Amazon Case Analysis
Amazon is in an excellent position to be competitive within its given industry. It has spent millions of dollars over the last several years building its brand and taking over a majority of its industries market share. Amazon is considered to be the premier online retailer in the world. The products they offer range from books to electronics and clothing to kitchenware. Along with their retail division Amazon also operates a services division. Amazon’s services division is responsible for online auctions, partnerships, zShops, and website management.
At the present time Amazon has a limited number of opportunities it can use to expand its business. How the company reacts to opportunities and threats within the industry will determine the future of the company. Amazon is facing threats from increased competition in an industry where profit margins can be very thin. Amazon is also facing threats from state governments and interest groups presenting the financial industry. Amazon’s ability to react to a changing marketplace and develop alternative strategies to deal with this change will help separate it from its competitors.
I have examined Amazon’s current business strategy and I offer the following recommendations. 1. Use Amazon’s brand name to expand into untapped markets 2. Use Amazon’s superior technology to expand its online auction business 3. Use Amazon’s previously established relationships with other businesses to implement a business to business (B2B) exchange for suppliers, manufactures, distributors, and retailers to use 4. Create a strategic plan to combat any change in the states sales tax policy.
Create a strategic plan that would help reduce the financial hit the company may take, should it choose to list stock options as an expense on the financial statement 6. Develop a plan that will maximize Amazon’s ability to license its patented 1-Click technology 7. Continue to cut costs and reduce inventories by partnering with more companies I. The Company’s Current Objectives and Current Strategy Amazon’s current objectives include: 1. Continue to grow the company and capture a larger market share of the online retail business.
Become a more consistent moneymaker in the immediate, intermediate, and long-term time frames to ease investor concerns. 3. Reinforce Amazon. com’s motto of offering the earth’s largest selection. 4. Develop an effective differentiating enterprise strategy to survive against aggressive competition. 5. Continue to cut costs by entering into partnerships with other ecommerce retailers. Amazon. com is one of the most well-known online retailers. The company has accomplished as much, if not more, than any other online retailer in its short existence.
In the early days the organization faced enormous amounts of criticism when the company’s goal was to gain market share no matter what the cost. Amazon accomplished this goal and gained a giant amount of the online retail business, but in doing so they lost a large amount of money. A major objective for Amazon is to continue to grow its company, but at the same time to become a more consistent moneymaker in both the short and long term. It is difficult for Amazon to convince potential investors that its business plan can be successful if it can turn a profit on a more regular basis.
It’s now time for Amazon to start showing investors that its early struggles were a necessity to get to where they can be a profitable company. At the same time that Amazon is trying to grow its company and become a more consistent profit producer, they want to remain true to the corporations motto of “offering the earth’s largest selection”. In order for Amazon to capitalize on its potential it needs to develop an effective differentiating enterprise strategy that will keep it profitable in the future.
Amazon faces a tremendous amount of competition in the online retail industry. Competitors such as eBay, Yahoo, and Buy. com are doing everything possible to take market share away from Amazon. Because of the increased competition in the online retail industry it’s important that Amazon’s differentiating strategy include opportunities where competition may not be as fierce. Establishing a presence in other areas of the industry will help Amazon create new streams of revenue and help offset some of the current expenditures.