Essay on Strategic Process and Analysis for Amazon.com Inc.

Executive Summary

Strategic analysis is crucial tool that is deployed to construct a plan of action based on the businesses internal and external environment. An integral part of strategic analysis is understanding the competencies and skills that exist within the company. In assessing the company’s resources, the VRIO framework helps to evaluate whether or not to exploit the opportunities to gain competitive advantage. Nike aligns with the VRIO framework through components such the Nike brand, customer base, marketing strategy, and product innovation which helps separate the company from its competitors. The company understands their strengths and ways to successfully leverage them to execute its strategy. Nike employs the use of PESTEL and Five Forces model to help them analyze their external environment in the ever-changing business world. For Nike to develop a successful course of action, it should remain collaborative, innovative and agile.

Strategic Process and Analysis for Amazon.com Inc.

Business strategy is a clear set of goal-directed plans and actions that a business takes to outline how it can gain and sustain competition in a particular market or markets (Ansoff et al., 2018). For a company to be successful in the business world, it should develop a solid strategic plan that sustains the inevitable changes. Successful organizations develop an effective business strategy that includes their mission, vision, purpose, and goals. Companies that understand the strategic framework and its key components will have a clear sense of direction and focus, which leads to informed decisions and therefore a long-term success of the business (Baroto et al., 2014). Nike is a business with effective strategies which has resulted in the company having a competitive advantage in their online retailing business.

Components of a Strategic Framework

AFI strategic planning framework is a model that links three management tasks: analysis, formulation, and implementation. This strategic planning framework is vital for a business to adopt a competitive edge and thrive in its particular industry. For a company to succeed, these three key elements are important to allow for development of an effective business strategy. Failure to understand the AFI framework makes it increasingly difficult for a business to incorporate successful strategic practices (Ansoff et al., 2018). To develop an effective business strategy, the firm needs to analyze the impact challenges could have on their internal and external operations.

Value of AFI Strategic Framework

Long-Term Success

Strategic planning framework helps in development and implementation of strategies for the long haul and not overnight success. The organization must be aware of their vision consumers, goals, and competition to ensure future growth. A strategy that addresses all these factors while also managing changing environment is crucial to the long-term success of a company (Gates, 2010).

Competitive Advantage

Strategic planning framework enhances discipline in the organization, which in turn improves communication. In competition, it allows facilitates effective decision-making and adoption of the right tactical options that results in generation of more sales than market rivals. By producing better goods and services at a cheaper price, the business is able to keep ahead of its competitors. Nike uses a combination of elements which helps them compete including: extensive customer base, innovative mindset, broad range of products, and effective marketing strategies. These elements help the company stand unique and also remain competitive. Importantly, Nike’s use of the Porter’s Five Forces Model, the VRIO framework, and the PESTEL Model has allowed them to adopt an effective business strategy to remain competitive and ensuring long-term success.

Nike’s Internal Environment

VRIO Analysis

When assessing the value that a business brings to the market, the VRIO framework is essential. This tool will help a business understand their currently available resources and if they match all elements of the VRIO tool, which enable them to gain competitive advantage, and achieve long-term success (Rothaermel, 2021). Nike seems to be utilizing the VRIO framework tool, which has achieved them competitive advantage in some specific business areas. To sustain a competitive advantage, Nike adopts the four elements from VRIO Analysis where it has established value and aligned it with its invaluable resources. The company’s customer base, product innovation, marketing strategy, and brand are combination of components that add value and rarity which makes it difficult to imitate Nike’s strategy. The company is very well organized and focused to leverage their strengths which allows them to sustain a competitive advantage. It is increasingly difficult for competitors to replicate Nike’s brand which is recognized globally and distinguished in the shoe and apparel industry.

To separate Nike from the competition, the company employs a unique marketing strategy which is a vital resource. Nike has had a marketing strategy that is extremely effective for example the Just Do It campaign which created a sense of belonging. Additionally, the company makes effective use of social media, athletes, and creative advertisements which is valuable to gain and sustain competitive advantage. Though Nike’s customer base can be imitated, their loyalty to the brand makes them unique and therefore hard for competitors to persuade the same customers.

Nike is defined by product innovation, which is another area the company meets the criteria of the VRIO framework. The company is always looking for new ways to manufacture their products, and the innovative mindset is vital to sustain a competitive advantage. Nike’s patents for technologically advanced manufacturing designs and innovative design is ahead of competitors’ such as Adidas (Mudambi & Puck, 2016). This patents shows the company’s commitment to high-quality product and innovation.

Ability for Nike to Leverage its Strengths

Companies need to understand their working strengths and how to leverage them to execute their strategy. Nike has continued to successfully leverage their strengths which enables them to execute their strategy effectively. Some of the key strengths that Nike utilizes in their business strategy includes exploring unchartered areas of development and seeking new opportunities. Nike has proven its ability to remain agile during the inevitable times of change. The successful strategies of leveraging a multitude of strengths has helped Nike adopt in times of changing trends and this business strategy allows the company to thrive and grow (Adolph & Greenwood, 2015).

