Devaky Paramasivan (572122)

Amazon case study

The first key strategic issue that I’ve founded is the overspread of diversification strategy. According to
the case study, Amazon allowed its focus to waver from its core competence of retailing books online and
allowed it to venture into newer focus areas. In order to solve this, Amazon should focus on their core
competence and slow down on the diversification in order to maintain their priority focus and target.

The second key strategic issue is over-ambitious of beating their business competitors. According to the
case study, Amazon has been trying to undercut their competition and gain customer loyalty such as the
profit margins sacrificed to gain a competitive advantage in the tablet market and there’s also the business
disruption of other online retailers and brick-and-mortar stores to stay in lead in the retail market. This
could cause a huge backfire to Amazon as other online retailers and competitors might work together to
crush Amazon ambitious and businesses. To solve this, Amazon should change their strategy to
cooperation rather than domination and start to working together with his competitors or potential
partners.

The third key strategic issue is the backfire of low pricing strategy. According to the case study,
Amazon has been trying to use low pricing strategy to maintain customer loyalty and this strategy worked
at the first time but as competition getting fierce, this strategy is making the company much more to
generate profit for its shareholders. To solve this, Amazon could’ve use product incentives offers rather
than low pricing. For example, if the customer buys an item, Amazon could’ve shown that this item got a
lot of other incentives that could come with it and it might interest the customer to buy more to match
their purchasing goods.

The final key strategic issue of Amazon is price increased of shipping carriers. For years, Amazon has
been using shipping carriers like US Postal Service, UPS, and FedEx and their shipping rates are
increasing throughout the years and could causes problem for Amazon as it has been offering special
promotion such as free shipping for their customers, hence, it is in the danger of losing its margin. To
solve this, Amazon can use low cost shipping service such as hiring other company certified drivers to
deliver its package all over the globe or even cooperate with some delivering company such as Uber or
Grab in Malaysia to do their delivering as they offer cheaper services.