Introduction
Organizational leaders in the contemporary work environment have a responsibility of ensuring that they guide their entities into building a competitive advantage in the market. Yahoo and Amazon are good examples of businesses that have successfully built a competitive edge over other players in the industry. Yahoo is a multinational company based in the United States of America. The company was founded in 1994 by Jerry Yang and David Filo.
Its current headquarters are located in Sunnyvale, California (Fiore & Tang, 2013). Yahoo is an internet corporation famous for various products and services. One of its commonly used products and services include its Yahoo search engine, Yahoo mail, Yahoo news, and Yahoo answers among others. Under the strong leadership of its chairman Maynard Webb and Chief Executive Officer Marissa Mayer, Yahoo managed to achieve market leadership with total equity of $ 13 billion in 2013.
Its numerous products and services coupled with strategic planning have enabled Yahoo to attain a competitive advantage over others in the industry (Fiore & Tang, 2013). Yahoo offers its customers real value for their money by offering products and services that meet their various needs.
Its portal allows users to do things such as communicating, content reading, mobile blogging, advertising, and commerce among others. Despite working in a highly competitive market, Yahoo has managed to remain among the major industry leaders for a long time (Fiore & Tang, 2013).
On the other hand, Amazon is an American online retail company. The company was started in 1994 by Jeff Bezos. It has its headquarters in Seattle, Washington. Amazon is one of the largest online retail stores for books, movies, music, games, electronics, groceries, as well as general home and garden items (Sehgal, 2010). The company is owned by the Capital Group of companies and has more than 130,000 employees.
It has operations in most countries across Europe and Asia. Over the years, Amazon has managed to make great strides in the highly competitive online retail business to achieve a competitive edge over other companies (Sehgal, 2010).
The company has managed to grow from just an online book store into one of the largest internet based retail businesses. Through strategic management, Amazon has used innovation and a customer service model to achieve market leadership. The company is a recognizable brand in the American market, with over 20 million active users (Sehgal, 2010).
Strategic approaches that have influenced success at Yahoo and Amazon
Achieving a competitive advantage in the contemporary market is very hard. Studies have established that running a business in the 21st Century requires a combination of both effective leadership and strategic planning (Canzer, 2006). Every business requires a strong foundation that dictates the process of planning and organizing its resources in a strategic manner.
For a business to achieve a competitive advantage, it should ensure that its objectives, human resources, and organizational culture are strategically focused on achieving market leadership. Strategic planning aimed at building competitive advantage for business entails the need to reorient the business model with a thorough market analysis (Canzer, 2006).
According to experts, market analysis plays a crucial role in helping a business achieve market leadership. It helps to establish important elements such as consumer behavior, size of the market, potential competitors, as well as the possible threats and opportunities in a particular market.
The key strategic approach used by Yahoo has been talent acquisition, while Amazon has mainly been focusing on the value of thorough market analysis. Yahoo operates in the market by creating new products, thus the need to prioritize a diverse workforce. On the other hand, Amazon has been focusing on taking full control of the book industry, thus the need to identify threats and opportunities in regard to their plans of building a competitive advantage.
For example, when Marissa Mayer was appointed the Chief Executive Officer in 2012, her first goal was to initiate a redesign of crucial elements of the company. In order to make Yahoo a major product in the lives of its users, Mayer oversaw the redesign of the company’s home page, logo, and crucial services such as Yahoo mail (Fiore & Tang, 2013). At Amazon, the decision to introduce its own printing system allowed it to take full control of the supply chain.
Compare and contrast the approach to strategic management
Studies have shown that many highly competitive businesses give a lot of attention to consumer behavior. This is common between Yahoo and Amazon, as they both aim at making the customer happy first. Customer satisfaction is the difference between a successful and unsuccessful business (Canzer, 2006).
Good market analysis also helps a business in building strategic plans by identifying and predicting market trends that are likely to emerge and affect its competitiveness (Canzer, 2006). Both Yahoo and Amazon have applied a number of strategies that have facilitated their success. Some of the strategies applied by Yahoo have been very different from the one used by Amazon.
First, Yahoo focuses mainly on achieving customer satisfaction as a basis for prolonged success (Fiore & Tang, 2013). This is an intended strategy that has boosted the company’s reputation across the industry. The company has been facing stiff competition from other businesses such as Google and MSN, which have similar products.
Many people that were using Yahoo Mail when Google Mail was launched requested the company to redesign in order to improve their user experiences. This helped the company to stabilize its customer base amidst competition from other players. The company has mastered the art of making its products and services a major product in the lives of consumers.
