Executive Summary This paper briefly examines and analyse the internet retailer Amazon.com Inc by critically analysing the company‟s operation within e-retailing. Amazon is the leading global e-retailer an industry that registered a compounded annual growth (CAGR) of 24.6% for the period spanning 2004-2009 while the forecasts indicate the industry to grow at CAGR of 13.5 %. The external and internal analysis of the report reveals that there are numerous opportunities from which Amazon has been already profiting. It has performed well in the past year while strategically penetrating to Chinese market where it is forecast to register a growth of around 25% of revenue to $ 1 billion in 2012. Current strategies of the company are mainly based on growth and build strategies through more penetration in Chinese market and through Product development. The possible
........................................................................................................................................... ........................................................................ .. 1 Introduction..................................................................... ......................................................................... ................ 2 Organisational Vision, mission statement and values ......................................................... ........................................................................................................................ ............................................................. 2 Significant and Impact ........................................................... ........................................................................................................... .................................................. 3 External Environmental Analysis ......................................................... ............................................................................................................................... ........................................................................ ..... 3 PEST Analysis ............................................................ ............................................................................................................ .................................................. 4 The Porters Five Force Model .......................................................... ............................................................................................................................ ............................................................. 5 The SWOT analysis ............................................................... .......................................................................................................................... ............................................................. 5 Competitors Analysis ............................................................. ................................................................................................................................... ........................................................................ .. 6 Market Survey ............................................................. ........................................................................................................................................ ........................................................................ .. 7 EFE matrix .................................................................. ............................................................................................................ .................................................. 7 Internal Environmental Analysis .......................................................... ........................................................................................................... .................................................. 7 Core competencies of Amazon ......................................................... ........................................................................................................................... ............................................................. 8 Porter‟s Value Chain..............................................................
........................................................................................................................................... ........................................................................ .. 1 Introduction..................................................................... ......................................................................... ................ 2 Organisational Vision, mission statement and values ......................................................... ........................................................................................................................ ............................................................. 2 Significant and Impact ........................................................... ........................................................................................................... .................................................. 3 External Environmental Analysis ......................................................... ............................................................................................................................... ........................................................................ ..... 3 PEST Analysis ............................................................ ............................................................................................................ .................................................. 4 The Porters Five Force Model .......................................................... ............................................................................................................................ ............................................................. 5 The SWOT analysis ............................................................... .......................................................................................................................... ............................................................. 5 Competitors Analysis ............................................................. ................................................................................................................................... ........................................................................ .. 6 Market Survey ............................................................. ........................................................................................................................................ ........................................................................ .. 7 EFE matrix .................................................................. ............................................................................................................ .................................................. 7 Internal Environmental Analysis .......................................................... ........................................................................................................... .................................................. 7 Core competencies of Amazon ......................................................... ........................................................................................................................... ............................................................. 8 Porter‟s Value Chain..............................................................
............................................................................. .............. 15 3 Market Development through Social Networks ............................................................... Option 4: Market Development by forming strategic alliances with Chinese e -retailers ................ 16 Option 5. Market development by entering to the market of India and Middle East: .................... 16 ....................................................................................................................... ........................................................... 17 Selection of strategies ............................................................ ................................................................................................. .................................... 17 Operational and Strategic objectives ............................................................. ................................................................................... ......................... 18 Implementation and controlling of Strategies .......................................................... ........................................................................................................ ................................................ 19 Strategic Annual Action Plan ........................................................ Conclusion............................................................................................................................................. ............................................................................................................................................. 19 ............................................................................................................................... ................................................................................. .............. 21 References ............................................................ Appendix 1 ........................................................... .............................................................................................................................. ................................................................................. .............. 23 Appendix 2 PEST Analysis........................................................... ...................................................................................................................... ........................................................... 25 Appendix 3 ........................................................... .............................................................................................................................. ................................................................................. .............. 28 ............................................................................................ ......................... 29 The bargaining power of consumers: ................................................................... .............................................................................................. .................................... 29 The bargaining power of suppliers: .......................................................... ............................................................................................................ ................................................ 29 The threat of new entrants: ............................................................ .................................................................................................................... ............................................... 30 Threat of Substitutes: .....................................................................
