Strategic Choice and Evaluation for Amazon.Com

Strategic Choice and Evaluation Paper

Monique T. Guillory-Jackson

STR/581

March 18, 2013

Dr. Robert Rowlett

Choosing a sustainable business strategy is not an easy choice but there are companies who have done it and continue to do so. One such company is Amazon.com who first opened their virtual doors in 1994 and “emerged from the dot-com bubble one of the few winners and continued to blaze a trail of impressive growth (from about $4 billion in 2002 to nearly $20 billion in 2008),” (Johnson, 2010.) Companies like Amazon.com survive and thrive because of sound business decisions based upon sound business models. Their business model is based in strong management strategy. In this paper we will explore alternative Generic strategies, value disciplines, and grand strategies for Amazon.com based upon past performance focused on continued success.

Generic Strategies

“A long-term, or grand strategy must be based on a core idea about how the firm can best compete in the market place. The popular term for this core idea is generic strategy, from a scheme developed by Michael Porter,” (Pearce & Robinson, 2011). Porter believed that the generic strategy should be directly tied to the company’s performance in the marketplace in this way a firm could leverage its strengths and become stronger. Porter suggests that companies will subscribe to one or more of three types of generic strategies: Low-Cost Leadership, Differentiation, and Focus. Amazon.com has enjoyed the success of a focus strategy in the past. This strategy “concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better service by focusing entirely on it. A firm using a focus strategy often enjoys a high degree of customer loyalty,” (Quick MBA, 2010). (Block quote all exact quotes 40 words or more per APA guidelines.)Amazon.com and other e-book retailers have been the focus of many studies as of late where e-business firms to differentiate themselves have claimed to have the lowest prices on items such as books, CD’s, DVD’s, and the like yet just the opposite was found (Clay et. al. 2002). The studies found despite the low cost claims, and notwithstanding the fact that Amazon.com has prices that were about five percent higher than Barnesandnoble.com’s prices and about 11 percent higher than Borders.com’s prices, customers still preferred Amazon.com. In fact the findings suggested that customers have such a strong inclination to be loyal to a retailer that offers a satisfying shopping experience (though not necessarily the lowest prices)