The second intended strategy applied by Yahoo is the acquisition of various start-up companies. This strategy has been very effective in consolidating the company’s position as an industry leader because of increased capacity for influencing new trends (Fiore & Tang, 2013). Yahoo acquires other companies for three major reasons, namely talent development, news reporting, and broadening of demographic options.
Some of the companies acquired by Yahoo that have helped in the attainment of these goals include Summly and Tumblr (Fiore & Tang, 2013). Another emergent strategy that has given Yahoo competitive advantage is the improvement of its mobile site. The number of people accessing the internet through their mobile devices has been on the rise in recent years. With an easy to use the mobile site, Yahoo remains highly competitive in the technology and communication industries (Fiore & Tang, 2013).
On the other hand, Amazon has had its own strategic plans albeit different from those used by Yahoo. Studies have established that the launch of internet-based retail stores has had a negative impact on physical stores. The convenience and reliability offered by internet-based retail companies have encouraged many people to shy away from visiting physical stores (Sehgal, 2010).
Over the last couple of years, Amazon has faced a lot of competition from other internet-based stores, as business developers try to make the most out of the opportunity. Many people have criticized the kind of strategies used by Amazon, especially in dealing with the numerous challenges facing the retail industry. The first intended strategy used by Amazon has been the willingness to let others misunderstand them rather than exploit their weaknesses (Sehgal, 2010).
The online retail industry is facing a challenge that regards their prices compared to those on physical stores. While other companies were busy giving their reactions to the same, Amazon decided to stay out of the discussion. Instead, it used the debate to promote its new campaign called “Occupy Amazon”. Amazon’s ability to focus on setting their objectives a level higher than that of their competitors has enabled it to achieve market leadership (Sehgal, 2010).
It focuses on achieving customer satisfaction and a good presence in the market. It understands the need to have a shared vision with its customers for the sake of increasing their loyalty. This intended strategy has helped the company to attract many customers due to its straightforward image.
Another strategy that Amazon applies is the need to embrace diversification. This was an emergent strategy that came through due to high competition in the market. The company started as an online book retailer store but has embraced the spirit of diversification to increase its products and services. Amazon has been very effective in developing its business strategy in a manner that embraces the latest technology (Sehgal, 2010).
It is very different compared to other major industry players such as Google, Apple, and Facebook. Amazon did not enter the industry with an innovation perspective like the aforementioned companies, but it has combined various technological elements in order to build a successful enterprise.
Good organizational structure an intended strategy that Amazon has used to attain coma competitive advantage in the market. The company has managed to develop its business strategy along with a with an organizational structure that uses the creativity of others to build a business (Sehgal, 2010).
Market competitiveness and its impact on strategy development
The competitiveness in the market has also influenced how Amazon and Yahoo have develops its strategies. Before Amazon came into the market, people were complaining about the difficulty of keeping books they had already read. Due to high competition and the need to acquire a sizeable fraction of the market share, Amazon launched a portal that would allow people to sell old books (Sehgal, 2010).
This strategy helped to consolidate the company’s position in the industry, as other players could not match its desire to fulfill increasing market demands. Other notable business strategies by Amazon that were influenced by high competition in the market include the launch of its affiliate program, creation of the e-book experience, and the creation of a 24-hour shipping model (Sehgal, 2010).
On the other hand, Yahoo has been forced to deal with Google as its main competitor. Since Google was offering its customers more social networking services, Yahoo had to improve on its top products such as Yahoo news. However, Yahoo’s numerous acquisitions enabled it to have the most influence on the kind of trends surviving the industry. Yahoo’s high competitive nature has also enabled it to be a trendsetter by introducing new products in the market.
Conclusion
Both Yahoo and Amazon can apply certain functional level strategies to achieve superior efficiency, improved customer experiences, and better innovation. For Yahoo, I would recommend the improvement of its instant messaging service. This service has changed the whole concept of communication, as other players like Facebook, Google, and Tagged are gaining ground owing to the effectiveness of their products.
Yahoo should increase their aggressiveness in terms of identifying emerging trends in the market. As for Amazon, I would recommend the creation of a program through which customers can earn points for every payment made. This program would encourage people to shop from their stores because they can earn points, which can be redeemed for products of their choice from different stores.
References
Canzer, B. (2006). E-Business: Strategic Thinking and Practice. New York: Cengage Learning.
Fiore, F.F., & Tang, L. (2013). Launching Your Yahoo! Business. New Jersey: Cambridge University Press.
Sehgal, V. (2010). Supply Chain as Strategic Asset: The Key to Reaching Business Goals. New York: John Wiley & Sons.