Introduction
History, Background and Development Only a handful of people can recall a company named Cadabra.com. Cadabra.com is nowhere to be seen now. However the company that began its operation in a garage with few desks built out of doors under this name, Cadabra.com, is now the largest internet retailer (eretailer) in the world. Cadabra.com renamed as “Amazon” hinting the voluminous of the company. The amazon.com Inc was founded by Jeff Bezos in 1994 and the online web site was launched on 1995. An online book store was a new idea he proposed to his former employer who ridiculed the proposal. But Jeff Bezos was convinced of the potential of such a business with the pace of internet growth which was at 2300% a year at that time and being as opportunist, with high entrepreneurial skill, he sat the perfect company by his own. The company started strategically with the vision of Bezos that it had used tactics to enjoy economies of scale from the initial stages of the company. Its cost of sourcing, transporting
The company made another strategic move from very start of its diversification strategy by establishing partnership with wholesalers. This strategy enabled it to lower costs further as it allows the company to maintain physical stocks minimal. The diversification strategy brought new business lines to make the company an online superstore with products ranging from DVDs, music CD‟s, computer software, hardware, video games, electronics, and even
groceries. The company has grown at tremendous pace in the past few years to which large credit has to be given for the customer-trusts-lead growth achieved through high quality services. The company has been enjoying customer base growth and increase in repetitive purchases by same customer. Much of these high quality services have to do with the companies vision/mission and goals Organisational Vision, mission statement and values
Amazon.com vision and mission is combined “to be earth‟s most customer -centric company; to build a place where people can come to find and discover anything they might want to buy online.” In order to achieve this it has set goals of being innovative on behalf of customers and to build a store for each and every customer by offering personalized products.
External Environmental Analysis
Environmental analysis is the study of the organisational environment to pinpoint environmental factors that can significantly influence the organisational operations (Samuel & Certo, 2009). The External environment mainly consists of General Environment and Operating environment. The General Environment for Amazon will be Global Political, Economical, Social, Technological, Ecological and Legal Environment as it operates globally every major corner of the world.
The PEST analysis model is used to analyse the
environment and the Operating Environment is analysed using Porters Five forces.
PEST Analysis
PEST factors are generic factors that will usually affect all business across industries. In the process of PEST analysis it is important to explore and understand the relationship between the forces at work. (Campbell, Stonehouse, & Houston, 2007) Changes in the components of these factors may have varying affect to different industries depending on the association with those components to a particular industry. Changing components of these factors that have direct impact on internet will be more influential to e-railing businesses like
appendix 2 explains these factors. These are never stable, so this is another problem that Amazon needs to look at being the Global leading e-retailer. Social conditions:
The gender religious, ethnic and other aspect of social factors‟ representation amongst internet users will guide Amazon on strategic portfolios it has to develop in order to capture more market share. The Appendix 2 gives the gender and other social factor representations in American internet users. It is also important take advantage of increasing use of social networking as mean of interacting with friends and family, phenomena most of America Europe and Asia Pacific region has been experiencing in the past 5 years. Technological conditions : Technological factors can reduce the barriers for new entrants,
and also will affect outsourcing decisions of Amazon. These factors can include R&D activity, rate of technological change like increase in growth of internet technologies and mobile networking throughout the world. In terms of these factors Amazon need to be on top to make difference as most of IT R&D has been the major factor responsible in growth of internet business which is a key success factor of Amazon in the past.
Five Forces
Threat level
Bargaining power of supplier
Moderate
Bargaining power of consumer
Moderate
Intensity of Rivalry
Moderate
Threat of new Entrants
High
Threat of substitutes
Moderate
The SWOT analysis
SWOT analysis is a planning method which is strategic and which also helps to assess the strengths, weaknesses, opportunities and threats involved in an organisation. It projects the internal and external factors that are favourable or unfavourable for a future project. Amazon.com objectives need to align with the SWOT in making sure that the objectives we set are attainable and realistic. The Appendix 4 analyse the SWOT of Amazon which
One thing in common in all of these industries is that all these business are related to internet in the way it is conducted. But for the purpose of this assignment I will consider the Internet Retail industry and as it is closely related to all other services it is offering. For example although retail business is not the same as internet retailing it is a competing industry to internet retailing industry. Thus major global firms in retail industry with substitute product lines become direct rivals. The main competitor of Amazon thus includes Wal-mart, Dell, e-Bay, Barnes and Nobles and Borders, and other traditional retailers. Being the leader in e-retailing market is not satisfying given the fact the traditional retailers remain major competitors as the presence of shops in every corner in larger cities create huge challenges to the businesses in internet business and vice versa.
