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Amazon Cost Leadership Strategy Analysis

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In order to achieve its goal, Amazon implements some strategy during their planning stage, namely cost leadership strategy and differentiation strategy. 2.1.1.1 Cost leadership Strategy Amazon is implementing cost leadership strategy as its core strategy in serving its customers. The company has enormous number of warehouses and processing capabilities, which provide the company physical economies of scale. (ACCA, 2015) Amazon faced a few challenges when it first applied this strategy and as a result, in the late 1990s, the company showed no profit at all after few years of operations. However, Jeff Bezos, the founder and chief executive officer (CEO) of the company, remained optimistic and focused on cutting costs instead of raising the …show more content…

This situation in turn created a service differentiation for the company compared to its other competitors. First, the Amazon.com website has an attractive and customer-friendly interface. Fast and reliable delivery which allow the customers to receive their order within the same day in specific area has also been an incredible feature of the company. A no-nonsense returns policy is being implemented, too. To assist the customers in choosing their order, purchase suggestions based on their previous purchases and webpage viewing are given. Customers can also provide their reviews of the product on the website to assist other customers in choosing the best book. These benefits that can be gained from purchasing through Amazon have brought many loyal customers, while the good services provided by the company encourages them to buy more from Amazon’s website. (Ecommerce digest, …show more content…

Most of the decision made by Jeff Bezos do not have instant gratification, instead having a long term value and bring benefits to the entire company. The development of Kindle, an e-book reader, is a fine example of an idea generated after synthesizing hundreds of data points. (Anders, 2012) 2.1.2.2 Employment practices Amazon chooses its employment candidates by identifying the quality of bias to action and able to work through ambiguity. Both of these qualities help to identify people who can innovate fast and do right by the customer. “One popular question asking the interviewer to create an action plan as brand managers in an area where they lack knowledge of and no budget. Stumped candidates will normally be rejected while others who provide guerrilla answers that are cobbled together usually thrive at Amazon.” (Anders,

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