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Electronic commerce considers as online transactions of goods and services of any business organization. It includes activities of exchanging products through electronic medium as social networking sites and promotes services in attractive ways. The present report is based on case study of Amazon (world famous online business entity), which facing internet sales tax law issues. Further, the case is related to tax policy in USA includes charge on online services at state level. Moreover, the report is able to present different aspects of tools and techniques of sustain transaction value and connecting link with million customers through producing qualitative services. In addition to this, relationship between stakeholders and Amazon . Thus, a structural framework of online transaction activity is framed here in systematic manner.
Amazon activates electronic transaction in Washington and collects tax only in state. As per the given case, New York passed internet sales tax law in which company has to charge tax for purchasing products. Therefore, Amazon faces problems to end up of relationship with other business industries of other states like North Carolina, Hawaii and different states of USA. Further, it indicates downwards position in competition market for electronic transactions. Analysis of online retailer position during facing tough situations is done through Bowman's strategic clock tool (Whish and Bailey, 2015). It presents sustainability and market value of Amazon products. Therefore, it is beneficial to take advantage of recognition of marketing research which generates ideas for further strategic plans.
Bowman's strategic clock focuses to determine marketing position by facing competition. The model is related to dimensions like price and perceived value of Amazon products (Amazon, 2016). Thus, strategic clock of the model involves various factors like low price and low added value, monopoly pricing, focused differentiation and risk level. Furthermore, there are eight strategies of Bowman shows various levels of product value includes hybrid, raise in prices and risk level to face challenges.
Focused differentiated:- Amazon concentrates on long term stability of electronic business transaction. Thus, applying focused differentiation, consumer can demand at high level due to high perceived value of company's goods and services (Rothaermel, 2015). Furthermore, the strategy is helpful to gain high profit margin and good relationship with buyers and also remains helpful to face case issue.
Risky high margins:- According to strategy, Amazon decides high prices for products therefore, less chances sustain products value for other states business organizations. Thus, it remains highly risk level to offer services in competitive market (Hill, Jones and Schilling, 2014). It is one of the tough task to activate transaction for price premium through facing high level of challenges.
Monopoly pricing strategy:- There is single option to face competition as well Amazon can determine pricing whatever it wishes. Thus, monopoly strategy proceed to regulate to protect company and its value regarding price determination.
Less of market share:- The strategy approaches to decide price of Amazon product at medium level (Tilman and Clark, 2014). It results to high quantity demand and other state business industry will desire to take advantage of online transactions. It remains beneficial for sustain position as well affordable prices of services are useful for customers to take advantage of product stability in country.
Although strategic clock model is able to present market position of Amazon and provides ideas to sustain value but critical evaluation identifies that strategies seems to be biased and clear concept is absent. Further, low pricing strategy and hybrid indicates to reach out achievable position and does not provide satisfaction to apply these strategies (Lang and et.al., 2012). Thus, profit margin impacts at flexible level. Hence, Amazon requires to set clear vision to maintain value and create positive attitude and perception of customers from other sates to increase productivity at large scale.
According to internet sales tax law, Amazon is suffering from changes in tax policies. It affects electronic transaction of books, MP3, videos and games negatively. Thus, Amazon and other states businesses affect financial efficiency of country (Bell and Morse, 2013).
Stakeholders:- These includes customers, employees, creditors and business entities including agents, wholesalers and other country's business organization. These are internal and external stakeholders who plays essential role to present market position of online retailer (Whish and Bailey, 2015). Moreover, political factor as tax rate, which is beyond control for Amazon effects production and profitability level.
Employees:- Amazon seeks to perform better through good performance of workers in the entities. They coordinate each other to meet effectiveness and provide high quality goods to makes place of organization in competitive market.
Owners:- Operator or creator of the entity considers as internal stakeholder analyses past activities and performance ( (Tilman and Clark, 2014). After that, step forward to activate further activities. Amazon presents industry's goodwill with useful reputation of its owner's name.