Market Survey
The Datamonitor a global research firm has done a market survey in 2009 on internet retail
EFE matrix
The External Factors Evaluation matrix is used to audit the current business external conditions. It is used to visualize and prioritize the opportunities and threat that the Amazon.com is facing. The factors in this matrix are found from SWOT analysis and this tool helps us to rank the factors that have been identified in the SWOT analysis in Appendix 5. The EFE matrix for the Amazon has calculated value of 2.82 as shown in the Appendix 5 which is above the average meaning the company‟s ability to respond to external factor is
above average or can say strong in other terms.
Internal Environmental Analysis Core competencies of Amazon
Every retailer does understand that selling is all about product and good value, something all
Porter’s
Value Chain
The value chain of the Amazon consists of Purchasing or sourcing, marketing, distribution and after-sales Services. The company has been able to reduce external failure rate which is one of core in forming Amazon‟s value chain. This is shown in the Appendix 7. The focus of
the company is sourcing and distributing the products to consumers and thus the investments are geared towards warehousing in key high demanding geographical locations. This has been paying off to the company by forming an efficient delivery and distribution system of products to the consumer around the world.
IFE Matrix
The Internal Factors Evaluation matrix is used to assess the internal strength of the company. It is used to visualize and prioritize the strengths and weakness the Amazon.com is facing. The factors in this matrix are found from SWOT analysis and this tool helps us to rank the
the STAR where the company has been enjoying greater market share than the nearest rival in the market. in Europe mainly in France, Germany and united kingdom it has been also maintaining highest market share but the growth is not up to the level it requires dynamic changes in the way of competing in the industry unlike in US. These categories therefore fall into CASH COW. Chinese market on the other hand which is dynamic and has large growth pace is considered in a position of question mark. According to Business Week (2010) the electronics sales in China has raised forecast for Amazon‟s compounded annual growth rate
for revenue in 2010-2013 to 25 from 22 percent. Japanese and Canadian market share and the market itself are growing, thus Amazon can still rely on those markets to convert them to Cash Cow in future. Financial Position of the company
The company financial position has been strong despite its high gearing ratio. Appendix 8 shows the Amazon‟s Quarterly Income Statement which shows strong performance despite
fluctuation in revenue in the past four quarters the company published. This has been due to the fact that it has becoming a strong player in Chinese market (newsweek.com, 2010)
Decrease cost of selling per customer by 5% by the end of 2012. Become major player in Chinese market by the end of 2013. Pricing Objective;
earn customer trust through low prices,
vast selection of product and ;
Fast, convenient delivery
Amazon report its financials with two divisions the USA and the International. International chain has been extended to six countries. They are United Kingdom, France and Germany from Europe, China and Japan from Asia and the neighbouring Canada. In order to achieve corporate level objectives each individual location has to set their own targets and objectives. Likewise all the functional departments and operational department need to set own goals and benchmarks and make sure to attain that target which will ultimately lead company to fulfil its corporate level targets. The short term objectives are derived from long term objectives, which should be translated into immediate or current actions and targets. Thus with the level
The long term Goals and Objectives of Amazon is the key to formulate the business strategies. Different writers have put forward different definition of the word strategy. Professor Chandler of Harvard Business School in 1962 has defined Strategy as: “...the determination of the basic long-term goals and
Objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”.
As shown in IE matrix the company should focus on strategies for the growth of the company.
The
calculated result of EFE and IFE Matrix is 2.82 IFE 2.98 respectively. (see Appendix 5 and 6) The result suggests Amazon to hold and maintain its position. This suggests the company should focus on in increasing market penetration and product development.
Acquisition Strategy:
Amazon has been one of the few companies which have been growing at the same pace as market growth by taking advantage of its position of the industry as leader. The company has been able to maintain this market growth through Acquisition of innovative companies.
