Amazon Strategic Analysis

Topics: Amazon.com, Strategic management, Electronic commerce Pages: 19 (5683 words) Published: August 21, 2013
Contents
1.Introduction2
1.1 The overview of Amazon.com2
1.2 Amazon’s business model and primary business2
2.Strategic position of Amazon3
2.1 PESTLE analysis4
2.2 Industry and competitive environment analysis — Porter’s Five Forces Model7 2.3 Internal environment analysis- SWOT11
3.Suitability of Amazon’s corporate strategy12
3.1 Growth through lower cost structure and lower prices.12 3.2 Creating value for customers by using their technology expertise14 3.3 Diversification and Expansion16
4.Conclusion17
5.Reference list19

Introduction

1.1 The overview of Amazon.com

Amazon.com is an e-commerce company from America. The company was found by Jeff Bezos in 1994 and was one of the first major companies to sell goods on the Internet. It began as a solely online bookstore. With years of successful development its main business diversified into many other products and services in a wide range. Today Amazon.com has become one of the biggest online retailers and web services provider in the world. The chart below shows the financial performance of Amazon in recent years. From 2007 to 2011, the revenue increased dramatically in contrast with the net income. According the latest data revealed, by the end of 2012, Amazon’s revenue was over 61 billion US dollars. Under the strategy of internalization Amazon.com has developed separate websites for Canada, UK, Germany, France, China and so on. It also has many customer service centers and fulfillment & warehouses in many countries.

Figure 1
[pic]
Source from: http://healthcare.globaldata.com/expertinsightdetails.aspx?prid=985

This report is divided into a few sections. The first section is to analyze Amazon’s strategic position through a deep research of its external environment. In this section, approaches like PESTLE and Porter’s Five Force Model are deployed to find out Amazon’s competitive environment. The second section is to investigate the internal environment of the company. The SWOT analysis tool will be used to present a clear picture of the company and its performance. The third section introduces the business model of Amazon and shows how the company performed in recent years and gets the strategic position of the company. In the last section, all these analysis above are used to evaluate the suitability of Amazon’s corporate strategy, some real business cases and literature reviews are involved to get best criteria.

The main purpose of this report is construct a link between the business environment and the strategy employed. To avoid the confusions brought from multiple markets and segments, in this report the strategy we analyzed will be in a corporate level. Considering the access to information and case timeliness, the time frame will be focus on 2007 to 2012.

1.2 Amazon’s business model and primary business

As the pioneer on the Internet and online retailer, Amazon faced large potential opportunities and rapidly growing markets. In the beginning of 21 century, Amazon joined the booming of Internet industry with other great organizations like Google and Yahoo and launched to a rapidly expanding. Benefits from upsurge of internet sector stocks, Amazon raised a large amount of cash from share market and this ensured its expansion over the world. In addition, compared to traditional retailing, Amazon’s business model had clear competitive advantages, such as more reasonable price, more purchase convenience and larger variety of products. Furthermore, Amazon also clearly secured the first-mover advantage. It has best reputation on the book retailing, mature logistic and supply chain, and large database and so on. In addition, Amazon’s business model was varying diversified due to its media channels; it could easily expand its product ranges to other products.

The amazon.com business model assumes that the expanding number of Internet users will create a new mass market with value...
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