1. Executive Summary:
Amazon.com is greatly concerned with customer desires that are why one of its objectives is
the personalization of clients’ wishes, therefore offering products that may meet their
likeness. Amazon.com is aimed to provide the best buying experience on the Internet.
Analysis SWOT, which stands for Strengths, Weaknesses, Opportunities and Threats, is a
way to analyse and evaluate the current situation of amazon.com.
PEST Analysis is a simple but nonetheless important and widely-used tool that helps you
understand the big picture of the political, economic, socio-Cultural and technological focus
on e-commerce for amazon.com
It is clear that the performance of amazon.com during the past two years has been greatly
successful, as we can observe amazon.com belongs to the prestigious “Forbes 500”
This report has been designed to provide Amazon.com with a strategic plan for their global
operations within the e-retailing industry.Amazon.com is a leading e-retailer and is a globally
recognised brand, but is facing increasing competition from bricks and mortar companies
setting up an online presence and current e-retailers increasing their geographical and product
scope. The internal and external analysis reveals that Amazon.com has been under-
performing in China; thus it has been recommended that Amazon.com penetrate the Chinese
market. This will require implementing a marketing strategy, and by introducing the
Merchant Program in order to make the company more locally responsive and take advantage
of the growing online market. A possible change in structure has also been suggested to aid
strategy implementation.
2. Introduction:
Company Overview:
Amazon.com, Inc. is an American electronic commerce company with headquarters in
Seattle, Washington. It is the largest Internet-based retailer in the United States. By 2008,
Amazon.com had a market capitalisation of some US$29.4 billion1 (£19.3bn or x21.4bn) and
employed around 20,700 employees. It was a truly global company and it had established
websites in Canada, the UK, Germany, France, Japan and China and 47 per cent of
consolidated sales were outside its home country. Amazon.com started as an online
bookstore, but soon diversified, selling DVDs, Blue-rays, CDs, video downloads/streaming,
and MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food,
toys and jewellery. The company also produces consumer electronics—notably, Amazon
Kindle e-book readers, Fire tablets, Fire TV and Fire Phone — and is a major provider of
cloud computing services. Amazon also sells certain low-end products like USB cables under
its in house brand Amazon Basics.
Amazon has separate retail websites for United States, United Kingdom & Ireland, France,
Canada, Germany, The Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and
Mexico. Amazon also offers international shipping to certain other countries for some of its
products. In 2011, it had professed an intention to launch its websites in Poland and Sweden.
Amazon vision statement:
"Earth’s biggest selection and to be Earth’s most customer-centric company".
Our goal is to be Earth’s most customer-centric company. The answer is three things. The
first is that customer-centric means figuring out what your customers want by asking them,
then figuring out how to give it to them, and then giving it to them.
Amazon MissionStatement
“We seek to be Earth`s most customer-centric company for four primary customer sets:
Consumers, sellers, enterprises, and content creators.”
http://www.strategicmanagementinsight.com/mission-statements/amazon-mission-
statement.html
. Of course, achieving customer loyalty and repeat purchases has been key to Amazon’s
success. Many dot-coms failed because they succeeded in achieving awareness, but not
loyalty. Amazon achieved both.
Current strategies:
We work to earn repeat purchases by providing easy-to-use functionality, fast and
reliable fulfilment, timely customer service, feature rich content, and a trusted
transaction environment.
http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-
models/amazon-case-study/
Creating value for customers by using their technology expertise.
Provides low cost solutions of technology to their customers.
External Analysis:
The external analysis for Amazon is as follow:
Pestle Analysis:
PESTEL Analysis is a simple but important and widely-used tool that helps you understand
the big picture of the political, economic, socio-Cultural and technological, environmental
and legal issues that we are operating in. PEST is used by business leaders worldwide to
build their vision of the future.
