Table of Contents
- Quantitative Strategic Planning Matrix (QSPM)
- Recommended Strategy
- Strategy Implementation
Quantitative Strategic Planning Matrix (QSPM)
One of the best ways to evaluate strategies for an organization is through the Quantitative Strategic Planning Matrix (QSPM). This tool provides a high-level strategic way to assess different types of strategic options through an analytical method that compares different alternatives. This process requires refined intuitiveness and subjectivity. The key word here is being “objective” and thoughtful when contemplating which strategies might work best. Besides being objective, one must also take advantage of the inputs gathered from the previous matrixes.
The benefit of this is that by using the information from the other management tools, we can develop a more succinct and objective strategic goal. The QSPM uses calculation from stage 1 analysis which are the EFE matrix and IFE matrix. Next, results from stage 1 and stage 2 analysis are then compared. Stage 2 management tools are the SWOT analysis, BCG matrix and the IE matrix. The last step is to narrow down the list of alternative strategies by order of importance by using a calculated approach and key strategic factors. The agenda here is to decide which strategy will help accomplish a company’s desired goals. Stage 3 in the QSPM is conceptual in the sense that strategies are selected depending on relative attractiveness. The relative attractiveness of our strategies is mostly based on external and internal critical success factors that have a cumulative effect.
The idea behind the QSPM matrix is to formulate and compare two possible alternatives formulated from stage 1 (IFE, EFE) and stage 2 (BCG, IE). Based on the information I gathered, I believe that Amazon, Inc., should focus on developing more customer-centered technology or pursue an aggressive strategy to increase their e-commerce presence in Asia and the Pacific region. We are all aware that Amazon business plan has been able to catapult them into the e-commerce success that it is today. The structure of their business plan includes customer-centered strategies and testing new opportunities in the market made possible through digital innovation. Of course, their directional strategy of testing and analyzing new products and services and expanding into foreign markets have certainly improved their results exponentially. On the QSPM analysis we can observe that “increasing e-commerce business in Asia and the Pacific region” has a total attractiveness score of 6.28.
On the other hand, “developing customer-centered technology” has a total attractiveness score of 5.2. Based on this QSPM analysis performed for Amazon, Inc. it is recommended that Amazon should implement corporate level strategies that aim to increase their market share in South East Asia and the Pacific region. As of now, Amazon has control of approximately 49.1 percent of all online retail purchases in North America. That is equivalent to approximately $258.22B just for the year of 2018 (Lunden, 2018). This is no doubt a result of Jeff Bezos’ expertise and ability to scale rapidly and make of Amazon a megabrand. However, business success is not guaranteed. Many factors within a company strategy can determine if success will be occasional or if it can be sustained over a period of time. When a business has occasional success, it has a very profitable beginning but then this temporary success begins to fade away. Amazon has undeniably proven to be a competitive company with brilliant ideas that have transcended customary ways of shopping.
They have implemented products/services that have helped in conquering a vast majority of the North American market. But because sustainability isn’t promised, diversifying into new markets should be a number one priority for Amazon. Amazon should then, devote time, energy and resources on the development of a sustainable marketing strategies that help to penetrate the market in Asia and the South Pacific region. By implementing evolutional strategies built on a secure foundation, Amazon should be able to grow their business and increase their profits through this strategic market development.
The reason why I believe that Amazon should expand its market reach into the Asian and North Pacific Region is rather simple; external factors cannot be controlled, and they can either have a positive or negative influence on a company. This means that Amazon’s influence in the North American market is not guaranteed to remain lucrative. Which is why leveraging on the power of synchronized connections to expand into new territory is a promising opportunity for Amazon. Simply put, Amazon thrives in a the medium of interconnected markets. Historian and author James Burke said, “We live surrounded by the end product of thousands of connections, and in every moment that goes by, more connections are made”. Because of the nature of business-interconnected markets, it is logical to acknowledge the various effects that external situations can have on a company. As we have learned, external influences cannot be directly manipulated, but we can categorize them as Opportunities and Threats.
Amazon’s direct rival in South East Asia is Alibaba Group. The company is one of the largest companies in China with a market share of approximately $480B and it is considered one of the most valuable companies in the world (Ritcher, 2018). This Chinese conglomerate is often compared to Amazon because of the similarities of their business models. At this point, Amazon has no direct influence on Alibaba and it is clear that this company has an advantage over Amazon in terms of interactions and transactions in the Asian market. As a result, the best option would be to closely study Alibaba and evaluate their current strengths and weaknesses. By doing this, Amazon can use those flaws found within the company, such as product quality for instance, or proper customer service, and invest into creating a better version of that themselves in order to gain an advantage.
Another way of gaining market share in South East Asia is by pursing value-creation opportunities that consistently strive to place Amazon at a competitive advantage. Having a competitive advantage can translate to Amazon consistently reinventing itself, gaining agility as their presence becomes more visible in the Asian market’s systems, processes, and their supply and demand chain. Demand, in particular, should be a critical aspect of Amazon’s marketing strategy as a new entrant to a foreign market because if there is no demand, there is no business. In all customer-driven economies it is important to identify potential opportunities and have a plan to take advantage of them. In Amazon’s case, they could improve upon existing products or offer revolutionary products that are not yet offered by the competition. Having a prospective vision can make Amazon’s success attainable in the Asian market. I do recommend that they still focus on the actual needs of customers and identify and fulfill those needs that other competitors are not aware of.
Thus, to expand its market share into Asia and the North Pacific region, Amazon should create demand and attract new internet buyers through efficient marketing strategies, gain greater visibility in the supply chain and optimize demand by offering greater product categories. Finally, Amazon should capitalize upon the increasing number of internet buyers. Year after year, online sales have a steady impact as more and more people entrust their money to internet-based companies. Therefore, positive dynamics of online product/services is a modern trend that Amazon should leverage on. Integrating our way of doing mundane activities with the power of a technology represents various ways in which Amazon can turn possibilities into profitable opportunities. The key here is to create an “ecosystem” that entices customer to remain loyal to Amazon at least for the next decade.
- Lunden, I. (2018, July 30). Amazon’s share of the US e-commerce market is now 49%, or 5% of all retail spend. Retrieved from https://techcrunch.com: https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-commerce-market-is-now-49-or-5-of-all-retail-spend/
- Ritcher, F. (2018, May 7). China's Amazon Is Not Quite Amazon Yet . Retrieved from https://www.statista.com: https://www.statista.com/chart/13759/alibaba-vs-amazon/