Market Development
The focus has been on selling existing products to India and Middle East via strategic alliances. This is riskier than penetration which includes new channels new packing and new area development programs. Product Development
This strategy concentrate on developing and introducing new products in existing markets which is more disadvantageous to Amazon due risks associates with introducing new products to market where there is high intensity of rivalry.
Diversification strategies:
the operations of Amazon. That is some digital cable providers and internet providers are offering Video on Demand and technologies have been developed by other companies such as Apple with iPad and Apple TV allows alternative means for consumers to receive and watch movies. Smart phone has never been better with different applications via internet that is adversely affecting the Amazon‟s business worldwide.
Company needs to tackle the competition from Barnes and Noble and Borders with strategic moves to overcome disadvantage it faces in dealing with traditional method of selling books. Globally competition from Chinese vendors and e-retailer has been one of key area Amazon needs sorted out in order to settle in the e-retailing for the long run . It is a segment which Amazon does not have the first mover advantage and the reputation of Chinese counter parts are quite positive due to cultural influence in this part of the world.
Option 1. Product development of e-books by taking spoil of vacancy that will be created by Borders bankruptcy
The Borders book store is under huge financial burden and has already filed for bankruptcy to close 200 stores on 22nd of July 2011. This leaves good growth opportunity for other book retailers in market especially for Amazon to increase market for e-books. As it was highlighted by Borders President Mike Edward, the reason for his chain‟s bankruptcy was due to insufficient capital
resources to be a viable competitor. (Borders files for bankruptcy, to close 200 stores , 2011). He said the bankruptcy was essential to restructure its debt.
Arguments for adopting this strategy. This will help gain more competitive advantage over traditional sellers like Barnes and Nobles and Borders itself. Amazon can expect to give more problems to Borders remaining shops and may effectively take over Borders in the future at the same time generating a product notoriety and brand loyalty
It is a major risk that if Amazon builds its own platform for the new tablet as there may not be enough applications from developers as there is already quite a competition from Apple‟s iOS and Google‟s Anroid OS applications developers.
Kindle can look forward for Anroid Operating System for this new tablet instead of building its own. (New York Times, 2011)
Argument Against:
Affiliating with a company like Google for OS can be dangerous in future as it would expose some of the weakness of the Amazon in e-retail market to a indirect competitor who can have possible concentric diversification to compete Amazon in future.
3 Market Development through Social Networks
Google+ is the last addition of the social network market which is currently under construction. The beta version of this network has 6 million member in 6 months even with the restriction it has places on new users to become member. Amazon has been working on
Option 4: Market Development by forming strategic alliances with Chinese eretailers
Chinese market is the segment which Amazon need to exploit in order to maintain and grow current market share which has high prospectus of growing in the future. (newsweek.com, 2010) Arguments for:
The PEST analysis has shown that the external environment indicates ever increasing attractiveness of the Chinese market which Amazon can take advantage out of careful and strategic alliances. Ability
With strategic alliances and investment on human resources from China Amazon can penetrate more into Chinese market.
In the PEST analysis it has revealed that the new e-retail market can be develop in the Middle East countries where as India‟s economy has been growing even when the recession were hit in most of the countries in past two year
Indian government has been targeting to increase number of users of internet users to 3 million from 2007 onward, a project that has increased number of service provides and reduced the price of internet (datamonitor, 2009)
Arguments against:
Internet contents are highly filtered in Middle Eastern countries where as Indian companies like Letsbuy.com has been enjoying first mover advantage in Indian market after initial starters collapsed during dot.com bubble in 2000. (Dharumakumar, 2011)
Selection of strategies
Since all of these are mutually exclusive for Amazon.com due to its high gearing ratio of 69% the company need further assessments on choosing the best strategy amongst these five
Release Beta version of Kindle Tablet in Chinese market with disguised as Chinese (reversed engineer) fake Kindle Tablet in the First quarter of 2012 to get market feed back
Break a deal with Google to establish a specific sub segment for Kindle tablet applications in google‟s application store, Anroid Market, before end of 2011.
Release Kindle Tablet to the Market in third quarter 2012.
