Cost Leadership Strategy Of Amazon

EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS
1. THREATS
a. Online security.
i. Amazon stores its online shoppers’ personal information, such as bank account details, which is a target for online thefts. ii. The more online customers Amazon has, the more attractive as a target it becomes.
b. Lawsuits.
i. The business has already attracted much negative attention from UK and U.S. authorities for tax avoidance and is subject for litigations and fines ii. Lawsuits are costly and consume time.
c. Strategic alliances.
i. Although Amazon is a massive online shopping mall and can’t be easily surpassed by small competitors, it faces serious challenges from strategic alliances. ii. For example, the strategic alliance between Apple and e-books

Cost leadership strategy:
i. The goal of cost leadership strategy is to produce products and services with a lower cost than the competitors do. The key to achieve this strategy are the economies of scale. ii. Amazon to succeed with the cost leadership strategy it has to provide the widest range of products to achieve the economies of scale and benefit from the low costs of displaying those products on its online marketplace. iii. In a result, the business became the largest online retailer in the world.
b. Superior quality services and products.
i. Amazon delivers only the best quality services and products. It is reliable, convenient, offers one of the lowest and fastest shipping, the lowest price, many free additional features with its services and has the widest selection of goods. ii. Amazon has a brand reputation for great customer service.
c. Strategic acquisitions.
i. Amazon has been successfully acquiring new firms to bring the new products, services, capabilities, assets and skills to the business. ii. Due to these strategic acquisitions Amazon is now capable of offering cloud services, has developed its information management (IM) and customer relationship management (CRM) skills.
d. Efficient logistics and

The power of suppliers is medium-high. Amazon has access to multiple goods and products from several companies and businesses across the globe. Suppliers have medium power due the fact that a lot of Amazon’s inventory can be obtained through other suppliers. Suppliers have an even higher power because Amazon cannot compete with its suppliers. Therefore, Amazon is highly dependent on its suppliers for products and profit. Amazon certainly has its downfalls through that aspect but it also has benefits in the sense that Amazon can control the many of its small suppliers. Amazon minimizes their stock from small companies to reduce costs. On top of that, companies do not charge Amazon until the product sells and Amazon pays the companies 35 days after the product is