Political & Legal Factors:
International policies in particular countries may interfere with the expected growth of
the company for example; google.com has been banned in China for governmental
decision arguing that Google threatens the community and national market with
inappropriate contents in his data bases.
3. Safety above e-commerce is not considered as an important issue in various countries
for example, 76% of internet users in Peru do not trust internet web pages and never
have experienced a purchase online.
Amazon.com spread it wings in United Kingdom, Denmark and France with the help
of the individual governments. Then only it will be benefited by taxes and so on. With
the help of the government only it could launch its authorized web site in any country.
Economic Factors:
In various countries where currencies are highly devaluated in comparison with the
dollar, it may bring additional costs to the company. Furthermore some products’
prices may be increase, affecting the main attraction of the company.
Social Factors:
In some areas in the world the internet is restricted due to religious and ethical factors.
This will prevent sales in these regions for Amazon.
Social networks are booming. Sites like Facebook and Twitter are visited by billions
of people every day. These sites also offer marketing directly on their site. Amazon
can increase its awareness through social network marketing.
Some societies do not entertain the idea of buying over the internet such as Peru. In
such markets the business possibilities are narrow and Amazon has to focus on other
more welcoming societies.
Technological Factors:
Amazon believed the continual investment in technological innovation helped
Amazon to achieve two complementary goals. Firstly, it improved efficiency,
ultimately lowering operating costs and enabling the company to offer lower prices to
customers. Secondly, heavy investment in research and development enabled Amazon
to find new ways to improve customer experience.
Environmental Factors:
With online shopping you have less pollution from vehicles.
With shipping the products you are adding unnecessary packaging to the item for
shipment. Amazon will need to work towards a greener solution to shipping their
sales.
Amazon.com mostly sells consumer goods from trusted manufacturers. Such
manufactures already produce environmental friendly products so such factors do not
directly affect Amazon.
Summary of PESTEL analysis:
Political, economic, social, technological progress indicates an increasing and attractive
market to be exploited by Amazon.com. The Chinese and Indian markets have shown
exceptional growth. The use of internet as a social networking channel has created new
opportunities to be exploited. Additionally, as environmental awareness increases globally
(Stern et al, 2006) it is important that Amazon.com’s strategy support environmentally
friendly activities. The global nature of Amazon.com’s activities also suggests that strategies
developed should comply with the different legal obligations internationally.
Associated Press. (2001, September 27). Economic impact from terrorist attacks. The
Oakland Press, pp. C1.
Cottrill, Ken. (2001). Online booksellers turning point. USA: H.W. Wilson Company.
Porter Forces Model:
High
Competitive Rivalry:
Amazon.com has countless competitors.
Now many websites allow their customer, to buy or sell online. And they
4. are trying to provide the best value to their customers.
Amazon.com direct competitors include internet retail web sites such as
Barnes and Noble.com and eBay.
low
Threat of New Entrants:
It would be virtually impossible for a new company to reach the magnitude
of inventory and status that Amazon.com maintains.
Amazon.com has been in the internet marketplace for about thirteen years
now; it would be extremely difficult for a start-up company in the industry
to raise enough capital to even compete with Amazon.com on a lower
level.
It would also be extremely difficult for a start-up company to gain
economies of scale, or cost advantages associated with large-scale
production, such as Amazon.com, have the ability to utilize machinery and
other technology that requires a large initial investment but increase cost
efficiency in the long term.
High
Threat of substitute:
With the exception of its patented technology there are quite a lot of
alternatives to Amazon’s products and services.
Books can be purchased at Barnes and Noble Books, Books-A-million,
and Half Price Books. Books are additionally sold at newsstands,
drugstores, and discount stores.
The internet users have many options to buy products and services online.
High
Bargaining power of Buyers:
Amazon.com customers have the option of buying the products and
services they desire on the hundreds of thousands of other retail web sites
on the internet.
Over the years, Amazon.com has diligently provided new customer service
tactics so the customer is satisfied and does not make purchases elsewhere
online.