Implementation and controlling of Strategies
In order to implement these and other strategies Amazon should manage the following factors properly that will be key in successful implementation of any business strategy. These include; Key
component
Amazonc's Approach
Implementing Strategy
The organization structure
Amazon has a flat structure
Strategic Annual Action Plan
In order to achieve the operational objectives outline above and to achieve the objective of releasing the Kindle tablet in 2012 we have to formulate the Strategic Annual Action Plan giving time line for different actions to be achieve in the short-run. The appendix 12 shows the SAAP plan to implement and launch the product by end of 2 nd quarter of 2012.
Conclusion
Amazon, the Americas largest online retailer with three times the internet revenue of the runner up offers various product categories through its e-ecommerce website amazon.com and other regional web sites. With efficient management of downstream, operation and upstream through innovative technologies and marketing innovation the company has been able to offer cheaper price to consumers. The company‟s core competencies include innovation and customer centric quality services. This has enabled the company to enhance customer satisfaction as it offers customers with broader selection and greater access to information. Leading position in the e-retail market has also enabled Amazon to target customer base and has enhanced its top line (Datamonitor, 2010)
all the remaining stores. It will not only prevent Barnes and Nobles to gain market shares of traditional book retailing but it also will pave new strategy of developing online books for Amazon. The traditional book market still has good future in United States and in other countries. The reasons behind the failure of Borders include insufficient capital resources, maintaining unsustainable level of debt, over investment, failures in concentric diversification. (quora.com, 2011). It is not due to any downturn of traditional retail book market. This is also backed from the fact that Barnes and Noble has been doing well in the market. (The Future of Barnes & Noble, 2011) The new strategy therefore can benefit Amazon like double edge sword by using these stores to grow selling of e-books with the help of traditional selling, a concept largely ignored by Borders which many blame for the failure of the giant and at the same time preventing Barnes and Noble increasing its market shares in traditional retailing.
References Borders files for bankruptcy, to close 200 stores . (2011, 2 16). Retrieved 7 25, 2011, from
msnbc.com: http://www.msnbc.msn.com/id/41536256/ns/business-consumer_news/ Bosman, J., & Michael. (2011, 2 16). Borders Files for Bankruptcy . Retrieved 7 25, 2011, from nytimes.com: http://dealbook.nytimes.com/2011/02/16/borders-files-for-bankruptcy/ Break the Rules the Way Zappos and Amazon Do. (n.d.). Retrieved from
http://ehis.ebscohost.com.newdc.oum.edu.my/bsi/detail?sid=f25acff3-98fa-49f7-b022cc30c7896cba%40sessionmgr104&vid=1&hid=102&bdata=JkF1dGhUeXBlPWlwJnNpdGU9Yn NpLWxpdmU%3d#db=buh&AN=60438963 Campbell, D., Stonehouse, G., & Houston, B. (2007). Business Strategy. Oxford, Great Britain: Elsevier Butterworth-Heinemann. David, F. R. (2005). Strategic Management, Concepts and Cases. New Jersey: Prentice-Hall. Dharumakumar, R. (2011, 7 25). Ecommerce in India - Second Coming. Retrieved July 29,
http://www.quora.com/Borders-Books/Why-is-Barnes-Noble-performing-well-as-abusiness-while-Borders-has-filed-for-bankruptcy Samuel, C. C., & Certo, S. (2009). Modern Management, Concepts and Skills. New Jersy: Pearson Prentice Hall. Stock Picks: Amazon.com, Apple, Ford, Intuit . (2010, 6 7). Retrieved 7 25, 2011, from
businessweek.com: http://www.businessweek.com/investor/content/jun2010/pi2010067_358691.htm The Future of Barnes & Noble. (2011, 2 16). Retrieved 7 25, 2011, from Frenstrategy:
http://fernstrategy.com/2011/02/22/the-future-of-barnes-noble/
Appendix 1 Amazon Principles and Values Customer Obsession
Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.
Ownership
Leaders are owners. They think long term and don‟t sacrifice long-term value for short-term results.
They act on behalf of the entire company, beyond just their own team. They never say “that‟s not my job”.
Invent and Simplify
Leaders expect and require innovation and invention from their teams and always find ways to
inspires results. They think differently and look around corners for ways to serve customers.