Suppliers:- Production and distribution activity of clothing as well textile goods are handled by suppliers of Amazon. Thus, marketing activity related to production and profitability performs utilization status of resources.
Society:- Online marketing of fashion products impacts positive perception of society (Helfat and Peteraf, 2015). Hence, modern society and communities get attracted towards products. On the contrary, some societies go against online marketing and believes in offline transactions.
Government:- Changes in government rules and regulations of policy plans impacts on Amazon goodwill in both manner. Increasing in interest and tax rates impacts negatively. While, decrease in interest and tax rates effects positively in monetary terms (Harrison and John, 2013). Therefore, market structure for transaction of goods and services effects as per changes in government plans.
Creditors:- These are those external stakeholder who impacts goodwill of Amazon in competitive market. Therefore, issue of ending relations with other state industries occurs because of tax charge during purchase of company's products within states. Hence, relations between Washington company as Amazon and other state like Hawaii, North Carolina and Rhode Island remains disturbed. ((Kirzner, 2015).
Shareholders:- Capital of Amazon entity depends on its shareholders. Thus, share capital of all shareholders presents financial profile of the organization. It indicates sustainability power of Amazon for facing competition. Including this, shareholders position and their capital parts attract or repulse other entities for sharing. Hence, shareholders plays great role to present company's position in market for clothing and textile items.
Customers:- Stakeholder theory identifies effect on customer, employees, suppliers and state to state as well nation to nation transactions. The theory generates idea to manage position and sustainability of products in competitive market. Thus, management of various stakeholders' position leads to reduce issue. Sales quantity and relationship with other state organizations adversely effect on goodwill of online retail industry.
Regarding market structure, increasing in tax rates reflects company's financial position negatively. While decreasing in tax rates positively influence transactions of goods and services. Although it results beneficial for government to monetary stability of nation but highly effects on country's state transaction (Gary and Julian, 2016). In addition to this, on behalf of pricing stability, company sets low price for selling products which indicates positive influence for customers but financial position of Amazon reduces.
Impact on different stakeholders emerge differently due to dynamics and adopting challenges of new techniques . Hence, online retail company requires to establish new stores in other states and improvement of relations with several businesses. Moreover, there are two aspects for Amazon to apply and expand business activity.
Relationship of Amazon with other state organization can be effective for long term sustainability of online services. Customers would be satisfied by facilities in Washington by focusing upon time consuming strategy and producing safe as similar to qualitative services.
Case related to Amazon retail industry for online transaction of goods and services from state to state. Company is facing issue for electronic business due to internet sales tax law. Changes in rules and regulations for online business activity requires to manage the issue and increase the potential of Amazon (Mayer, Melitz and Ottaviano, 2014). Therefore, solution for the problem can determined by apply McKinsey's 7's model. Retail industry manages economic stability by applying 7S model includes hard elements and soft elements.
Hard elements are strategic elements helpful in management to bring positive effects involves strategy, structure and systems. It influences business activity in planned manner. While soft elements are intangible involves factors like shared value, skills, style and staff. Hence, all elements are useful for improving strength of company to sustain product value in market. It implements strategy and evaluation of technological changes can be examined by applying these elements to create positive environment.
Strategy:- Target and strategic plans leads to enhance product value and Amazon gets strength to sustain in competitive market (Scitovsky, 2013). It develops and maintain online transaction value in market. Thus, strategy builds strength to take advantage of competition and plays role to maintain quality to satisfy customers.
Structure:- Amazon sets goal to create structural framework for business activities and coordination of employees with retail industry. Hence, structure of organization like functional, strategic and matrix leads to solve out the issue within state transactions. Systems:- Proper balance between production and supplement of books, videos, movies and games comes under system element. Activities which sets to be activate get segmented and integral planning process proceed to high level of online transactions of Amazon products (Schmitz and Lema, 2014).