Low,
Modera
te
Bargaining power of Suppliers:
The bargaining power of Amazon’s suppliers is weak because many
suppliers know that they could make a lot more money if their product is
on display at amazon.
https://stonybrook.digication.com/alec_cheng_est_325_final/External_environme
nt_of_Amazon
Amazon.com is a large buyer of products as its goal is to “offer everything
to everyone”.
Amazon’s success depends heavily on the collaboration they have with
online sellers and business partnerships like Target, Borders, or Office
Depot.
Summary of key findings from Porter’s Five Forces
•The competitive rivalry amongst the e-retailing industry is intense. From some of the largest
to the smallest companies, dotcom businesses are abundant, making competition intense.
Amazon.com competes directly with big firms such as Barnes and Noble and E bay.
•The threat of new entrants that are able to compete directly with Amazon.com is low
•The strong brand image of Amazon.com should be an advantage in any price wars
https://nikamalfard.wordpress.com/2011/04/22/week-67-amazon-and-
porter%E2%80%99s-5-forces/
5. Internal Analysis:
Value chain Analysis:
The value chain analysis undertaken examines the operational effectiveness of activities that
enable Amazon to perform better than its competitors; i.e. the distinctive value chain
activities that are difficult to imitate. Amazon figures its value chain activities to create
unique value for customers reduce its costs of carrying out these activities and reduce the cost
of its customers’ transactions.
Supportive Activities:
Firm infrastructure:
Huge central customer data warehouse available to all business units. Central planning
function in Seattle corporate headquarters for seven functions.
Human Resource Management:
Amazon offers employees unique benefits such as, medical, paid time off and stock grants
and relocation allowances. Such a strategy means warehouse could be located in
economically cheaper areas yet these benefits can attract highly skilled workers. (ward2007).
Amazon offers a decent rate of pay of about $11 - $12 thus reducing cost of labor.
Amazon.com has a great training for its employees. According to the annual report of
amazon.com 2010, the past year’s success is the product of a talented, smart, hard-working
group, and Amazon take great pride in setting up of this team.
Technology Development:
High investments in technology development to leverage new but unknown opportunities in
digital sales of music, books and videos. For example, being able to quickly digitize media
for direct online sales/download or for “search inside the book”. Using standard hardware
systems from HP to reduce cost of maintenance and compatibility. Building an IT strategy IT
infrastructure and data center on LINUX reducing cost of technology development.
Procurements:
Using strategic business unit-book surge to keep a rich inventory of digital copies of books so
as to make this readily available for customers through print -on- demand and reduce time of
delivery. Specially build distribution centres, warehouses and fulfilment centres to increase
the speed of order processing, thus avoiding transaction cost of contracting out Laseter et al
(2000).
6. Primary Activities:
Inbound Logistics:
Amazon has the advantage of avoiding the overhead and carrying large amounts of inventory
because it orders the books from the distributors.
They provide money and contracts to prospective authors and decide how many copies of a
book to print. Amazon.com receives products from its distributors, partners, manufacturers,
and publishers. Amazon.com distribution centres are segmented into reserve storage locations
and forward pick storage locations. Amazon.com refers to forward pick storage as prime
storage. Efficient information gathering system about customers experience to inform service
inputs and inventory controllers.
Operations:
Outbound Logistics:
Picking, sorting, packing, and shipping constitute the outbound processes of customer
fulfilment in Amazon.com distribution centres operations. In Amazon.com operations,
pickers select products from forward pick locations (prime locations) to start the order
fulfilment process. The distribution process is initiated by a customer ordering from the
Amazon.com website or an affiliate website. Amazon.com IT systems determine which
Amazon.com distribution centres to ship the item from or whether to ship the item from a
drop shipper.
Marketing & Sales:
Amazon fulfil customer orders in a number of ways, including through the U.S. and
international fulfilment centres and warehouses. Amazon design websites to enable millions
of unique products to be sold by it and by third parties across dozens of product categories.
