Project Topic

STRENGTHS

Strengths are the internal strategic factors that an organization leverages on to grow its business (Grant & Jordan, 2015). Amazon leverages on the following factors to support its success and ongoing growth:

· Strong brand - Amazon boasts the strongest ecommerce brand as a leading online retailer. This has resulted in its rapid growth over the past decade

· Extensive product range – Amazon has a wide product mix which makes it convenient for shoppers. The wide product range also boosts its service attractiveness which keeps its customers loyal (Stone, 2014).

· High revenues – Amazon’s revenues enable the firm to be cash rich and maintain financial health. This enables the company to invest in new businesses and growth areas. The company has for instance expanded into video streaming. This will enable it to maintains its position in the technology sector which is highly dynamic and fast-changing.

· Customer centricity -Amazon gathers considerable data on consumer behavior. The company can leverage on this data to provide a better value proposition to its customers (Landau, 2013).

· Cost leadership – Amazon has created strategic alliances with various manufacturers which enable it to provide products at competitive prices

· Efficient distribution network – Amazon has created a well-structured delivery network that enables it to fulfill orders at record speeds comparative to other online retailers.

WEAKNESSES

Weaknesses are the organization’s internal factors that limit its growth (Tracy, 2015). For Amazon, they include:

· Decreasing profitability – Amazon faces shrinking margins due to the costs of its extensive delivery network. The company also engages in price wars which further erode its profitability.

· Product Flops –Amazon has previously launched products that were not received well by its customers. This include the Kindle Fire which was not received as well as the Kindle.

· Limited presence in emerging markets -Amazon has limited presence in developing markets in comparison to its competitors. Walmart for instance has a significant presence in China and Africa. This may limit its ability to compete in these markets.

· Limited physical presence – Amazon has fewer brick-and-mortar stores as compared to its rivals.

OPPORTUNITIES

There are a number of opportunities that are available for Amazon. This include

· Expansion of brick-and mortar business -Amazon has an opportunity to open more physical stores in order to effectively compete with against larger retailers such as Walmart

· Expansion into emerging economies -Amazon also has an opportunity to expand its operations in emerging markets including China, India and Russia. This can give it an opportunity to grow its revenues and profits

· Backward Integration - Amazon can leverage on its extensive reach and brand to sell its private labels. This will increase its margins and boost profitability.

· Rolling out its own payment system -Amazon has an opportunity to roll out its own payment gateway. This will enable the company to scale up given that security of financial transactions is a top concern among consumers

· Expansion into grocery sector - Amazon has the opportunity to leverage on its swift delivery to market groceries. Freshness is a key consideration among consumers and the company can leverage on this to grow market share in the grocery category.

· Acquisitions – Amazon has an opportunity to grow by acquiring small companies so as to decrease the competition it faces and benefit from the specialized capacity of the companies.

· Diversification – As a technology company, Amazon has an opportunity to diversify into other sectors including cloud computing and robotics in order to be responsive to the dynamic business environment.

· Technological changes – Shifts and advances in technology provide Amazon with an opportunity to improve its offering to customers such as in faster delivery.

· Globalization – As companies go increasingly multinational, Amazon has an opportunity in integrating with its supply chain partners to serve customers all over the world.

· Sustainability – Amazon has an opportunity to integrate sustainability in its supply chain in order to become a socially responsible and ethical company.

THREATS

Amazon faces a number of threats including:

· Cybercrime- As an online retailer and internet company, cybercrime poses a significant threat to the operations of the company. It must adopt stringent measures to counteract this threat.

· Easily imitable business model -Amazon’s business model is also easily imitable. A number of online stores modelled on the company’s model have sprung up and could eat into its market share.

· Competition- Amazon also faces increasing competition from established retailers. This include Walmart which is improving its online presence. This could pose a significant threat to the company’s profitability.

· Legal challenges – Amazon has faced a number of lawsuits from publishers and its rivals due to its aggressive pricing strategies.

· Low entry barriers of the industry – Low entry barriers into online retailing pose a significant challenge on the sustainability of its ecommerce building. Also, it can result in price wars that erode margins.

· Government regulations –There are no clear jurisdictional regulations to govern ecommerce across borders and this can potentially affect the company’s forays in overseas markets.

· Trade tariffs – Trade tariffs aimed at making local companies in markets such as India and China can affect the company’s profitability by taking market share.

· Tax avoidance issues- Amazon has elicited negative publicity over tax avoidance in the United States and in the United Kingdom. This can affect its brand in markets where it generates most of its revenues.

· Fluctuating oil prices - The company also faces the threat of fluctuating transportation costs due to volatility of oil

· Financial slowdown – Economic cycles also present a challenge to the company as slowdowns can result in subdued demand which affects profitability.