Shared value:- It is beneficial to create link between competitive advantage and corporate social responsibility (Bloom and et.al., 2015). Moreover, shared value is one of the main element for Amazon to survive competition and sustain products value in market. It results to effect interstate online transaction of services.
Skills:- Implementation of skills to face tough competition and competencies of the workers of Amazon retail industry (Bell and Morse, 2013). Therefore, company can expand business activity through determining pricing strategy to manage issue.
Style:- Leadership style to follow on strategic plans requires to reach out the target. Manager of the organization leads role to handle the situation and implements as well evaluates the actions (Kirzner, 2015).
Staff:- It includes various factors like demographic, educational and human resource to develop performance Amazon for online transactions. Therefore, attitude and perception of customers towards products would be positive.
Although company can sustain its product value in competitive market but steps are not clearly views that what step to be initiate first. It also does not focus upon different departments that what element is suitable for which functional department (Lang and et.al., 2012). Hence, company requires to create a structural framework and planned strategy to expand business and producing qualitative products.
Amazon considers able to face competition against Sony and other effective entities of online marketing through applying strategic capabilities. It involves proper planning for resource allocation as well competences core to advertise products and sustain products at large scale. Strategies are made on behalf of ability to handle production and supplement same as able to sustain products in effective manner.
Resource based view:- Proper management planning for resources including raw material to finished goods is able to survive in competitive market (Tilman and Clark, 2014). It takes advantage to grab opportunity to achieve customer satisfaction. Further, different departments of Amazon retail industries sets target and implements plans to optimum allocation of goods and services. Thus, effective performance of organization seems to coordination of all departments with each other and proper planning to achieve balanced production and supplement of electronic items and its delivery in right time (Hill, Jones and Schilling, 2014). Further, it plays supportive role for financial growth and good reputation of company. A proper idea generates to manage flow of resources and funds effectively for further activities. In addition to this, systematic marketing research leads to decision making process to balance requirements and production of goods and services. It provides systematic quantity and quality structure for distribution and manufacture of books and grocery items to develop in market (Rothaermel, 2015).
Competences:- It involves strategy to face competition and provides elements to maintain and sustain product's value in market. Therefore, various efforts are applies for marketing strategy and accept changes according to flexibility and uncertain changes. Amazon scan take advantage of competition by producing qualitative products makes place with using different strategies (Tilman and Clark, 2014). It is beneficial for country to increase awareness of customers towards electronic services and taking advantage of competences as core value to gain effectiveness in retail industry.
The report considers Amazon case study to solve out issue. Great marketing activity to promote and sustain value of products and online transactions presents various tools. Therefore, proper idea generates to create positive environment and manner to increase strength is obtained here. Determination of various elements to maintain market position and transaction of business activities considers here efficiently. Hence, solution for business expansion and sustainability manner to increase product value is determined. Moreover, various aspects are to be understand by learning core skills and competences effectiveness of products. It leads to large quantity demand and improves awareness for online business organizations.
Bell, S. and Morse, S., 2013. Measuring sustainability: Learning from doing. Routledge.
Benn, S., Dunphy, D. and Griffiths, A., 2014. Organizational change for corporate sustainability. Routledge.
Bloom, N. and et.al., 2015. The impact of competition on management quality: evidence from public hospitals. The Review of Economic Studies. 8(4). pp.41-45.
Harrison, J.S. and John, C.H.S., 2013. Foundations in strategic management. Cengage Learning.
Helfat, C.E. and Peteraf, M.A., 2015. Managerial cognitive capabilities and the microfoundations of dynamic capabilities. Strategic Management Journal. 36(6). pp.831-850.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Kirzner, I.M., 2015. Competition and entrepreneurship. University of Chicago press.
Lang, D.J. And et.al., 2012. Transdisciplinary research in sustainability science: practice, principles, and challenges. Sustainability science. 7(1). pp.25-43.
Mayer, T., Melitz, M.J. and Ottaviano, G.I., 2014. Market size, competition, and the product mix of exporters. The American Economic Review. 104(2). pp.495-536.
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