Amazon also manufactures and sells the Kindle e-reader. Amazon.com utilizes the
capabilities of its supply chain partners to deliver orders directly to customers. Their
marketing expenses are largely variable, based on growth in sales and changes in rates.
Amazon Sales increased 40%, 28%, and 29% in 2010, 2009, and 2008. Changes in currency
exchange rates positively (negatively) affected net sales by $(86) million, $(182) million, and
$127 million for 2010, 2009, and 2008.
Services:
From the beginning, Amazon focus has been on offering their customers compelling value.
Amazon realized that the Web was, and still is, the World Wide Wait. Repeat purchases and
word of mouth have combined to make Amazon.com the market leader in online bookselling.
http://khbuddhist.blogspot.com.tr/2011/11/analyze-amazon-and-walmartcom-using.html
Resources and Competencies:
Tangible Resources:
Amazon have well web infrastructure. Scalable IT Systems (can be expanded easily) Amazon
has the largest and most sophisticated collection of online retailing technologies available
(Laudonand Traver, 2003, p593).
Intangible Resources:
Amazon intangible resource includes its Brand name, create trust among people. Centrally
managed web services. Management and maintenance of infrastructure.
Core Competencies:
Use of recyclable cardboard for packaging
Use of economies of scale
consistency of services
Quick and easy payment via “1 click”
outstanding CRM and website personalization using complex technology
7. Between1995 to 2008 amazon.com has released over 100 different product categories
in seven geographical areas.
Competitive advantages:
Strong technological infrastructure with single platform
High investment in technological development to beet leverage digital product
Great product forecasting system
Print on demand
Constantly soliciting suggestion on new product
Easy and fast payment system
24 hours operations
Free return within 30days
SWOT Analysis:
Drawing from the internal and external Analysis, we can summarise Amazon.Com strengths,
weaknesses, opportunities and threats in the following SWOT Analysis.
Strenght Weaknesses
Global brand
Focus on research and
development
Strategic location
Customer-centric vision
Diverse products
Applied advanced technology
No physical presence
Low profit margins
Low cash flows
Weak performance in China
8. Amazon.com Merchant
Program
Skilled workforce
Strong logistics
Opportunities
Growth in movie downloads
Social networking
Growth of online shopping in
China
Beijing Olympics 2008
Expansion through
acquisitions
Growing e-commerce sales
Growth in digital media
Increased consumer spending
in India
Threats
Dependent on vendors
Strong competition
Patent infringement
External Factor Evaluation Matrix:
External Factor Evaluation Matrix
External Factors: Weights Rating Weighted
average
0.0 to 1.0 1 to 4
Opportunities:
0.4
0.1
0.3
0.07
0.13
3
3
4
2
4
Increase the number of buyers over the
internet.
E-commerce expansions in Asia.
Young people´s acceptability of new
technology and innovative ideas.
Increasing products categories.
Brand recognition and people´s trust.
1.00
Threats:
Impact of Government regulation.
Increase in competition due to low market
barrier entry.
EBay, Barnes & Nobles, OLX and Book-A-
Million, etc.
Currency variations.
0.3
0.2
0.2
0.3
3
2
3
4
1.00
Amazon has been able to manipulate the opportunities and have been able to counter threats
9. Strategy formulation:
Strategy formulation refers to the process of choosing the most appropriate course of action
for the realization of organizational goals and objectives and thereby achieving the
organizational vision. The process of strategy formulation basically involves six main
steps. Though these steps do not follow a rigid chronological order, however they are very
rational and can be easily followed in this order.
1. Setting Organizations’ objectives - The key component of any strategy statement is
to set the long-term objectives of the organization.
