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CASE STUDY PART 1
Case Study Part 1: Amazon
Graduate School of Business, Liberty University
Author Note
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to
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CASE STUDY PART 1
Existing Mission, Objectives, and Strategies
Amazon is a global market leader of online retailers. The firm’s humble start begin in
1994 as an online bookstore, however, it has since evolved into the world’s leading online
retailer selling everything from A to Z, including tech, cloud computing and streaming services.
The firm has amassed over one million employees worldwide as of September 2020 and has
acquired over one-hundred million subscribers worldwide. Amazon’s rapid expansion and
acquisition strategy is influenced by Founder, Jeff Bezos’ vision for the firm which has remained
consistent since 1994 to be an “everything store” with explosive growth, and e-commerce
domination. Amazon’s competitors include Alibaba, Netflix, Ebay, JD, Costco, Flipkart, iTunes,
Walmart, Otto, Tesco, Google Play Store, Target, Home Depot, Walgreens and Staples.
Amazon’s mission statement is “To be Earth’s most customer-centric company.”
According to the firm’s website, its guiding principles include an obsession with its customers, a
passion for innovation and a relentless commitment to operational excellence and long-term
thinking. Amazon is the pioneer of customer reviews and 1-Click shopping and powers a wide
range of customer-centered products and services listed as personalized recommendations,
Prime, Fulfillment by Amazon, Amazon Web Services, Kindle Direct Publishing, Kindle, Fire
tablets, Fire TV, Amazon Echo, and Alexa.
New Mission Statement
Amazon is dogmatic about customer service and customer experience. The firm describes its
relationship with the customer as an “obsession,” listing it as its #1 Leading Principle. Amazon
prides itself as being customer-focused rather than competitor focused. Every decision made is
reverse engineered from the customer’s point of view in mind and every aspect of the business
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revolves around the customer.
New Mission statement
Our mission is to be the One-Stop Shop for consumer Earth, with the widest selection of
competitively priced products and services, powered by personalized recommendations and a 1-
click shopping experience. As a customer-driven organization we will consistently deliver value
through the continued research and development of innovative technologies, including cloud
computing, improved digital media and social networking capabilities, and superior logistics and
distribution methods while reducing negative impacts on the environment and community at
large. Our commitment to responsible and ethical leadership includes not sacrificing long-term
value for short-term rewards, a socially sensitive workplace with diversity, equity and inclusion,
on-going employee training and career development and utilizing innovative technologies for
employee health and well-being.
SWOT/TOWS Matrix
SWOT Analysis
Strengths
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Amazon is a global market leader in online retailing with a successful brand image and
strong global market positioning. Amazon is ranked #2 by Interbrand’s Global Brand Ranking
2020 report, with a brand valuation of $200 billion, coming in behind #1 ranked brand, Apple
Computers. Amazon’s innovativeness and creative ideas with unique product lines and service
offerings like free two-day delivery, drone delivery service and no-hassle returns to UPS and
Kohl’s stores differentiate it from competitors. Amazon maintains cost leadership through
supply chain efficiencies, inventory replenishment time, strategic alliances and a strong value
chain system (Goldsten, 2017). Amazon’s three key businesses include Amazon Marketplace,
Amazon Web Services and Amazon Prime (Goldsten, 2017). With the largest merchandise
selection, Amazon Marketplace is a formidable online competitor. Most all online shoppers are
buying on Amazon.com. In 2018, Amazon.com sold over 560 million products worldwide
(Goldsten, 2017). Amazon’s efficient logistics and distribution systems are reliable and fast,
adding an addicting rush to the customer’s online shopping experience.
Weaknesses
While Amazon enjoys many advantages over its rivals, the firm’s ecommerce business
model makes it easily imitated by competitors. New online retailers enter the market every day
and the barrier to entry is relatively low. Amazon’s limited physical presence reduces the firm’s
reach to customers who do not buy online. Amazon’s low profit margins are exacerbated in
certain foreign markets due to the firm’s “free shipping” with Prime business model (Garner,
2018). Amazon’s low penetration in developing markets limits the firm’s expansion potential due
to poor infrastructure, making two-day Prime logistics and distribution a huge challenge
(Goldsten, 2017). Low sales on the firm’s Fire Phone and Kindle Fire products indicate the firm
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has not quite figured out how to perfect its private-label technology (Garner, 2018). Unfair trade
practices erodes public trust and increases risk. Amazon’s use of 3rd party data puts the firm at
risk for anti-trust violations punishable by hefty fines (Bronstad, 2020). With the largest
marketplace of 3rd party sellers, it is increasingly difficult for the firm to vet the safety of the
many products traveling from seller to buyer. Concerns over increased risk to public safety arose
recently when the Environment Protection Agency removed several products from Amazon.com
for harmful chemicals and pesticides (Aversa, 2020).
