Amazon Forum

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Strategic Profile and Case Analysis purpose (INPUTS and OUTPUTS: Chapters 1-3)

Amazon’s strategy is built on reaching many consumers and ensuring that they give the best satisfaction using the internet and technology as their primary platform. Amazon assesses the costs, risks present, and also the benefits to be accrued (Martínez-Sánchez et al.,2021). From this, it can achieve its mission of being the best company in giving its customers the best services at a low cost.’

Situation Analysis (INPUTS and OUTPUTS: Chapters 1-3)

  1. General environmental analysis (This involves demographic information)

Amazon uses the PESTLE model in analyzing external factors affecting it.

  1. Political factors- The political stability of developed countries like the USA significantly impacts the company. Support from the government is an opportunity to enable expansion in other markets (Martínez-Sánchez et al.,2021). However, the support can also be a threat from other competitors rising. Government fight in cyber crimes improves business for Amazon;
  2. Economic factors- economic stability helps reduce economic issues in the macro-environment reducing risks to the expansion of Amazon to those areas. The economic decline of China threatens Amazon as it is one of the biggest markets it wants to get into.
  3. Social factors- increase in consumption in developing countries is an opportunity for Amazon to increase the market for Amazon products.
  4. Technological factors- cyber crimes have become a significant issue in most countries, and this is a threat to Amazon as it is majorly based on the internet. Improvement of new technologies is an opportunity for Amazon as it helps improve its performance.
  5. Environmental- increase in reduction of greenhouse gases is an opportunity for Amazon as it can show its image as the top in the e-commerce industry (Martínez-Sánchez et al.,2021). Business sustainability improves environmental standards and strengthens the image of e-commerce.
  6. Legal factors- the change in the laws of imports and exports is an opportunity for Amazon as it has a chance of exploiting the sellers who can access supplies from outside.
  7. Demographic factors- aging of the population presents an opportunity for Amazon as it gets a new market by ensuring that health care services reach those who are aging.
  8. Industry analysis (Remember the Five Forces Model)

Amazon uses Porter’s model to analyze the external factors that affect the industry environment in the online retail market.

  1. Competition- availability of substitutes is a strong force for Amazon because it is the substitute for its competitors like Walmart. Competition is an excellent strategy in ensuring that the company stays in business for long.
  2. Power of customers- low cost of customers transferring from one firm to another is a strong force for Amazon as customers may transfer to other firms (Martínez-Sánchez et al.,2021). Access to information to the customers about Amazon significantly impacts the company as the customers can find information about other firms and make them the alternatives.
  3. Power of suppliers- fewer suppliers have a significant force on Amazon; if the small group of suppliers changes prices for their supplies, that directly affects Amazon.
  4. The threat of substitutes- the low cost of replacement significantly impacts Amazon as customers will tend to buy the less expensive products.
  5. New entry- the high cost of developing a brand has a weak impact on Amazon as it would take a lot of time before establishing a brand that can compete with it.
  6. Competitor analysis
  7. Identifying the strengths and weaknesses- Amazon identifies its strengths and sees what advantage it has in the market (Martínez-Sánchez et al.,2021). Analyzing the weaknesses also helps in knowing the sectors that require improvement.
  8. Understanding the market- in identifying its competitors, Amazon needs to look at the market because there might be a company it does not know or consider, yet it is a competitor.
  9. Industry trend- Amazon learns the industry trends to know how the competition is fairing and to see the industry’s direction.
  10. Setting benchmarks- Amazon identifies the larger and smaller companies than it, which helps it establish a good model considering even the rising companies (Martínez-Sánchez et al.,2021). All this is to ensure that it continues to exist in the industry.
  11. (SWOT Analysis): Identification of Environmental Opportunities and Threats (External)
  12. and Firm Strengths and Weaknesses (Internal). What economic and market
  13. indicators could impact your organization’s ability to compete? In addition, provide
  14. the following financial ratios: (1) return on total assets, (2) operating profit margin
  15. (or return on sales), (3) net profit margin (or net return on sales), and (4) current
  16. Describe what these mean to your organization.
  17. Strengths- Amazon is the leading g online retailer globally; thus, most people know about it, which gives it new markets worldwide.
  18. Weaknesses- Amazon has a strategy of offering free shipping to its customers, which puts it in the danger of losing margins making it unable to optimize cost.
  19. Opportunities- Amazon has an option of improving its margins through the increase in online shopping, and consumers have that in mind in terms of privacy and security.
  20. Threats- Cyberbullying is a significant threat to Amazon as the hacking may expose its customer’s data.

