Amazon: The media Industry

Amazon is an American multinational corporation that specializes in commerce and cloud computing services. It was created in 1994 by its current CEO, Jeff Bezos, and is headquartered in Seattle, Washington. Amazon is the world’s largest online retailer in terms of market size and total sales (Kanto, Jodi and Streitfeld).

Amazon began as an online bookstore selling books and later expanded into the sale of digital version disks, software, video games, furniture, food, toys, consumer electronics, universal serial buses, and cloud infrastructure services such as IaaS and PaaS, which are widely regarded as among the most effective (Kanto, Jodi and Streitfeld). Bezos seems to have foreseen the success of his business when he started it as he named his company Amazon in kith and kin to one of the largest rivers, he planned to make his stores one of the biggest in the world. He envisioned his business to the large, different and exotic Amazon River and thought of implementing such an environment in his firm. With the motivation and hard work, he got Amazon to where it stands today (Kanto, Jodi and Streitfeld).

Amazon Company has ventured into different industries in trying to meet consumer needs and earn profits. Some of the industries ventured by Amazon include the media industry, electronics industry, and other merchandise. In the recent years most of its profits have accumulated from the media industry, and for that case, I will focus on the media industry in this research (Kanto, Jodi and Streitfeld).

The media Industry

The media industry works handily with the entertainment industry. It incorporates radio, print sources, and television. Media industry further breaks down into movies, music, news, magazines, books, and radio shows. Amazon has majored on online advertisement and retail and also cloud computing where they face stiff competition from Google (Croteau, Hoynes and Milan).

Advantages of Investing in the Media Industry

Increases Brand Awareness Efficiency

The media industry through its social marketing platforms helps in marketing new market products. Marketing is one of the main aids to business success, for this reason, firms will always need the media in advertising. Technology advancement as the driving forces of competition has made business enterprise diversify from the old means of marketing to the embracing the use of media to reach a larger population of potential customers (Croteau, Hoynes and Milan).

Everybody Needs Entertainment

Entertainment is as necessary as Oxygen in today’s world. Entertainment has been used to escape tension i.e. from work or school by watching movies or playing games. For this reason, the entertainment industry may change over time i.e. from buying computer discs at local stores to monthly subscriptions on video sites i.e. Netflix. However the change, the media industry will always be needed hence a factor to invest. Media may be changing, but it is far from dead. A rise in the visit to entertainment sites and televisions is expected to grow (Croteau, Hoynes and Milan).

Rising Demand

The demand for social media services has increased tremendously over time for the fact that many people turn to media sources as a form of revolution and technological embracement i.e. Facebook. For that reason, customers look for their needs and make purchases online i.e. Amazon and eBay hence a rising demand in media platforms either in marketing or online retails is predictable (Croteau, Hoynes and Milan).

Entry and Exit Statistics

For the last years, researchers have proven that many companies venture into the media industry, but few or no cases of a firm quitting the media industry are reported annually, such research confirms that the benefits in the media industry are vast enough for each firm to get a share. Statistics as this give a sign that investing in the media industry is a right move (Croteau, Hoynes and Milan).

Industry Profitability

The media industry is evolving with growth due to external pressures such as technology and innovation, each firm attains profits as per the quality services offered, and for this reason, individual efforts are paid back (Croteau, Hoynes and Milan).

Amazon External Factors

Technology

Technology has a key influence on every business inclusive of Amazon. As technology advances, Amazon has to work hard to keep up with the technological advancements for the case where their competitors may embrace them before they do and win more customers, i.e., in the event of internet speed for example. Amazon has a role to adapt to the new technological trend to stay relevant and competitive in the online retail industry (Rothaermel).

Culture

Culture has an impact on Amazon and all business especially has as they expand to other countries globally, they find new cultures which may not embrace some of their goods and services. Indian cultures for example have had sanctions on the goods firms supply to their country. A culture that does not embrace the consumption of canned food will limit the venturing of firms producing canned food (Rothaermel).

Competitors

Firms producing goods and services as those produced by Amazon also have a major impact as a company should always strive to be ahead of their competitors either by quality of goods and services, their quantities and customer care. As each firm is trying to expand and win more customers, every firm should address weaknesses and customer complaints as soon as possible in order to maintain relevance in the market. Amazon faces competition in the media segment include Netflix, Apple, eBay, Time Warner Cable, iTunes and Google (Rothaermel).

Economic factors

Economic status of a region you are willing to invest in plays an important role in the supply and demand of goods and services produced which later accrue to a firm’s benefits and profits. Economic factors have an impact in Amazon in that where peoples economic status are low, they will supply goods matching their economic status whereas in areas with high income they will supply goods viewed as unaffordable by the low income areas (Rothaermel).

Political Influences and Stability

Political stability in regions to be invested is one of the major considerations taken by any firm as with insecurity for example an enabling environment for business operations will not be created and this will limit business activities. Political influences such as sanctions will attract business investors while high taxes and inflation will limit investors in a region (Rothaermel).

Amazon Internal Factors

One of the factors that help keep Amazon relevant and far past its competitors in the several industries it operates is embedded in its internal structure and chief executive officer Bezos. Amazon operates under an effective organizational structure which establishes the interactions among its organization members right from the CEO to the employees. As the largest growing retail company, Amazon adopted a corporate structure that is adequately compatible with its growing markets.