Bias for Action
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.
Frugality
We try not to spend money on things that don‟t matter to customers. Frugality breeds resourcefulness,
self-sufficiency and invention. There are no extra points for headcount, budget size or fixed expense.
Vocally Self Critical
Leaders do not believe their or their team‟s body odour smells of perfume. Leaders come forward
with problems or information, even when doing so is awkward or embarrassing. Leaders benchmark themselves and their teams against the best.
Earn Trust of Others
Leaders are sincerely open-minded, genuinely listen, and are willing to examine their strongest
Appendix 2 PEST Analysis PEST
KEY COMPONENTS
FACTORS Social
SIGNIFICANCE TO AMAZON.COM
Social Networking has been phenomenal in past 3-4
Amazon.com can
years beginning with Facebook and Twitters success. A
use marketing
new social network of Google, Google Plus, has already
strategies and can
reached to 6 million users in 6 months.
exploit new business opportunities through these social networks or can even seek for innovative social
internet hackers pose significant threat and risk for the
this can be taken
online shoppers (Datamonitor 2010)
to advantage by building trust of consumers thereby enhancing market share
Political
In many countries including economic power house
certain type of
China has been restricting contents in internet.
products cannot be sold to China
some politically conservative countries has been
new e-retail
changing leaderships like Tunisia and Eqypt leading in
markets will be
the process of changing their Previous Regimes who
emerging
were in power for decades. The major force in toppling
presenting new
these leadership was the increase in voice of youths for
opportunities to
Currency fluctuation plays vital role in selling across
this will not only
borders. Recently the dollar slumped to 33 percent low
reduce prices of
against yen A weaker dollar will increase revenue to US
US merchandise
companies as attractiveness of US products increases
but also
and such will have positive impact on US economy.
transportation costs and could exploit non-US residents market
There have been major oil shocks in the past two years.
possible slumps in
An increase in oil prices will decrease disposable
demand for
incomes of consumers, decrease consumptions and
elastic goods may
correspondingly will increase stockpiles. (Economics
need to market
book)
maintain competitiveness in inelastic
Appendix 3
Lower fixed costs
No natural barriers
Small companies can develop niche markets
Recession proof in last economic
downturn Threat of new entrants – High
Large Number of suppliers Publishers have exclusive rights of distribution Backward Interrogation with
Low cost of sales
Product diversification
and product mix makes Amazon unique
Less elasticity of for Amazon products through brand loyalty Low switching costs to customers General Internet Security threat
Appendix 3 The bargaining power of consumers:
There is variety of potential customers in this retail market since Amazon has diversified its business to number of sectors which has relatively less elasticity in demand. The inelastic nature of its products is explained from its own unique brand through high quality services it offers or to rephrase I could say its marketing mix is differentiated in terms of the style of merchandise it sells and attractive prices offered to customers. The diversification to different retail sectors itself has increased customer base of Amazon and it will generally be true for any company in this sector and will reduce overall buyer power. The security threats pose by the internet itself affects the loyalty of customers in this industry and it is at advantage to Amazon from the fact that it is trusted by many customers throughout the world. However, the nature of the e-business represents significant power to consumers as well as there is very low switching cost. Therefore I can say power of consumers is moderate.
handling and customer service. The nature of e-retailing does not require heavy investment means smaller companies can compete in this industry. There are no natural-barriers in the industry and barriers to the market are minimal as there is little regulation and supplier accessibility is relatively easy. A small company may be successful in competing a company like Amazon with specialised or niche products. Further the growth in the sector has been dynamic which has proven somewhat recession-proof in the last economic downturn, making it attractive to new entrants with strong likelihood of new entrants.
Threat of Substitutes:
The traditional „bricks and mortar‟ shopping and catalog shopping will not perish for all
despite how opportunistic and profitable can e-retailing become in future. Many customers enjoy experience of traditional shopping specially in garments and clothing products. As I have mentioned before the threats of hackers accessing to personal information may lead many consumers to favour catalog and traditional shopping. Overall the threat of substitute can be said to be moderate to Amazon.