2. Evaluating the Organizational Environment - The next step is to evaluate the
general economic and industrial environment in which the organization operates. This
includes a review of the organizations competitive position. It is essential to conduct a
qualitative and quantitative review of an organizations existing product line. The
purpose of such a review is to make sure that the factors important for competitive
success in the market can be discovered so that the management can identify their
own strengths and weaknesses as well as their competitors’ strengths and weaknesses.
3. Setting Quantitative Targets - In this step, an organization must practically fix the
quantitative target values for some of the organizational objectives.
4. Aiming in context with the divisional plans - In this step, the contributions made by
each department or division or product category within the organization is identified
and accordingly strategic planning is done for each sub-unit.
5. Performance Analysis - Performance analysis includes discovering and analyzing
the gap between the planned or desired performance. A critical evaluation of the
organizations past performance, present condition and the desired future conditions
must be done by the organization.
6. Choice of Strategy - This is the ultimate step in Strategy Formulation. The best
course of action is actually chosen after considering organizational goals,
organizational strengths, potential and limitations as well as the external
opportunities.
Strategic Position
Amazon has been able to maintain sustainable competitive advantage based on three
operational strategies. These are low cost-leadership, customer differentiation and focus
strategies.
Low cost-leadership is pursued by Amazon by differentiating itself primarily on the
basis of price. We believe that offering low prices to our customers is fundamental to our
future success. We seek to partially mitigate the costs of lowering prices over time through
achieving higher sales volumes, negotiating better terms with our suppliers, and achieving
better operating efficiencies. Amazon makes sure that it offers the same quality products as
other companies at a considerably cheaper price. Analysis of competitors? Are there services
we (can/could) offer using our infrastructure that could command a premium price?
10. With our customer differentiation strategy, Amazon provides current and prospective
customers with differentiation through design, quality or convenience by selecting a strategy
that is different among the competitors.
The focus strategy takes one of the two other strategies and applies it to a niche within
the market Based on this, Amazon focuses on outstanding customer service as a niche but not
the whole market because each niche has its own demand and requirement.
11.
12. Portfolio Analysis:-
Amazon has recorded total revenue of $15billion in first three quarters of 2009, which
is 20% higher than total revenue during the same period in 2008. In 2009 (why, with
consumer demand down has the company opened up new markets, taken market share from
13. competitors, increased its penetration of the existing markets etc.?, the gross profit has
increased from 22.6% in 2008 to 23.7%. Our increased sales and operational efficiency have
helped us to maintain the profit margin (so savings of sale or margin contribution?) although
there is an increase in operational costs (margins then were higher, diluted by increased
operating costs. Our operating margin has been stable at 4.4% over the past years showing a
consistency in operations. (So the increased sales did not lead to improved operating
income?)
Based on our previous year's performance and experience, we project total revenue of
$8.5billion in the last quarter of 2009. This will lead to total revenue of $23.5 billion for
2009, which will be an increase of 22.6% from year 2008. The steady increase in yearly
revenue primarily reflects our market competitiveness. Our projection in the increase of sales
by 22.6% in 2009 is based on the global economic slowdown and changes in customer
purchasing preferences. Meanwhile, the basis of our estimate for the current quarter is based
on our previous trend wherein sales increased during the Christmas season and low price
offering. Based on our previous sales records, our last quarter sales were 35% to 37% of total
revenue.
The inventory turnover has improved (explain 11.5 from 13 is a decrease?) by 12% in
trailing twelve months of September 2009 to 11.5 from 13.0 in 2006 and 2007. The asset
turnover has increased slightly in trailing twelve months of September 2009 to 2.79 from 2.31
and 2.29 in 2008 and 2007. This reflects our improved efficiency in inventory and asset
management.
Our current ratio and acid test ratio have improved marginally to 1.40 and 1.05 from
1.30 and 1.00 respectively in 2008.These ratios augment confidence of our investors and
suppliers on us in this global credit crunch where cash or liquidity is considered vital for
continuing operation. We have been able to lower our debts through regular repayments. As
at 30th September 2009, our debt to equity ratio is 0.03. This is a considerable improvement
from debt to equity ratio of 0.18 and 1.09 in 2008 and 2007 respectively.
