Amazon VRIO Framework Analysis

Amazon understood firsthand that the competitive advantage of a company originates immediately from how distinctive the organization's resources and competencies are. Amazon is able to both engage in production at a lower cost and generate a superior product at a standard cost. This is accomplished mostly via Amazon's strategy of having a wide variety of goods and competitive pricing. Customers know they can find basic products at slashed prices or high quality goods at standard prices and this is all achieved via the enormous range of products and product brands and types available on their massive marketplace. For example, the depiction displayed in the case study which shows how growth was related directly to: lower cost structure- lower prices customer experience traffic sellers -selection and convenience. While this is a grave oversimplification of the Amazon business model, it demonstrates how many aspects of the strategy reinforced one another.

Both Amazon and Walmart are seeking to accomplish the same goal, to become the world’s largest retailer by providing customers with a seamless shopping experience. Both companies have their own strengths, with Amazon being the leader in the online retail space, while Walmart is the clear leader in the brick-and-mortar arena. As more online and brick-and-mortar retailers are eating into the market, both Amazon and Walmart must content with other companies as well as each other. Amazon and Walmart were both created and detonated extraordinary growth due to an innovative push unlike any other in their own respective arenas. “If either Amazon or Walmart is destined to come out on top, it must come from a massive innovation push, a willingness to

By 2008, Amazon had become a global brand with websites in various countries, and the company fulfilled orders in over two hundred countries. In 2012, the company employed more than 56,200 around the world that worked in various divisions including customer service centers, software developing, order fulfillment, and corporate operations. Amazon’s sales doubled from 2009 to 2011 due to increased sales in electronics, general merchandise, reduced pricing, and the acquisition of Zappos in 2009 (Hoffman, 2015, pp. 9-7).

Amazon’s efforts to reach consumers on a global scale have been widely successful. The online retail giant has reached potential customers worldwide with a simple click of a button. Amazon is set to become the largest ecommerce in the World. In order for this to occur Amazon will have to experience growth outside of the US and Canada. Recently Amazon has launched a strategy to reach more markets outside the US. Amazon Prime has been largely the main reason for the success. Amazon prime members are spending more than double the non members according to Statista. A rate of $1200 annually compared to about $500 annually for non-members. The global strategy approach that Amazon has adopted has been successive in maximizing the diversification otherwise unattainable for the company.

Amazon has been able to maintain sustainable competitive advantage because the company has adopted cost leadership, differentiation and growth strategies.

Wal-Mart’s toughest competitor today is Amazon. Amazon is the world’s leading e-commerce retailing company. Amazon started as an online book merchant but quickly expanded into a host of other product categories. The company model sells, publish, market and advertise their products where the consumer can buy from the comfort of their own home. Most of which can be delivered within 48 hours. The company sells millions of products each and every day to its consumers. Unlike, Wal-Mart who sells just new products, Amazon sells brand new products along with used products from three parties. The model sells standard products by publishing and advertising goods on the internet. Amazon also sells and markets their own innovative technology such as the

The main competitive advantage of Amazon is the ability to provide a large variety of product and services at an extremely low price.

Moreover, Development of technology has led to an increase in competition between online stores. Now there exists unlimited number of online stores in every country having multiple branches leading to the fact that they provide cheaper services to customers. Keeping this in view Amazon is now compelled to change its traditional style of business. Apart from this, Amazon has also realized that having a physical store, where customers can shop like regular markets would give an extra value proposition to the company. (Lee, 2014)

Amazon operates worldwide, so it must follow political and government decisions around the globe. As an online only retailer, Amazon is concerned with policies that affect e-commerce, such as taxes, as well as government support for growing online businesses. In its quest for expansion, Amazon keeps tabs on political stability overseas and in developing countries because they benefit from potential expansion (Greenspan, 2007). Similarly, Amazon is also looking for stability in the economic environment because risk is minimized and growth opportunity is maximized. For sociocultural factors, Amazon benefits from increasing consumerism and online shopping habits (Greenspan, 2007). Again, as an online only retailer, Amazon profits from the trend moving away from traditional retailers and towards e-commerce. However, with increased online usage comes some technological factors that must be kept in mind. In today’s world, technological change happens in the blink of an eye, so Amazon must stay on top of the latest innovations while also minimizing the growing threat of cybersecurity. In regards to ecological factors, Amazon can look to the movement towards a “greener” planet by improving their environmental impact as well as their image by engaging in

Amazon’s victory is significant, keeping in mind that the company grew by 41% in the last fiscal year by $48.1 billion, that is, five times faster than Walmart, that grew only by a mere 8% (Fig 2). Indeed, Amazon’s world-wide popularity and recognition will be difficult to beat, with demographics of 237 million active customers worldwide, making it one of the most valuable brands in the world. Not only has Amazon seized the world with its e-commerce strategy, but it is also willing to forego profits to gain market share, making it difficult for Walmart to find a space in the online retailing spotlight. Not being hamstrung by an enormous brick-and-mortar business like

Retailers have adapted to the online marketplace out of necessity and opportunity. The great recession placed many retail companies in financial hardship and while some failed, others innovated and became some of the largest companies in America such as Amazon. A recent trend is consumers are buying more products online than ever before. As a consumer, I enjoy shopping in the convenience of my home and having the items delivered to my doorstep in 48 hours or less. Global internet access continues to increase, with mobile devices and affordable internet for the home, consumers will continue to shift and buy products online rather than in retail brick and mortar locations. Online sales in the United States have increased over 250% in the last ten years, accomplishing $250.0 billion in 2012 (Tehrani, 2014). Therefore, Amazon is in a solid market position to capitalize on the future trends and booming ecommerce

Amazon desires to be “Earth’s most customer centric company”. And this determines that Amazon’s strategic position will be more concentrate on the growth of the group and enable it to be a great enterprise rather than a money maker.

1. Summary statement of the problem: Increased competition, a consistently poor economic environment and a possible repeal of the Internet sales tax exemption has forced Amazon.com to generate new strategies on how to remain competitive in the e-Commerce business. This issue seems to be, how to retain a competitive edge while minimizing costs and still remaining focused on the core vision of the company. The strategies focused on the services side of the company instead of the products side, as the services side was the best suited for new opportunities.

Amazon’s effective value creation strategy flows from its excellent business model, which inherently allow it to generate high revenues in cash at a low cost structure. The model is capable of high inventory turnover velocity (HITV) as it collects cash before it spends for product and service fulfillment. Its free cash flows are largely driven by three factors: (a) growing operating income (GOI); (b) efficient working capital management (EWCM); and (c) efficient cash capital expenditure management (ECCEM) (Amazon, 2017). In fact, its cash flow from 2014 to 2016 more than doubled (240.32%).

To begin, Amazon is competition with Google and Microsoft on the consumer services segment of the internet. Amazon, much like Google and Microsoft's "Bing," is consumer oriented. In order for any of these three service providers to flourish, consumers must continually use their