Saunders (2001) defines a business model as the mechanism by which a business intends to specify a value cluster or a value proposition for targeted customers, a market offering and financial model. Being a summary of how a firm plans to serve its clients and identify its product offering, the model involves both strategy and implementation. Upon its establishment, Amazon. com employed Online Retailers of Physical Goods as one of its business models which was designed for the delivery of goods, services and information to the final consumers. This model has been taking title to the recently manufactured products sold by Amazon. com and it always depends on third party providers.
Upon its launch, the company was heralded due to its feel-friendly culture that attracted brilliant young people to apply for employment there. The company insisted on hiring the most intelligent, brightest and resourceful people who could not only share the company’s vision but also willing to work to achieve it. The management tried to institute a sense of community by sharing hard work as well as fun with other employees.
Although Amazon. com paid its employees less than market salaries, it gave them ownership in the company which made them (employees) happy. This gave it a competitive advantage ahead of its competitors who includes eBay. com, NowEssay. com, DjMixTapez. com among others. (Saunders, 2001)Amazon. com has been able to increase its competitive advantage after employing three operational strategies, these includes, customer differentiation, focus and cost-leadership strategies. In the first strategy i. e. customer differentiation, Amazon. com has provided both its prospective and current customers with differentiation through design, convenience or quality. The company always selects a diverse differentiator among the competitor.
This makes it possible for Amazon. com customers to differentiate and recognise its product from those of its competitors. The second strategy is focus strategy. Focus strategy takes either cost-leadership or customer differentiation strategies where it applies them to a niche contained by the market. the company focuses on excellent customer service as a niche and not the whole market because every niche has its own demand as well as requirement. The last strategy the company uses is a cost-leadership strategy, this it pursues through differentiating itself mainly on the basis of price.
Following this strategy, Amazon. com often ensures that it presents the same quality products as those of its competitors but for a significantly less price. (Geoffrey, 2004)Values have also played an important role in the success of Amazon. com. A value is said to be a goal which forms a partial objective. Values and philosophy has been at the centre of this company and has always determined the distinction between failure and success of the organisation. We have two strong values which are currently practised by Amazon. com that is, operational frugality and customer satisfaction.
These two values harmonize Amazon. com’s operational strategies in maintaining and achieving a successful competitive advantage and in encouraging corporate and employee performance The top management has always made tough decisions on how to move the organisation to achieve continued growth and eventual profitability. There have been four primary drivers for growth: