STATEGIC MANGEMENT AND BUS POLICY UNIT III

Running head: SWOT ANALYSIS 1

SWOT ANALYSIS 4

SWOT Analysis

Lana C. Ybarra

Columbia Southern University

June 4, 2019

Amazon SWOT Analysis

Amazon Corporation is one of the largest companies in the world right now. It deals with a variety of products, from books to electronics, which they sell to potential customers around the country. Amazons popularity has risen over the years because of its cheaper products and tendency to meet customers’ demands. The company was incorporated by Jeff Bezos back in 1994, and by 1997 it had already gone public. Amazon Corporation has been in business for so many years, and not so many people understand why they have been so successful. Thus, scholars tried to carry out a SWOT analysis to find out the answer to this question.

Internal and Controllable Factors

Strengths

Amazon Corporation has numerous strengths that help it to survive and thrive in these diverse business environments. These strengths are not only beneficial when they want to penetrate a particular market, but they are also valuable in protecting the company's market share (Leigh & Pershing, 2006). For instance, Amazon has superb performance in new markets because of its experience and their ability to expand has helped them to diversify the economic cycle risk in the market that they operate in.

Amazon Corporation has a good track record for product innovation, and its strong brand portfolio has helped the organization to expand into new product categories. Amazon Company has a robust financial structure that provides resources into the hands of the organization to expand into new markets. The company has a highly skilled workforce due to its training programs. Reason being, they have allocated vast resources into practice and developing a workforce that is not only skilled but also motivated to achieve the company's goals and mission in the shortest time possible.

Weaknesses

Amazon Corporation has not been able to fill in the gaps created by the products they sell, and this ignorance can give their most active competitor a foothold in the market. The company also needs more investments in new technologies. Reason being, they are expanding every day, and they need new technologies to integrate all these processes across the board.

Amazon Corporation has a business model that anyone can easily duplicate (Bernroider, 2002). The company's investment in Research and Development is nowhere near its fast-growing competitors in the industry. In other words, the company needs to be at the same level as its competitors in terms of innovation to attract new and loyal customers. Lastly, Amazon Corporation has a high attrition rate on their employees. Here, the company puts more resources on the development of their employees compared to its competitors. However, they need to find a way around it for them to be the best in the market.

External and Uncontrollable Factors

Opportunities

Amazon Corporation has so many possibilities that it can use its advantage. The company can take advantage in the jump in revenue of customer spending as well as economic hype to increase its market share and capture new customers. The company can also gain the opportunity to grow and widen or penetrate its operations in developing markets. They can also do backward integration by bringing in in-house brands in distinct product categories to differentiate its offerings. Amazon can improve on its organizational policies and technical measures to reduce counterfeit sales. And by expanding its physical online stores, Amazon corporation can engage customers with the brand and improve competitiveness against its largest competitors.

Another opportunity that Amazon can maximize on is that, instead of being a forwarding site for third-party products, the company can roll out products under its brand. The organization can also acquire e-commerce companies to reduce the competition level and take advantage of its functional capacity. Similarly, Amazon can create a higher international market segment because of its popularity, and it can also develop telephone support that will allow customers to reach them anytime they have a problem. Finally, Amazon can use new technologies to practice differentiated pricing strategy in their unique markets. Such a move will enable the firm to lure in new customers through value-oriented propositions and maintain its loyal customers with excellent service.

Threats

Threats are uncontrollable factors that reduce business performance, and Amazon Corporation faces a significant amount of threats in their online retail market. For instance, the rate at which there are new raw materials in the industry poses a threat to the company’s profitability. Also, the enactment of the new environmental regulations under the Paris Agreement (2016) could pose a threat to the already existing product categories. Growing strengths of local distributors, especially in India, presents a threat in some markets as some competitors are known to pay higher margins to the local distributors. Amazon corporation also faces currency fluctuations in countries that have volatile climates leading to loss of profits. The network security system of the company can also be affected due to the increase in cyber-crimes around the world.

Another threat is that Amazon's brand image can be effected as we saw back in 2010 when the company experienced a few controversies. Low entry barriers are also a risk because when more companies join the industry it leads to tough competition and price wars. Amazon also faces lawsuits from publishers and rivals in the retailing industry because of its aggressive pricing strategies. Unfortunately, the continuous change in market trends is also a risk as it makes the company reevaluate their options. And lastly, the imitation of low quality and counterfeit products is a threat to Amazon Corporation, especially in low income markets and emerging markets.

Conclusion

In conclusion, Amazon corporation has so much work to do, and this SWOT analysis can be an added advantage to them as they can use it as a guide and a roadmap to implement their strategies while going forward. The analysis can also help them to focus on profitability and not volumes alone because if they want to be competitive in the future, they have to be diverse. In other words, the company can consolidate market dominance, deal with global controversies, and enhance its strategic entry when dealing with hostile countries. In the end, they will be a force that no one wants to reckon with.

References

Amazon.com, Inc. Form 10-K. Retrieved from https://sec.report/Document/0001018724-18-000005

Bernroider, E. (2002). Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. European management journal, 20(5), 562-573.

Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of management, 29(6), 801-830.

Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.