The an Organization’s Competitive Advantage Paper

Competition is a critical element of commerce. Importantly, businesses need to understand the role of competition and its effects on operations. To be effective, however, organizations need to establish strategies that set them as leaders in their markets; they need to have a competitive advantage over their competitors (Sigalas et al., 2013). Therefore, to understand the competitive advantage further, this paper will study Amazon and its competitive advantage. It looks at how Amazon uses competitive priority cost to its competitive advantage and, more importantly, explains its priority cost as a strategic advantage.

Amazon is amongst the largest online retailers in the world (Haucap & Heimeshoff, 2013). Much of its growth can be attributed to its effective management and well established generic strategies for competitive advantage (Haucap & Heimeshoff, 2013). Amazon uses cost leadership as its generic strategy for competitive advantage. Cost leadership is a corporate strategy utilized by companies in which the cost of production or operation is reduced to gain a larger market share (D. Banker et al., 2014). Companies that lead their markets through this competitive advantage tend to share common characteristics, including lowering their prices and still managing to make profits (Kharub et al., 2019). However, it is important to understand that minimizing operational costs is core in this generic competitive strategy. Therefore, to be effective in this area, Amazon utilizes cutting-edge computing and networking technologies to maximum operational competence, which also minimizes costs.

Also, Amazon’s automation process helps it deliver goods to customers fast (Kuettner & Schubert, 2012). The automation system runs through the entire sales process, from order placement to delivery. More importantly, this automation processes smoothen business operations by diminishing complications triggered by shipping issues. In other words, automation and operational efficacy enable the company to minimize the cost of online retail, which makes shopping convenient for customers. Moreover, the company heavily invests in research and development to optimize the performance of its technological systems (Kuettner & Schubert, 2012). Apart from automation and technology, Amazon products are known to be cheap. The low prices are essential in attracting customers. These strategies allow Amazon to establish itself as a leader in its market.

It is worth noting that companies can attain a cost-competitive advantage by utilizing their skilled workforce, inexpensive raw materials, controlled costs, and so on (Santos-Vijande et al., 2012). Amazon uses efficient operations to create value for its customers. For instance, operational processes such as automation reduce costs associated with hiring a larger workforce. Reduced costs are reflected in product prices, which are often set at a minimum. The company’s cost leadership strategy applies to all Amazon products, but its services succeed mostly due to the company’s differentiation strategy. This strategy has allowed Amazon to attain its growth constantly, and it is a significant corporate strategy that many companies find challenging to copy.

Amazon is one of the world’s largest retail companies. As one of the largest retailers globally, Amazon has proven its competitiveness, even against retail giants like Costco and Walmart. Amazon’s intensive growth strategies and the company’s corporate competitive strategy has been vital to its growth. The company’s cost leadership strategy allows the company to reduce its product prices, hence, attracting more customers and reducing competition. The company reduces its operational cost by investing in advanced computer technology and automation. Automation and advanced technology system cut costs associated with instances such as hiring more employees.

References

D. Banker, R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy? Management Decision, 52(5), 872-896. https://doi.org/10.1108/md-05-2013-0282

Haucap, J., & Heimeshoff, U. (2013). Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization? International Economics and Economic Policy, 11(1-2), 49-61. https://doi.org/10.1007/s10368-013-0247-6

Kharub, M., Mor, R., & Sharma, R. (2019). The relationship between cost leadership competitive strategy and firm performance. Journal of Manufacturing Technology Management, 30(6), 920-936. https://doi.org/10.1108/jmtm-06-2017-0116

Kuettner, T., & Schubert, P. (2012). IT-based competitive advantage: a cross-case comparison of business software usage. Procedia Technology, 5, 181-189. https://doi.org/10.1016/j.protcy.2012.09.020

Santos-Vijande, M., López-Sánchez, J., & Trespalacios, J. (2012). How organizational learning affects a firm’s flexibility, competitive strategy, and performance. Journal of Business Research, 65(8), 1079-1089. https://doi.org/10.1016/j.jbusres.2011.09.002

Sigalas, C., Pekka Economou, V., & B. Georgopoulos, N. (2013). Developing a measure of competitive advantage. Journal of Strategy and Management, 6(4), 320-342. https://doi.org/10.1108/jsma-03-2013-0015