Amazon corporate Structure

Amazon organizational structure focusses on business functions as core foundations that influence and determine component interactions in its organizations. Among the most significant components include global function base groups, geographical divisions and global hierarchy (Hill, Jones and Schilling).

Global Function Base Groups

This is the central distinctive feature of Amazon corporate structure where each business function has a senior manager overseeing the rest of the team. Its tactical agenda is to enable Amazon to facilitate all its management operations all over its enormous organizational growth. This feature has promoted the growth of the company. This structure is comprised of the chief executive officer, Amazon web service, International consumer business, legal secretariat, accounting and finance (Hill, Jones and Schilling).

Geographical Divisions

Amazon’s organizational structure also involves geographical divisions. In this corporate structure, groups are based on geographical regions they are located and business related goals. It implements geographical divisions structures in managing the business based on economic settings of particular regions. This supports the organization to address issues in relevancy as per the different regions (Hill, Jones and Schilling).

Global Hierarchy

Hierarchy presents an organizational structure with traditional characteristics, Amazon expresses this in a term of a global system of authority and vertical lines of command that impact the retail firm. The strategic objective of this feature in the structure is to assist Amazons managerial control in the organization (Hill, Jones and Schilling).

Amazon’s Strategic Options to Maintain a Competitive Advantage

Information Hold

Bezos rarely speaks on company’s profits, activities, and goals achieved over a business year. He advises that the more you speak and express your ideas, the more predictable you get. This skill helps him from being counter attacked by his market competitors (Stone).

Observe Customers and Not competitors.

Bezos makes the point that educates companies always obsess over their competitors: They wait to see what rivals bring up, then try to copy and one-up it. By hearing customers instead, Amazon founded Amazon Web Services (AWS) business designed to bring a solution to problems with too-expensive in-house application hosting and open-source products that were not robust enough to easily support fast-growing or already-large companies (Stone).

Treat Employees Think Like Company Owners

Bezos articulates that a company’s success is highly inclined to its employees and that it is necessary to make them feel like they are part of the business as this makes them offer the best in their daily tasks giving business advantages. Giving employees a stake in company’s success make them feel like they are part of an organization family (Stone).

Empower people To Avoid Bureaucracy

Bezos insists that there are decision made by top company executives and type other decisions that a business can reverse if they are wrong. He says the result of this is sluggishness and risk aversion and advices that to keep innovating you should push power low in an organization as that is where the real organizational impact and growth is based (Stone).

Cost Leadership or Differential Strategy

Cost leadership strategy is one that utilizes the use of low cost in business operations while differential strategy aims at marketing different products for different region however the cost. Amazon practices differential strategy as their venturing in regions varies in regard to regional needs. Geographical position component is derived from differential strategy (Stone).

Amazon SWOT Analysis

Strengths

Monopoly Power and Diversity in Operations

Amazon is a retail giant exceeding its competitors by far that it seems to be enjoying some form of monopoly power. Amazon also has a strong brand power, its low shipping rates and diverse range of products it offers. The fact that it engages in diverse industries keeps it running well because when less profits come from a particular sector, another experiencing a peak season bails the firm (Pandit and Poojari).

Weaknesses

Shipping Costs

Amazon have amazing delivery systems that deliver goods within an hour or so after placing an order. Amazon built many warehouses in order to make their shipping quick and efficient without considering the managerial costs. As much as they offer more they should check if the more they offer is really necessary as this escalated expenditure and reduced profits (Pandit and Poojari).

Opportunities

Grocery Buying

As Amazon deliveries are quick and online purchases are facing an increase, Amazon is likely to take over and expand their grocery sector eventually dominating this sector in a few months to come.

Threats

Cybercrime

Amazon as an online retail enterprise faces attacks from hackers who take particulars from data breaches then redirect money to their own accounts leading to losses for Amazon who will not get pay for goods or services delivered (Pandit and Poojari).

Competitors

Amazon faces competition from companies such as Walmart who are trying to implement quick delivery of goods and venture into the grocery market. If they succeed, Amazon will be at risk of sharing their customers (Pandit and Poojari)

Conclusion

In conclusion I would suggest that as much as every firm has its own challenges, Amazon challenges can be addressed whereby they should cut over unnecessary cost like the opening of unnecessary ware houses which increase costs and also implement all measures of cyber security to curb cybercrime and with that they will always be ahead of their competitors and they will expand massively.

Works Cited

Kantor, Jodi, and David Streitfeld. “Inside Amazon: Wrestling big ideas in a bruising workplace.” New York Times, no.15, 2015, pp. 74-80.

Croteau, David P., William D. Hoynes, and Stefania Milan. “The economics of the media industry.” Gender, race, and class in media, 2015, pp. 39-53.

Rothaermel, Frank T. Strategic management. McGraw-Hill Education, 2015.

Hill, Charles WL, Gareth R. Jones, and Melissa A. Schilling. Strategic management: theory: an integrated approach. Cengage Learning, 2014.

Stone, Brad. The everything store: Jeff Bezos and the age of Amazon. Random House, 2013.

Pandit, DAP Dr Vinay, and Arun Poojari. “A study on amazon prime air for feasibility and profitability--a graphical data analysis.” IOSR Journal of Business and Management, no. 16.11, 2014, pp. 06-11.