Our account payable days were 62 and 57 for 2008 and 2007 respectively. Our
account receivables day of 17 days is low because quick settlement of customer payments
made through credit/debit cards.
Our principal source of fund is generated from operations and cash/cash equivalent
received from customers, suppliers and sellers. The cash/cash equivalent and marketable
securities were $3.7billion and $3.1billion in 2008 and 2007.
In terms of market performance, our share price drop to $43.20 in October 2009 and
subsequently went up steadily to $134.03 as at 25th November 2009. The share value has
increased by more than $90 after the announcement of our 3rd quarter results. The
appreciation of share prices reflects shareholders trust on Amazon, and it will further help us
in Zappos.com acquisition.
Sales
Amazon's sales are generated from media, electronics, other general merchandise and
non-retail activities such as other seller sites, co-branded credit card agreements and
miscellaneous marketing and promotional activities.
17. STRATEGY FORMULATION THROUGH TOWS MATRIX
From the SWOT analysis conducted earlier, it is essential that Amazon.com look at a couple
of the strategic options to be further pursued; so as to allow the company to both continue
moving in the right direction and to improve on any drawbacks they are facing in their
current set-up. For the right strategic options to be identified, a TOWS matrix will be suitable
for the formulation process.
For the strategic options identification, two strategies will applied through the use of the
TOWS matrix tools. The first strategy will use Amazon.com internal strengths and applying
it with their external opportunities and threats. This will allow for the company to use its
strengths to improve the company’s external factors. The second strategy will consider the
weakness in the company with the external factors like opportunities and threats to eliminate
underlying weaknesses in the company.
1. Strengths – Opportunities:
2. Weakness – Threats
3. Weakness – Opportunities
4. Strengths – Threats
Strength (S) Weaknesses (W)
Strong
global
brand
S1
Diverse
products
S2
Strong focus
on R&D
S3
No physical
presence or
store
W1
Low
profit
margins
W2
Applied Strategic Associate
18. advance
tech.
S4
location
S5
programme
S6
Low cash
flows
W3
Weak
Perfor-
mance in
china
W4
Customer
centric
Vivion
S7
Skilled
workforce
S8
Strong
logistics
S9
O
P
P
O
R
T
U
N
I
T
I
E
s
Biding
Olympic
Cs
O3
Growing
E-comer
ce sales
O6
S1+S9+O6= use such strengths
to make sure as much of the
new expected expenditure as
possible is spent at amazon.com
S2+O6+O8= Keep diversifying
to increase probability of
predicted expenditure occur
ring on amazon.com.
S6+S9+O6= Diversify into new
markets via association.
02+S6+S1= Promote
amazon.com by such means.
O5+S6= Combine these to gain
greater market share
W4+O4=
Review and
improve on
current strategy
in China.
O8+O6+W2=
Tap into these in
a bid to increase
profit margins.
Growth in
social
networ
King
O2
Recent
acquisitio
n
O5
Increased
consumer
spen
ding in
India
O8
Growth in
movie
downlo
Ad
O1
Growth
in intern
et usage
in china
O4
Growth in
digital
media
O7
T
H
R
E
a
T
s
Very
competitive
market
T2
Pressures groups on
being environmental
Friendly
T4
S9+T4= Improve current
delivery process to be more
environmentally friendly.
S1+S2+S9+T2= Use these to
remain competitive
W2+T2=
improve this in
order to stay
ahead of rivals.
