank on is the product differentiation hich is a common strategy mostly for the business-to-consumer type of business. The company can differentiate its products from those of its competitors through highlighting the fact and making clear to the market that their technology is superior in addition to the features of their goods, styling, and pricing.
Walmart should also revisit its pricing strategies. Pricing can be used by businesses in them strives to attract more customers or giving the products aspirational value which is higher than what the ordinary customers could afford. Keeping the prices low, would require the company to be aggressive and sell higher products volumes since low pricings provides lower profit margins. On selection of setting the company pricing to be above what the ordinary customers can afford the company would be able to retain large profit margins and maintaining of the products exclusivity.
Walmart should also strive to improve its customer retention policies. Retention of company customers would be cheaper than spending more money in the strive to attract more customers. The strategy requires the company to identify what the customer’s interests are and adopt the tactics that will satisfy those customers.
The company should also strive to ensure its sustainability which can be achieved through the aim of reduction of energy costs or reduction of the company’s footprint through the process of implementing a program for recycling of the company’s programs.
Gluck, F. W., Kaufman, S. P., & Walleck, A. S. (1980). Strategic management for competitive advantage (pp. 154-161). Harvard Busines School Publishing.
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Amit, R., & Zott, C. (2001). Value creation in e‐business. Strategic management journal, 22(6‐7), 493-520.
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Madsen, T. L., & Walker, G. (2015). Modern competitive strategy. McGraw Hill.
Beldad, A., De Jong, M., & Steehouder, M. (2010). How shall I trust the faceless and the intangible? A literature review on the antecedents of online trust. Computers in human behavior, 26(5), 857-869.
Shin, H.S., 2009, ‘Reflections on Northern Rock: The bank run that heralded the global financial crisis.’ Journal of economic perspectives, vol.23, no.1, pp.101-19.
Smithson, N. (2020). Walmart’s Operations Management: 10 Strategic Decisions & Productivity – Panmore Institute. Panmore Institute. Retrieved 28 May 2021, from http://panmore.com/walmart-operations-management-10-decisions-areas-productivity-case-study-analysis.
Smithson, N. (2018). Walmart SWOT analysis & recommendations.
Ferguson, E. (2017). Amazon.com Inc. Stakeholders, Corporate Social Responsibility (An Analysis) – Panmore Institute. Panmore Institute. Retrieved 28 May 2021, from http://panmore.com/amazon-com-inc-stakeholders-corporate-social-responsibility-analysis.
Meyer, P. (2017). Walmarts stakeholders: Analysis & recommendations.
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