Appendix 4 STRENTHS
Robust Brand Image
World’s Largest Online Retailer
Strategic location
Product Diversification
Technological Advancement
Service Oriented and Customer Centric Vision
WEAKNESS
arise from Free shipping offers
Stakeholders confidence issues due to patent infringement
Weaker presence in emerging markets like china and Middle East
High dependency on debt for working capital management
Strong Research and Development Facilities
Price Competitiveness issue might
Profit Margin is lower for regional
Enthusiastic Highly Skilled Workforce
market segments which have no
Customers Obsession and Loyalty
conglomerates
OPPORTUNITIES:
THREATS:
Growth 3G internet Technologies
Changing social Trends
Growth in Social Networking
High Dependency on strategic
Rising Global internet literacy
Alliances and Partnerships for Inbound
Appendix 5 EFE Matrix
Opportunities
Rating
Weight
Weighted Score
Growth 3G internet Technologies
4
9%
0.36
Growth in Social Networking
3
9%
0.27
Rising Global internet literacy
2
5%
0.10
London Olympics 2012
4
6%
0.24
Expansion with Takeover and Merger
4
8%
0.32
Lower costs of selling
3
3%
0.09
Internet Sales to grow at CAGR of 13.5% until 2013
3
5%
0.15
5%
0.20
8%
0.32
Growth in usage of Gadgets and Smart Phones in emerging countries Economic Growth of India and China Threats
4 4
Appendix 6 IFE Matrix
Strengths
Ratin
Weight
g
Weighted Score
Robust Brand Image
4
10%
0.4
World‟s Largest Online Retailer
4
9%
0.36
Strategic location
3
8%
0.24
Product Diversification
3
7%
0.21
Technological Advancement
3
7%
0.21
Service Oriented and Customer Centric Vision
3
7%
0.21
Strong Research and Development Facilities
4
5%
0.2
Enthusiastic Highly Skilled Workforce
4
7%
0.28
Customer Obsession and Loyalty
4
6%
0.24
2
10%
0.2
Weakness Price Competitiveness issue might arise from Free shipping offers
Appendix 7 Porters Value Chain of Amazon
Amazonhas created a data base through which a central planning is being done with the input of all business units and departments. This helps for the Amazon to reduce cost as well gain value by synching all its business activities toward same goals. Cost i s derived down when repetetive works are eliminated when Infrastructure
this data base is used the company wide With the unique benefits to employees attract highly skilled labour force who are ready to work in
s e i t i v i t c A t r o p p u S
warehouses located in economically cheaper areas. Value is being created from the skills of labour force who are highly competitive. The company has been able to source expertise from competitors' trained staff Human Resources
who had proven to behind innovative ideas of Amazon investment in technology has turned into numerous opportunities in the past for example being able to quickly digitize media for direct online sales. "search the inside or contents of the book service" has been
Technology Development
one of the highly rated development in technologies in the past the strategic business create value with the efficient and timely on demand delivery system like the BookSurge which keep rich inventory of digital copies of books readily available for customers through print-
Procurement
on-demand
Page
Business Intelligence system with the help of data base infrastructure has been able to
Online Payment
forecast inventory
System has
at fairly accurate
been never
Close Proximity to
Amazon is able to create its
free delivery and
level which also
faster in the
"Aids to trade" and
own producst through
return policy with
help to reduce
e-retailing as
transport infra
product mix it offers to
in 30 days is
cost by preventing
Amazon's
structure facilities
customers. Various
unnecessary stock
database
help Amazon to
technique of product
level and Return
combined
lower cost and
bundling and mixing that
Inward costs
with the
also allows to
give maximum value to
costs Alliances and
substantially.
intelligence
aggregate order to
customers is identified
third pary sales
the online format
system
minimise per unit
from the past sales data
helps Amazon to
allows
cost of delivering
where real time analysis
Price Comparison
rotate inventory
customers to
goods achieving
are available from Market
of new and used
be credit
economies of
Intelligence systems for
rated
scope and scale
sales and marketing team.
