Introduction
Environmental scanning means that it is a process that will examine and help to clarify all the necessary information which will help a company to identify possible opportunities and to identify all potential threats. A business will acquire all the information they need about an external environment, any competitors they may have, and acquire information about their own company. Once all this information is gathered the company takes an action plan and makes any necessary changes needed. The company I chose for this assignment will be Amazon.com.
Internal and External Environments
Amazon has proven themselves to be the biggest online retail market in the world, who hasn’t at least once shopped online at Amazon? They didn’t always start out this way though, they originally began as an online bookstore. As that started to become successful they realized the potential market they had with branching out and selling other items such as clothing, electronics, and more. When Netflix came out with a streaming service Amazon decided there was a massive market in this and started their own streaming service with their Amazon Prime membership, they even went further and allowed prime members to stream music ad free as well. I was able to conduct a SWOT analysis to get a great idea on the internal and external environments for Amazon.
SWOT analysis’ gather information about a company and everything else around them to produce a summary of that company’s strengths and weaknesses, this helps that company to make changes to improve themselves in the business world. Amazon has been great at utilizing these analyses to make the appropriate changes to their company, as their products they sell change drastically all the time and they need to be very adaptive to their surroundings. Amazon was able to partner with a multitude of businesses, so they can sell pretty much anything you would need or want. Another huge success was when Amazon decided to go to the global market and sell goods to people all over the world, this helped them stay ahead of the competition. Even though Amazon is a major corporation with a lot of strengths they do have weaknesses as well, just like any other company. One of their biggest weaknesses is that their concept can be replicated quite easily as anyone can start up a website and sell goods and services to customers. Another downside even though this seems to be fading today is that they don’t really have any stores where a customer can walk into and buy items, they are mainly just distribution centers that are located through the country. Amazon is missing out on the customer base that doesn’t usually shop online and online shopping isn’t really something they are comfortable with.
Competitive Strategy
Recently there has been a huge increase in customers shopping online instead of going to the traditional brick and mortar stores, if you have been to most malls in any towns you can see that these stores are struggling mightily and have begun to close stores. Amazon has become so massive that they account for nearly 50% of all sales for the top 500 retailers, this shows how successful Amazon has become in a short period of time and proves to the industry that developing a proper competitive strategy is vital to their success. Amazon ranks in the top 13 for total value of a company coming in with a whopping $28 billion. The importance of this is because it shows that the consumer prefers to shop here instead of a competitor like Walmart or BestBuy for instance.
Creating Value
Amazon was created originally to sell a wide variety of books at a cost effective or competitive price online. Customers were drawn to this because they could easily find the books they were looking for and were happy with the prices they were paying for them. Creating an easy to use website that is user friendly and appealing to the eye helps customers by keeping their frustration low and allowing them to find what they needed more effectively, which was an important part of their competitive strategy. As more and more people flocked to Amazon they decided there was a market to offer more products and they started with movies and music, since this was also successful they decided to contact companies and offered them a spot on their website to sell their products. By doing this Amazon was able to appease their customers and decided to fully expand their business model to offer anything that a company would allow them to advertise on their website. Doing this allowed them to attract new customers and increase their sales, it helped them gain the competitive advantage they needed to grow into a massive corporation.
Measurement Guidelines
In order to measure how effective a strategy is you need to examine how it interacts with your goals in your strategy. Amazon uses specific guidelines to verify their strategic effectiveness which was to value their customers and to adapt and grow to an everchanging market. They put this strategy into place to help them increase their sales and to attract more customers to shop on their website. When all of this shows an increase, they are proving that the strategies they implemented are very successful and that they are functioning as intended.
Effectiveness of Guidelines
When any company not just Amazon sees how well their company is doing financially they can begin to understand that their strategies they have put into place have been a smashing success. Amazon has continually expanded into new markets to keep attracting more customers and compete with other companies such as Netflix. Amazon was able to adapt to their weaknesses and develop them into strengths and take their strengths and make them even stronger, they went from a small online shop selling just books to now selling almost anything you could ever want.
Conclusion
Amazon has become a smashing success due to their effective strategies and them being able to identify their weaknesses and turn them into strengths. Having upper management that is able to identify all of these weaknesses and adapt them into strengths is what sets a company apart from others and helps them to become more successful. When Amazon does their environmental scanning, this allows them to adapt and change and then grow when other companies struggle to do this.
Reference Page
Bartes, ., & Frantisek, . (2010, spring). Modern Competitive Strategy Firm. Acta Universitatis Agriculture, 58(6), 51-58.
Ungureanu, M. (2012, Summer). Social Accounting Factor for Developing the Enterprise's Internal and External Environment. Bulletin of the Transilvania University of Brasov, Economic Sciences, 5(1), 169-176.
Ratnasingham, P. (2006, Spring). A Swot Analysis . International Journal of Cases on Electronic Commerce, 2(1), 1-22.