Chosen company is Amazon.
Check the book and slides.
Corporate – Level Strategy
Chapter 6
Strategy levels – different objectives
The main objective of business-level strategies?
Competitive advantage
2
Strategy levels – different objectives
The main objective of corporate-level strategies?
Synergy
3
Introduction
Corporate-level strategy: Specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets
Expected to help firm earn above-average returns by creating a value
Corporate level strategies help companies select new strategic position
Positions that are expected to increase firms value.
Firms use corporate level strategies as a mean to grow revenues and profits; these decisions are never risk free
Two key issues:
In what product market and businesses the firm should compete
How corporate headquarters should manage those businesses
4
4
An effective corporate level strategy:
creates across all firm’s businesses
aggregate returns that exceeds what those returns would be without the strategy
contributes to the firms’ strategic competitiveness and its ability to earn above average return.
Introduction
Introduction
Value ultimately determined by degree to which “the businesses in the portfolio are worth more under the management of the company than they would be under any other ownership”
Effective corporate level strategy creates across all of the firms businesses aggregate returns that exceeds what those returns would be without strategy.
6
Product diversification, a primary form of corporate-level strategies, concerns the scope of the markets and industries which the firm competes as well as “how managers buy, create, and sell different businesses to match skills and strengths with opportunities presented to firms”.
Introduction
Levels of Diversification
8
Diversified firms vary according to their level of diversification and the connections between and among their businesses.
8
Levels of Diversification
Low Level
9
9
1. Low Levels
Single Business Diversification Strategy Corporate-level strategy in which the firm generates 95% or more of its sales revenue from its core business area
Dominant Business Diversification Strategy Corporate-level strategy whereby firm generates 70-95% of total sales revenue within a single business area
Levels of Diversification (Cont’d)
Moderate to High Level
10
10
2. Moderate to High Levels
Related Constrained Diversification Strategy Less than 70% of revenue comes from the dominant business. Direct links (i.e., share products, technology and distribution linkages) between the firm’s businesses
concentrating on the transfer of knowledge and competencies among the businessesRelated Linked Diversification Strategy (Mixed related and unrelated)Less than 70% of revenue comes from the dominant business. Mixed: Linked firms sharing fewer resources and assets among their businesses (compared with
1
CHAPTER
4
BUSINESS-LEVEL STRATEGY
Introduction
Strategy – increasingly important to a firm’s success and concerned with making choices among two or more alternatives. Choices dictated by
External environment
Internal resources, capabilities and core competencies
2
Introduction
Business level-strategy – integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets
Generic strategy – a strategy that can be used by any organization competing in any industry
3
Introduction
4
A firm must use a Business Level Strategy
It is not necessary to use all the corporate level strategies, acquisition, restructuring, international…
From the dry cleaner to the multinational corporation – a firm must choose at least one business-level strategy
The business level strategy is the core strategy – the strategy that the firm forms to describe how it intends to compete in the product market
Introduction
5
In terms of customers, when selecting a business-level strategy the firm determines:
who will be served,
what needs those target customers have that it will satisfy, and
how those needs will be satisfied
Customers: Their Relationship with Business-Level Strategies
6
6
Strategic competitiveness results when firm can satisfy customers by using its competitive advantages
Returns earned are the lifeblood of firm
Most successful companies satisfy current customers and/or meet needs of new customers
Customers: Their Relationship with Business-Level Strategies
7
Five components in customer relationships
1. Effectively managing relationships with customers (ex: Amazon)
Deliver superior value
Strong interactive relationships is foundation
2. Reach, richness and affiliation
Access and connection to customers
Depth and detail of two-way flow of information between firm and customer
Facilitating useful interactions with customers – viewing the world from the customer’s eyes
7
Customers: Their Relationship with Business-Level Strategies
8
Five components in customer relationships
3. Who: Determining the customers to serve
Market segmentation
Dividing customers into groups based on differences in needs
Cluster people with similar needs into individual and identifiable groups
For example, consumer and industrial markets
8
Customers: Their Relationship with Business-Level Strategies
9
Five components of customer relationships
4. What: Determining which customer needs to satisfy
What = Needs
Related to a product’s benefits and features
Must anticipate and be prepared: (i.e., High-quality? Low price?)
Translate into features and performance capabilities of products
5. How: Determining core competencies necessary to satisfy customer needs
Core competencies: resources and capabilities that serve as source of competitive advantage for firm over its rivals
How = core competencies
9
Customers: Their Relations
American University of the Middle East
MGT450 – Strategic Management
Section – O2
Dr. Indri Dyrmishi
Student Name & ID
Mariam AlSader 41541
Nourah Abdullah 41843
Sarah AlAjmi 42793
Anfal Behbehani 32686
Introduction
The following project deliverable will focus on analyzing an international company of our choice
on a strategic management scale, in order to give us the opportunity to get a better understanding on the
reasoning behind its success. The company that we decided to focus on is called Amazon, which in an
international e-commerce business that specializes in offering everyone around the world any product
imaginable. The following deliverable report will be divided into several sections, where each section will
focus on a specific topic. Firstly, we will begin by providing an organization overview, in order to give us
more information on the company and its background. Following, we will be discussing the mission and
vision of the organization, and the factors that motivated them to achieve the success that they have
today. Next, we will be conducting a brief comparison with two direct competitors of Amazon in terms of
their vision and mission. The penultimate section will look into the core competencies of the organization,
which is a preliminary analysis that is required to be completed, which will serve use to us in the upcoming
deliverables. Lastly, the final section of the report will provide us with an overall strategy, which will
provide us with the tactics and decision-making reasonings that have helped the organization reach the
success that it has today.