rapidly and reduce it inventory
Page
possible to achieve by minimising External Failure
products is available
management cost
Inbound Logistics
Operations
Outbound Logistic
Marketing and Sales
Operation Activities
Page
After sales services
Page
Appendix 8: Quarterly Income Statements of Amazon Revenue and Cost of Selling
31-12Expenses
31-03-11 10
30-09-10
30-06-10
(000,000)
(000,000)
7,560.00
6,566.00
(000,000 (000,000) )
12,947.0 Total Revenue
9,857.00
0
10,317.0
Operating Income or Loss
322.00
474.00
267.00
271.00
(3.00)
44.00
36.00
36.00
319.00
518.00
303.00
307.00
12.00
11.00
12.00
9.00
Income from Continuing Operations Total Other Income/Expens es Net Earnings Before Interest And Taxes Interest Expense Income Before
Changes Other Items
Net Income
201.00
416.00
231.00
206.00
Preferred Stock And Other Adjustments
Net Income Applicable To Common Shares
Appendix 9 Ansoff Matrix
-
201.00
-
416.00
-
231.00
-
206.00
Appendix 10 Space Matrix
Internal Strategic Position Competitive (CA)
External Strategic Position
industry (IS)
-1 Robust Brand Image
2 Barriers to entry
-1 World‟s Largest Online Retailer
6 Growth of Industry
-2 Product Diversification
5 Accessibility of Finance
Appendix 11 Evaluation of Strategic Options
Evaluative Criteria Sustainability
Acceptability
Option 2
Option 3
Option 4
Option 5
Fit with capacity
7
10
8
4
10
Fit with environment
9
10
9
6
10
pay-back period
5
8
7
5
6
Risk Associates
3
5
6
6
3
Return of capital employed
5
9
7
7
7
Consumers
7
7
5
6
5
Shareholders
7
5
8
5
6
Employees
7
6
9
4
7
Financially
3
7
8
6
7
Technically
7
10
8
6
8
Cost effectiveness
7
10
10
6
10
67
87
85
61
79
Stake holders Reactions
Feasibility
Option 1
Total Marks
Page
Appendix 12 SAAP
Quarterly
Strategic
Objectives
Actions
1. Brain
Meetings
Storming
with all
Date assign
Date
Financial
Non-Financial
Man
completion
Resources
Resources
responsible
12 Business Unit
Sam Wheeler ,
Jeffry Blackburn ,
Heads
Director,
Senior Vice
Fuctional and
Business
President,
Division head
Development
Business
15-Aug
25-Aug -
chaired by
Man Accountable
Development
SVP of World wide architechture , Platform and Software, Rick Dalzel
Page
2.Break a deal
Assign Taks
with Google to
for R & D
support OS of
head and
Kindle Tablet
three other
1-Sep
15-Sep
10 Staff 25,000.00
Mr. Neil
Vice President,
Roseman
Engineering,Steven Kessel
staff to negotiate Google and agree on price with Marketing and Finance team To produce Financial
16-Sep -
1 Mr. Neil -
apprisal of to
Roseman
Vice President, Engineering,Steven Kessel
determine maximum price afford to pay google
Page
3 Marketing
20-Sep
Team to
3 Mr. Neil -
Head of Marketing
Roseman
discuss marketing options to minimise financail outflows 4. Produce pilot
Operation
21-Sep
30-Sep
10 Diego
batch to be
Department
evaluated for
to do
Retailing and
quuality
thourogh
Marketing
assuarance
testing of
25,000.00
Placentini
Diego Placentini, SVP, World Wide
first batch Release the
2-Oct
Marketing
Diego Placentini,
pilot
Manager,
SVP, World Wide
production in
China and Asia
Retailing and
China
Pacific region
Marketing
disguised as" fake Kidle"
Page
Review the
1-Dec
31-Dec
12 Marketing
Diego Placentini,
Manager,
SVP, World Wide
feedbacks for
China and Asia
Retailing and
the "fake
Pacific region
Marketing
results and
100,000.00
Kindle" Compile and
1-Jan
31-Mar
Submit the
5 Marketing 25,000.00
report of
Diego Placentini,
Manager, US
SVP, World Wide
operations
Retailing and
Product
Marketing
performance 5. Launch the
enhance the
product
performance
1-Jul-12
25 Mr. Mark 1,000,000.00
Peek
Jeffry Blackburn , Senior Vice
and Launch
President,
the product
Business Development
Total 1,125,000.00
Page