T3+W2+W3=
reduce such
disputes to
improve
increase
retained
earnings
Huge
dependence
on vendors
T1
Involvement in patient
violation dispute
T3
ANSOFF PRODUCT MARKET MATRIX:
Igor Ansoff was a Russian/American mathematician who applied his work to the
business world. He is known as the father of Strategic Management. Igor was born to a
Russian mother in Vladivostok and an American father. Until he was 18 years old, Ansoff
grow up in Russia. He then moved to New York and studied mechanical engineering and
physics. In 1950 he joined the Rand Corporation, a leading think-tank organization focused
on NATO. The Matrix was first publicized in the Harvard Business Review in 1957, and has
given strategists, marketing professionals and business leaders an effective way of
discovering growth opportunities. The Matrix is sometimes referred to as the Product/Market
Expansion Grid. It shows four ways that businesses can grow, and assists players to think
through the risks associated with each option
Amazon's Use of Matrix
As Amazon identified potential strategy options, it developed evaluation criteria and
rated various alternatives. This tool helps organization identify growth approaches in four
keys areas.
19. Strategic Options:
1. Protect / Build or “Market Penetration:”
Marketing penetration strategies focus on selling more existing products within existing
markets. This approach is least risky. Examples of different focal areas include:
Advertising programs
Marketing programs
Loyalty programs
Adding sales resources
Expanding products and services with existing clients
Pricing
In market penetration amazon:-
Raising awareness and brand building
Increasing market share and sales
Penetrate more in china
2. Market Development:
Market development strategies focus on selling existing products into new markets. This
approach is somewhat more risky than market penetration. Examples of different focal areas
include:
New area development programs
New channels
New packaging
New pricing
For market development amazon:
Enter aggressively in indian market
Partnership or acquiring e-retailing company in india
3. Product Development:
These strategies concentrate on developing and introducing new products in existing
markets. This is riskier than the marketing penetration and market development approaches.
For product development amazon:
20. Add new segments like bag; jewellery; etc.
4. Diversification:
These strategies concentrate on developing and introducing new products in existing
markets. This is riskier than the marketing penetration and market development approaches.
For the diversification of product amazon:
Tailor made product according to the need of market
.
Learning and Growth:-
“To achieve
our vision,
how will we
sustain our
ability
change and
improve?”
Learning and Growth
Objectives Measures Targets Initiatives
Improve Customer
Service
Employees
train
100%
satisfaction
- Teach employees
manners
- Staff training
Adopt new
Technology
Amount of
technology
implemented
Per year Improve hardware
and software
Learning and growth is all about strategizing and implementing objectives to better
our management and employees. Teaching, training and enabling our employees to be aware
of how the company operates and generates revenue and value will better the overall
company. To do this we had two main objectives. Improving customer service by training
our employees on manners and customer relationship will let the company have a better
image. We are looking for 100% customer satisfaction, which is not an easy target, but a
possible one.
Secondly we will adopt new technology. Adopting new technology is looking for
better and faster ways to work our website engine and improve customer experience in the
site. To do this better hardware is needed in order to perform at an optimum pace.
21. BCG growth or share matrix:
In order to examine the balance of investment portfolio and market condition, BCG matrix
could be the best option. In the following section, the BCGmatrix of Amazon will be
explained geographically.
As Amazon has grown aggressively in recent year, expanded into diverse businesses, and
achieved profitability, its impact on the E-business and retail sectors is greater now than ever
before.
European market has witnessed an E-RETALLING of$ 13.1 billion in 2011.it has become the
cash generator for Amazon in last few year and could be marked as star. Taking UK as an
example, UK has taken 25% of the Amazon international revenue and occupied 19.8%
market share of E-COMMERCE. Over the five years through December 2013, the UK
segment of the company is expected to increase its revenue at a compound annual rate
of33.7%, to reach $4.3billion (sap.com2013).
Although smaller than the European market, North America is another place for
Amazon making profit. North American sales increased 36% compare to the same period last
year while global sales grew 29% and North American expenses increased 34% to $6.98
billion from$5.19 billion in 2012.therefore, the North America market could be a cash cow.
