Outline and Requirements In this assignment, you will assume the role of management consultant, who has the role of conducting a strategic case analysis of a large company, and providing the company...

Strategic Analysis

Strategic Analysis
AMAZON- The E-commerce Giant
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Strategic Analysis - Amazon
Executive Summary
The given report aims to carry out a strategic review of Amazon in order to opine on the
likely future strategy that the company is looking to deploy coupled with likely problems. In
this regards, the current strategy of the company is briefly described. Further, a SWOT
analysis of the company has been carried out so as to carry an internal analysis of the
company in wake of the existing ecosystem in the e-commerce space. Additionally, in order
to analyze the external environment (both micro and macro), PESTEL analysis along with
Porter Five Forces model has been deployed. This analysis clearly indicates that the low
profitability coupled with high competition and low consumer loyalty tends to remain
avenues of concern for the company. In order to address these issues going forward, the
company has an aggressive and ambitious strategy where it seeks to differentiate itself using
technology as a key enabler while maintaining low prices and instead relying on enhancing
revenues. Even though the strategic focus of the company is in the right direction but it is
expected that the company would face significant challenges in the implementation and
eventually the future survival of the company would be pegged on how well it is able to
execute the strategic path that it has embarked itself on.
Introduction
The organization that has been selected for this task is Amazon Inc which is the largest
internet based e-retailer globally with a footprint in more than 40 countries across the globe.
The company also has significant presence in cloud computing where it is the market leader.
The company came into existence in 1994 in the US. While the company started with books,
but it has rapidly added a host of products in a progressive manner to become the largest
online merchandiser in the world. Over the years, the company has expanded bases in
multiple countries across the globe and has faced immense success in almost all these
geographies barring China (Stone, 2013).
The current strategy of the company involves providing customers with everyday low prices
which are unmatched by not only traditional retailers but also e-retailers. The secret of these
low prices lies primarily in the backend logistics and supply chain which are the key
differentiators for company and enables the company to save on costs despite free shipping.
The company has also made attempts on pushing private labels but barring Kindle, no other
product has achieved phenomenal success. Further, the underlying strategy of the company is
to enhance the market share and the resultant revenue with cash flows being the prime focus
Strategic Analysis - Amazon
and not profitability. As a result, it is common for the company to bleed under losses
especially in geographies where the company is setting up operations and aiming to enhance
market share (Stone, 2013). In this backdrop, the objective of the given report is to carry out
an analysis of the company using various strategic tools such as SWOT, PESTLE, Porter Five
Force s Model so as to reflect on the likely future strategy for the company and the various
challenges it is expected to face in the future.
SWOT Analysis
SWOT analysis is a useful strategic tool for the internal analysis of the company based on
various internal and external environmental factors. The various aspects of the SWOT
analysis with regards to the given company are highlighted below (Barakaat, 2017).
Strengths
 The company has a strong brand which is based on excellent customer service and the
presence in the market for the last two decades. Starting from books, the company has
gradually ventured into a host of products and today arguably provides the largest
online merchandise to the customers at the click of a button.
 Over the years, the success of the company in multiple geographies has been based on
relentless customer focus through various customer centric processes coupled with
innovative use of technology in order to provide better value to customers.
 The logistics and distribution network put in place by the company draws envy of the
competitors as the company is able to approach even the remote corners which may
not be served by other players and delivers the goods in a time bound manner which
enhances the overall satisfaction of customers.
 Due to economies of scale and constant endeavor to deliver value, the company is
able to offer products at lowest prices which provides it an edge over the competitors
especially against local e-commerce players.
Weaknesses
 The diminishing margin is a matter of concern for the current business model pursued
by the company. In order to provide products at lowest price coupled with free
shipping and a distributed logistics network, the company operates on very low
margins and also sometimes has to incur losses which are not sustainable in the long
Strategic Analysis - Amazon
run. This is especially true for new geographies where the company expands and in
order to capture market share has to sustain huge losses which may continue over
years. A case in point is India where the company is incurring annual losses in
millions of dollars.
 There are also concerns that the inherent business model of the company is essentially
a low margin business as a result of which the company has revenues and business
volume to boast about but the same does not reflect in the profits of the company.
Further, the emphasis of the company on cash flow and channeling money from
profitable markets to unprofitable ones also makes the matters worse in this regard.
Opportunities
 In order to enhance the profits and business, the company can leverage the market
presence and brand in order to push private labels with superior margins. Also, this
would result in higher top line growth for the company. Till now the success in this
regard has not been there.
 Considering the company’s payment gateway, going forward there could be
improvement in the margins especially in markets that are still not matured and have
limited e-commerce transactions. These emerging markets provide a lucrative
opportunity for the company for sustained growth in the future as the developed
markets are reaching a saturation point. Therefore, it makes sense to...