Opportunities
Amazon acquisitions and expansion strategies can increase penetration into foreign
markets, increase markets share and reduce competition. The firm should seek to establish a
presence in markets ahead rival firms. Amazon also has the opportunity to expand its brick-and-
mortar business operations establishing a stronger brand presence against big box retailers and
diversifying revenue streams. There exists an opportunity to improve profit margins and achieve
economies of scale with Amazon basics, private label clothing line, integrating backwards can
help to improve profits (Garner, 2018). More acquisitions of technology-based companies allows
Amazon to continue offering the customer innovative solutions like best-in-class delivery
services and environmentally friendly retailing (Garner, 2018).
Threats
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One of Amazon’s most enduring threats is competition from rival firms. With aggressive
retail giants such as eBay, Walmart and Target there is no rest for the weary. Amazon has come
under fire in recent years for violating anti-trust laws and threats of litigation that can make the
firm vulnerable to billions of dollars in fines and the stench of a bad reputation (Bronstad, 2020).
Increasing cyber-crime threatens the security and integrity of online businesses, hackers are
increasingly brazen and consumer confidence is undermined (Kardes et al, 2020). Amazon’s
ecommerce business model and products are highly imitable which stands to reduce the firm’s
market share and brand value. Amazon’s imitable business model and products makes for an
easy target by the aforementioned rivals and Apple, Google, Microsoft, Costco Wholesale, Home
Depot and Netflix (Goldsten, 2017). Continuing to diversify its unique products and services will
help the firm strengthen its competitive position. Other threats to Amazon’s quest for total world
domination include barriers to entry in certain foreign markets. Due to government regulations,
Amazon currently does not ship to Syria, North Korea, Iran, Cuba or Sudan (Garner, 2018).
Business Model Analysis
Amazon is one of the world’s largest companies, but it is much more than just an ecommerce
store. Amazon started out as an online bookstore over 10 years ago but has quickly evolved into
one of the most prominent brands in the world. Amazon’s business model has many components
responsible for hurdling it into such success. Amazon has a multi-layered business model. One
part of Amazon’s business model was developed over the several years, the other part was
developed through acquisitions as it scaled up its operations.
Amazon’s market entry point was a 1st party platform or ecommerce site where it initially
identified as an online bookstore in the early 90’s. After expanding beyond books into more
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product diverse product lines Amazon begin to build the reputation the company is known for
today, “the everything store” (Aversa, 2020). With 1st party selling successes, Amazon ventured
into an opportunity to add 3rd party sellers on its site. This paid off in a big way by increasing the
product selection, reducing the need for constant sourcing and driving additional traffic to the
ecommerce site (Aversa, 2020). Third party sellers are responsible for Amazon’s strong,
accelerated growth. The firm generates revenue from its 1st party platform, the products from 3rd
party sellers and from selling ancillary services to 3rd party sellers (Aversa, 2020).
Amazon also invested into a cloud-based computing infrastructure developing Amazon
Web Services (AWS). AWS is an enterprise resource software used to support its 3rd party
ecommerce consumer platform and is sold to 3rd party sellers and small businesses as a pay as
you go service (Aversa, 2020). To differentiate itself further and add yet another revenue stream,
Amazon introduced Prime. Prime offered faster delivery plus other perks and benefits like Prime
Video with a subscription which increased the customer value proposition in online retailing
(Aversa, 2020).
Today, as the largest online retailer with a seemingly boundless product selection,
Amazon has become most valuable product search engine in the world (Aversa, 2020). This
distinction has allowed the firm to develop another revenue stream via advertising (Garner,
2018). Amazon can sell valuable consumer data to advertisers and back to its 3rd party sellers.
This diversified model has allowed Amazon the liquidity to acquire other businesses and invest
in other products, such as Whole Foods, Zappos.com, IMDb, Junglee, Ring, Blink and
Alexa.com (Garner, 2018).
Competitive Forces Analysis
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Amazon is global market leader in ecommerce with a strong brand image and strategic
positioning. In 23 short years, Jeff Bezos has transformed an online bookstore into an online
retail super-power with a massive share of the market. To keep its position within this highly
competitive and aggressive space, Amazon must successfully balance all of the market forces at
play. Amazon must retain its brand image, continue to make the consumer its top priority and
continue to diversify its business model as the market evolves.
The external environment of a business is either stable or dynamic and is influenced by
political, economic, socio-culture, technological, legal and ethical factors and is the basis for a
firm’s strengths, weaknesses, opportunities and threats (Kardes et al., 2020). These factors are
what shape the various dynamics in a firm’s environment like competition, barriers to entry, and
advances in technology (Kardes et al., 2020). They are factors out of the company’s control and
therefore are identified in the strategic planning process to develop actions to either exploit an
opportunities or mitigate threats.