However, as in china, situation is not the same. China owns a $36 billion E-
COMMERCE industry, which is hyper-competitive with online retailer launching price wars
and marketing campaigns to win market share. Occupied 2.3% of the total share of Chinese
B2C market, Amazon has generated $750 million in annual web sales In china, a figure that
could increased 33.3% to $1 billion as soon as next year china may contribute about 10% of
the global revenue by2015(slideshare.net,2013)
Although low in relative market share. Amazon will gradually expand its market in China
with a relative high growth rate.thus, China should put into the Question Mark area in the
BCG matrix.
Not long before, Amazon has launched an online market place in India in2013 an plans to
expand to its market share in India E-COMMERCE market that .India’s e-commerce or more
specifically e-tailing market, crossed $800 million with 13 million on line shoppers in
2012(Allthingsd.com, 2013).Since the Amazon in India is just a start-up, and there is plenty
room for further growth.AS a result, the India market can be categorized as a Question Mark
in the BCG Matrix.
22. Strategy Implementation:
Implementation is the strategy is the process through which a chosen strategy is put into
action.it involves the design and management of system to achive the best integration of
people,structure process and resources in achiving organizational objective.
The implementation of new strategies and policies often calls new human resource
management priorities and a different use of personnel.such staffing issues can involve hiring
new people with new skills,firing people with inappropriate or substandard skills,or training
existing employees to learn new skill.
Amazon's "bar raiser" program, which uses a select group of current employees to
interview and recommend outstanding candidates for corporate positions. He interviewed
former and current Amazon employees to find out how the process works, and what sets
Amazon's process apart from other companies' hiring processes. Here's how Amazon does
it:
1. Devote time to the process.
Amazon "bar raisers" assist in the hiring process in addition to working their full-time job.
They spend several hours interviewing candidates by phone and in person, and evaluate each
candidate, sometimes up to ten a week, plus handle the attendant paperwork and meetings.
"[Amazon doesn't] just hire the best of what they see; they're willing to keep looking and
looking for the right talent," said Valerie Frederickson of Valerie Frederickson & Co., a
California-based human resources firm
2. Be prepared to spend a little more.
A time-consuming process means more money spent. After all, time spent evaluating
applicants is time taken away from the employee's full-time duties. "It can be an expensive
process because it takes longer, but think of how expensive it is to hire the wrong person,"
said John Vlastelica, a former Amazon employee.
3. Reduce hiring mistakes.
Amazon's approach requires "bar raiser" employees to spend time with and approve the
candidates, creating a more complete vetting process, allowing for a better chance for
potential issues with candidates to be identified, Bensinger notes. The process goes beyond a
typical interview scenario, and allows the employer to gauge how candidates adapt and react
in various situations.
5. Bring consistency to a large company.In the year ending September 2013, Amazon
hired nearly 30,000 employees from a pool of 75,000 interviews, and reportedly has
110,000 employees, Bensinger notes. Having "bar raiser" employees "help[s] bring a
consistency of the types of skill sets and perspectives" Amazon looks for, said Dave
Clark, vice president of Amazon's worldwide operations
Conclusion:
This report has analysed the internal and external environment in which Amazon.com
operates, which has resulted in the generation of several possible strategies. In
conclusion, were commending that market penetration in China is the most suitable,
feasible and acceptable option based on Amazon.com core competences and opportunities
in the industry. Managing change and implementing strategies can be very challenging in
a constantly changing, global environment. Therefore, Amazon.com will need to integrate
its resources and competence across different functional areas. “Capability in separate
resource areas is not enough” (Johnson et al, 2006, p491).
Refrences:
Five competitive forces., [online] Availible at: Http://www.12manage.com/methods
porter five forces. html[2 jan 2008].
https://www.scribd.com/doc/24854038/20/TOWS-Matrix
http://www.slideshare.net/shuklamohit89/amazon-15559368
http://bizinfocenter.blogspot.com/2008/02/strategic-mangement-analysis-
amazoncom.html