Amazon’s return on an asset in the year 2021 was 24.2%, and its operating profit margin was 5.30%. The net profit margin was 7.1%. It also has a current ratio of 1.14. This means that Amazon’s growth rate is increasing.

  1. Strategy Formulation (Remember Chapters 4-9)
  2. Current Strategy—Business-Level and Corporate-Level Strategies, M&A,

Alliances

  1. Corporate level- this tends to show the firm’s areas set to operate. It shows the path for the business to achieve its vision (Bin, 2020). It also indicates if a firm needs to continue competing or exit.
  2. Business level- it outlines specific strategies of the business it gives an outline of where the company stands with its competitors.
  3. M&A Alliances- this shows whether firms need to work together on mergers and acquisitions.
  4. Strategic alternatives to the strategies in (a) above
  5. Market penetration is a strategic alternative to the corporate-level system where the company aims to increase its current sales (Bin, 2020). Here, it aims at increasing the market share for its consumers outside the regular business areas.
  6. Market development- this is an alternative to the business level. Here, the company aims at stealing consumers from other manufacturers. This will automatically affect its relationship with the competitors.
  7. Diversification- this is an alternative strategy to M&A alliances. In this strategy, the company enlarges its range of business.
  8. Alternative evaluation (different from what is currently being used by the

organization, if applicable)

Evaluating alternatives enables the business to make the best decisions on which options to allocate in the plan (Bin, 2020). It helps in knowing what to do in case of a particular n risk or what to do if a new opportunity that was not accounted for presents itself. The names alternatives need to be compared against each other, looking at the advantages and disadvantages of each. It is also essential for a business to consider each alternative’s impact on the market and the industry at large.

  1. choice (if applicable)(In this section, you will identify the strategies discussed in class: business level and corporate level strategies, cooperative strategies, merger and acquisition strategies, and international strategies).
  2. Cost leadership: The leading market company sets the price of a product, and the competitors have to match that price. This is applicable at both the business and corporate levels.
  3. Differentiation; a firm decides to take a factor or two that consumers perceive as essential and implement it, making itself unique compared to other firms (Bin, 2020). The business and corporate levels both have this strategy.
  4. Horizontal integration- in this strategy, a firm acquires another similar to it for expansion. This can be significantly seen at the corporate level, mergers and acquisitions, and international design.
  5. Vertical integration- here, there is a supply chain formed from manufacturing to distribution. It can also be described as a supply line of a product.
  6. Strategic Current and Alternative Implementation Strategy (Remember Chapters 10-

13)–governance policies, current organizational structure and controls, leadership

style.

  1. Action items

Who- this helps identify the person to be dealing with the specified task, and this helps to ensure that the specific person is selected.

This part helps the person know the kind of task they are expected to perform in implementing the strategies.

When- this is the set time or deadline as to when the specified task must have been performed.

  1. Action plan

(Here, you will identify implementation strategies discussed in class in addition to

identified strategies discussed in class that included:  corporate governance,

organizational structures and controls:  strategic and financial management, what kind

of leadership is being used, and corporate entrepreneurship, innovation, and

strategic competitiveness as part of the Action items and Action plans).

Resources- this list outlines where all the required resources are at. It also explains what every member needs to do for effective implementation.

Potential barriers- all the risks likely to occur in the business for the chosen strategies. The selected alternative methods are to be used hereafter. They have all been evaluated, and the perfect one has been picked.

 

 

 

 

 

 

 

 

References

Bin, S. (2020). K-means stock clustering analysis based on historical price movements and financial ratios.

Martínez-Sánchez, M. E., Nicolas-Sans, R., & Díaz, J. B. (2021). Analysis of the social media strategy of audio-visual OTTs in Spain: The case study of Netflix, HBO and Amazon Prime during the implementation of Disney+. Technological Forecasting and Social Change, 173, 121178.

Selvi, S. Mergers and Acquisitions-A Major Prospect for Business Sustainability.