Political Factors
Political factors are currently affecting Amazon’s progress to expand into emerging
markets due to local government regulation which does not allow the firm to deliver within its
borders. Other reasons delaying progress include countries with poor infrastructures or poor
delivery records. Yet, Australia opened its doors to the retail giant willingly and allowed the firm
to establish its presence in the down under.
Economic Factors
Economic factors will determine whether or not business will be profitable or
unprofitable in the markets Amazon operates. Consumer disposable income is one factor that
tends to have a major impact on economic conditions, especially in retail. Though the
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relationship between a business and its communities can also contribute positively or negatively
to economic conditions. In 2018 Amazon raised its minimum wage to $15/hr for all U.S.
employees and across its affiliate businesses, increasing the firm’s cost of labor, yet improving
the livelihood of many people. A looming “double-dip” recession is also a threat to Amazon’s
business as we slowly climb our way out of 2020 which was riddled with economic woes due to
COVID (Nagarajan, 2020).
Social Factors
Social Factors affecting the firm include increasing consumerism in developing countries
and online consumer buying habits as Amazon has taken convenience to the next level with its
Prime delivery service of 12 million items on its site. This past year there was an increase in
senior buyers online as older communities took advantage of the door-to-door delivery service
during quarantine. Other social issues include the wealth disparity gap between the rich and poor
in many countries, including the U.S. which stands to threaten business.
Technological Factors
Technological Factors in Amazon’s environment include the on-going threat and
opportunity of obsolescence with the proliferation of new technologies each year. New internet
technologies also improve efficiencies for Amazon allowing it to better service its customers.
Cyber security poses a threat to Amazon market share as it erodes the quality of the customer
experience and jeopardizes consumer confidence.
Legal Factors
The factors currently affecting Amazon are anti-trust violations and the threat of litigation
over the firm using its market power to cheat third-party sellers out of new product innovations
introduced on the Marketplace platform (Bronstad, 2020). There’s also been an accusations of
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price fixing as both Germany and Washington state file suits against the firm. Another legal
threat for Amazon include the firm’s ability to safeguard the public against potentially harmful
products sold on its site from third-party sellers. These legal actions can be detrimental to
Amazon’s competitive advantage as defending the firm against these issues becomes time
consuming and very costly and public trust is at stake.
Environmental Factors.
While Amazon’s primary business operations occur on the internet there is an increasing
emphasis of surrounding corporate social responsibility and sustainability. Efficient Supply chain
also reduce negative impacts on the environment (Muñoz-Villamizar, 2021). Savvy investors
seek out organizations that are proactive in sustainable business measures while Cause
Marketing incentivizes consumer buying.
Matrices
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References
Netflix
Flipkart
Alibaba
Target
Google
iTunes
Ebay
Product LineBreadth
HIGH
MEDIUM
LOW
Home
Depot
Walgreens
Costco
Staples
JD
Tesco
Ot o
Walmart
Play
GROUPMAP
Geographical Scale
MEDIUM
LOW
HIGH
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Amazon price leader in E-commerce. (2017). MMR (New York, N.Y.), 34(15), 3.
Aversa, P., Haefliger, S., Hueller, F., & Reza, D. G. (2020). Customer complementarity in the
digital space: Exploring Amazon’s business model diversification. Long Range
Planning, , 101985. https://doi.org/10.1016/j.lrp.2020.101985
Bronstad, A. (2020). Amazon Hit With Antitrust Class Action
https://www.law.com/2020/03/20/amazon-hit-with-antitrust-class-action/?
slreturn=20210325174013
Garner, B. A. (2018). Amazon in the global market. Journal of Marketing and Management, 9(2),
63-73.
Goldsten, G. (2017). Market forces in flux: As indie mavens head to Cannes, their business
models are begin impacted by Netflix and amazon, but emerging offer fresh revenues.
Variety, 336(2), 57
Kardes, I., Leisa, R. F., & Dugan, M. (2020). Online retailing: determinants of competition
between multinationals and local firms in emerging markets. International Journal of
Retail & Distribution Management, 49(2), 263
Muñoz-Villamizar, A., Velázquez-Martínez, J. C., Haro, P., Ferrer, A., & Mariño, R. (2021). The
environmental impact of fast shipping ecommerce in inbound logistics operations: A case
study in mexico. Journal of Cleaner Production,
283https://doi.org/10.1016/j.jclepro.2020.125400
Nagarajan, S. (2020). The US is facing a dollar collapse by the end of 2021 and an over 50%
chance of a double-dip recession, economist Stephen Roach says
https://markets.businessinsider.com/news/stocks/us-dollar-crash-high-chance-double-dip-
recession-roach-2020-9-1029618113
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