Effectiveness of Nike’s Organizational Structure

Nike’s organizational structure support their internal stability as well as their growth (Park & Kincade, 2010). Without a strong management system design, the business would be left vulnerable to external threats since that leads to internal operations breakdown. Nike enjoys collaboration and high productivity from employees since the company is effective in communicating strategy. Nike utilizes geographical division organization structure which is based in its needs in the regional markets and global organization. The effective management system design and organizational structure allows the company to develop a quality corporate culture, and sustain a competitive advantage.

Nike’s External Environment

PESTEL Analysis

The external environment is crucial to the success of a company’s business and it shapes its daily operations. The PESTEL Model can help a business understand their external environment. PESTEL Model includes factors such as, Political, Economic, Sociocultural, Technological, Ecological, and Legal. Nike is affected by the political factors through the tax changes, and changing manufacturing laws. The controversial ad Colin Kaepernick is a political factor which was thought to be risky but turned to a success as it let to 31% sales increase (Martinez, 2018). Any drastic changes in economic factors such as low cost of labor, and market collapse in other countries can have negative impact on a company. Example, if there is increase in labor costs in other countries, Nike may raise their prices which may lead to consumers changing their loyalty. Sociocultural factors affects a business today more than ever since customers’ trends change consistently and Nike is equipped to that.

Technology has helped Nike to drive innovation. The company uses social media tool wisely to connect with consumers and influence their relationships with customers. Ecological factor is a point of focus for Nike since its large manufacturing factories contribute to pollution. The company is constantly making efforts to adopt eco-friendly strategies for environment which can help attract new followers. A combination of legal and political factors regulate manufacturing, and overall company performance. Nike has used the PESTEL Model efficiently to understand areas of opportunity as well as threats, and used it to develop a strategic business model (Rothaermel, 2021).

Five Forces Analysis

Porter’s competitive five forces helps shape strategy: bargaining power of suppliers, the threat of new entrants, bargaining power of buyers, rivalry among existing competitors, and threat of substitute products (Porter, 2008). Nike should understand and overcome the rivalry that exists with Under Armour and Adidas since that can create competition for years. The bargaining power of buyers cannot be ignored and Nike should continue to give a good customer experience its large customer base for it to thrive. Michael Porter’s Five Forces model can show areas of opportunity and spot threats. Nike can leverage its bargaining power of supplier since it’s an area of opportunity that can help them get their products rapidly to the market. Nike has continued to perform well by understanding areas of opportunity in their market.

Leadership Role in Strategic Planning

Leadership requires having a vision and getting followers to trust in that vision. Leaders play a pivotal role in executing strategies and plans in the face of adversity. Employees trust in leaders who take action and responsibility during times of crisis to help the business navigate through the murky waters (Antipov et al., 2019). Nike needs to utilize their resources and leverage their strengths to identify new opportunities based on the internal and external analysis of the company. The company should evaluate if new ideas and innovations align with their company vision, and should not forget their core competencies when pursuing new opportunity areas. Nike should promote collaboration and trust in the internal environment which will ensure strength and prevent toxicity. To ensure long-term success of Nike, the leadership remind them their values, promote collaboration, connects with customers on a personal level, adopt creativity, and understand external factors that affect their business model.

References

Adolph, G., & Greenwood, K. D. (2015). Grow from Your Strengths. Strategy+ Business, 4.

Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., & Ansoff, R. (2018). Implanting strategic management. Springer.

Antipov, V. Y., Kurokhtina, O. Y., Maksutkan, S. M., & Anyushenkova, O. N. (2019). Some essential features of strategic planning. Наука и образование: новое время, (1), 178-183.

Baroto, M. B., Arvand, N., & Ahmad, F. S. (2014). Effective strategy implementation. Journal of Advanced Management Science Volume, 2(1), 50-54.

Gates, L. P. (2010). Strategic planning with critical success factors and future scenarios: An integrated strategic planning framework. CARNEGIE-MELLON UNIV PITTSBURGH PA SOFTWARE ENGINEERING INST.

Martinez, G. (2018). Despite outrage, Nike sales increased 31% after Kaepernick ad. Time.

Mudambi, R., & Puck, J. (2016). A global value chain analysis of the ‘regional strategy’perspective. Journal of Management Studies, 53(6), 1076-1093.

Park, H., & Kincade, D. H. (2010). Historical analysis of apparel marketer’s strategies: Evidence from a Nike case. Journal of Global Fashion Marketing, 1(3), 182-193.

Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 78. https://www.youtube.com/watch?v=mYF2_FBCvXw&list=PLoGhzQgdhGJws7SPKJqIY8FnzGm-QCcLj&index=1

Rothaermel, F. (2021). Strategic management (5th ed.). New York, NY: McGraw-Hill