Company Overview
The organization that we decided to focus on for the first project deliverable of the Strategic
Management course is Amazon.com Incorporated. Amazon is an American multinational company that
focuses on providing the highest level of e-commerce business to individuals across the world. Amazon as
an organization offers several different business products and services, which are as follows: –
• E-commerce;
• Cloud Computing;
• Artificial Intelligence; and
• Digital Streaming
The company known as amazon is considered to be amongst the top 5 information technology giants,
which control the online market across the globe. Within the top 5, you are able to find organizations such
as: Google, Apple, Facebook, and Microsoft, which are some of the largest companies that have ever
existed. In the year 2015, Amazon was considered to be the company that had the highest influence and
cultural impact in the world, as for the most part it has been considered to be a member of every
household today. The company was founded in the year 1994 by today billionaire Jeff Bezos. The company
has grown extremely over the last couple years, and has recently achieved a revenue count of $386.064
Billions for the year 2020. Amazon as a company serves all the markets around the world. No matter the
cou
Introduction
The following project deliverable will focus on analyzing an international company of our choice on a strategic management scale, in order to give us the opportunity to get a better understanding on the reasoning behind its success. The company that we decided to focus on is called Amazon, which in an international e-commerce business that specializes in offering everyone around the world any product imaginable. The following deliverable report will be divided into several sections, where each section will focus on a specific topic. Firstly, we will begin by providing an organization overview, in order to give us more information on the company and its background. Following, we will be discussing the mission and vision of the organization, and the factors that motivated them to achieve the success that they have today. Next, we will be conducting a brief comparison with two direct competitors of Amazon in terms of their vision and mission. The penultimate section will look into the core competencies of the organization, which is a preliminary analysis that is required to be completed, which will serve use to us in the upcoming deliverables. Lastly, the final section of the report will provide us with an overall strategy, which will provide us with the tactics and decision-making reasonings that have helped the organization reach the success that it has today.
Company Overview
The organization that we decided to focus on for the first project deliverable of the Strategic Management course is Amazon.com Incorporated. Amazon is an American multinational company that focuses on providing the highest level of e-commerce business to individuals across the world. Amazon as an organization offers several different business products and services, which are as follows: – • E-commerce; • Cloud Computing; • Artificial Intelligence; and • Digital Streaming The company known as amazon is considered to be amongst the top 5 information technology giants, which control the online market across the globe. Within the top 5, you are able to find organizations such as: Google, Apple, Facebook, and Microsoft, which are some of the largest companies that have ever existed. In the year 2015, Amazon was considered to be the company that had the highest influence and cultural impact in the world, as for the most part it has been considered to be a member of every household today. The company was founded in the year 1994 by today billionaire Jeff Bezos. The company has grown extremely over the last couple years, and has recently achieved a revenue count of $386.064 Billion for the year 2020. Amazon as a company serves all the markets around the world. No matter the country that you live in, you will be able to purchase a product from Amazon.
Mission and Vision
Amazon.com is considered to be one of the most successful, if not the most successful company in the world. According to online information about the company, its company vision is “We aim to be Eart
Running Head: ENVIRONMENTAL ANALYSIS 2
2
ENVIRONMENTAL ANALYSIS
Amazon Inc- Environmental Analysis
Student’s Name
Institution
External Environment
General Environment
The external environment is made up of various elements, and the first element is political factors; Amazon benefits from the political stability of other nations, which gives it a chance to expand its operations. Political factors are an opportunity for Amazon to expand its operations. On the economic factors, the economic stability of developed nations and increase in disposable income are opportunities for expanding the business, and potential economic recession in countries like China is a threat to the business. Looking at social factors, a possible rise in online buying habits could increase the company’s sales, but an increased wealth disparity could lower sales (Hitt et al., 2016). Technological obsolescence can be both an opportunity and a threat since it puts pressure on the company to advance but can also be a competitive advantage.
The environmental factors which affect Amazon include the rise of a carbon-free lifestyle which gives the business a chance to boost its image as a market leader in eCommerce. The carbon-free lifestyle is an environmental factor that aims to reduce pollution in the environment by reducing carbon emissions by businesses. Under legal factors, the changing import and export regulations allow the company to expand into nations with fewer trade barriers. (Hitt et al., 2016). The company is affected by the physical features in the transportation of goods since some mountainous regions are not accessible easily. Additionally, international trade allows the company to be a leader in the worldwide market by expanding into other countries under the global factor.
Industry analysis (Porter’s five force model)
The retailing industry can be analyzed by the five competitive forces proposed by Michael Porter. Amazon is in a very competitive industry and competes with retail giants like Walmart and competitive advantage because of good customer experiences and eCommerce. The rivalry within the company is a powerful force because of the aggressiveness portrayed by the firms in the industry, such as Walmart. They are increasingly improving their products and services to attract consumers ad stimulate sales. The company also gets competition from the highly available substitutes; for instance, many book stores offer a similar company. The customers of the company have high bargaining power because of the availability of information and substitutes. The customers have access to information regarding a wide range of online retailers, making it very easy for them to find alternatives and shift to other sellers. The bargaining power of the customers is a powerful force that cannot be ignored.
The suppliers control the supply of materials for the company and have a high bargaining power since there is a small population of supplier
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