Strategic Management Analysis of Amazon

This report analyzes the strategic position of Amazon through SWOT analysis. It also offers recommendations for new product launch, target market, and consumer value proposition.

Running head: STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
Strategic Management Analysis of Amazon
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1STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
Executive Summary
The objective of this report is to analyze the strategic position of Amazon. Considering the same
SWOT analysis will be carried out that will facilitate in analyzing the strengths and opportunities
of the company in attaining competitive advantages. Moreover, threats and weaknesses of the
company will also be revealed that can facilitate in addressing its major issues. With
consideration to the online grocery purchasing trends a better online and in-store purchasing
channel must be developed by Amazon that can result in better usage of Amazon survives by
consumers. Such services include Amazon Fresh, prime pantry, whole foods acquisition along
with subscribes and save that can offer a great value to its consumers.

2STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
Table of Contents
1. Introduction and Company Background..........................................................................3
2. Market Description..........................................................................................................3
3. SWOT Analysis...............................................................................................................5
4. Explanation of SWOT Analysis......................................................................................6
5. Recommendations............................................................................................................8
5.1. New Product Description..........................................................................................8
5.2. Target Market...........................................................................................................9
5.3. Consumer Value Proposition....................................................................................9
5.4. Choice Justification of New Product......................................................................10
6. Conclusion.....................................................................................................................10
References..........................................................................................................................11

3STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
1. Introduction and Company Background
Amazon Inc is positioned as one of the largest global online retailers. It supplies a wide
variety of merchandise such as the books, electronics and apparels through its website (Dyer et
al. 2015). The company also operates through its international websites. Classification of the
company’s business segments includes North America, International alone with through Amazon
Web Services. Amazon has its business operations in Europe, Asia and North America and has
it’s headquarter in Seattle. The company has observed revenue of US$135,987 million in the
year 2016 and it also observed a decrease by 18.4% in 2017 in comparison to the previous year
(Phx.corporate-ir.net. 2018).
The objective of this report is to analyze the strategic position of Amazon. Considering
the same SWOT analysis will be carried out that will facilitate in analyzing the strengths and
opportunities of the company in attaining competitive advantages. Moreover, threats and
weaknesses of the company will also be revealed that can facilitate in addressing its major issues.
Based on such analysis certain significant recommendations will also be offered regarding its
new product description, target market, consumer value proposition and choice justification of
new product.
2. Market Description
Market description of Amazon Company will focus on the consumer electronics market
within the selected nation (Singapore) (Fitzroy, Hulbert and O'Shannassy 2016). The market
description of consumer electronics market includes considering market size, market leaders,
market concentration, distribution & industry growth. The consumer electronics within

4STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
Singapore is observed to have huge market size with including portable, in-home and in-car
consumer electronics products market at a national level. The industry is observed to give
leading consumers and brands that impacts the market with their new products development,
distribution or pricing concerns. However, the industry growth of consumer electronics in
Singapore is observed to become a bit slow (Hill, Jones and Schilling 2014). This is because the
volume of sales of consumer electronics in the nation is observed to drop in the year 2017.
Additionally, consumer electronics segment such as mart wearables, analogue activity
watches, and OLED televisions along with wireless speakers indicated high volume gains and
contoured to attain increased consumer interest. The products that are covered in the Singapore
electronics market includes peripherals and computers, digital cameras, in-car entertainment,
portable consumer electronics, in-home consumer electronics and Tablets by OS (Hubbard, Rice
and Galvin 2014). Integration combined with effective aesthetics is the driving forces within the
luxury market. Luxury mobile phones, mp3 players along with electronic wearies segments are
there in the consumer electronics markets. Within the luxury electronic industry the leaders are
observed to companies like Apple, Samsung and Huawai that offers superior and highly
competitive consumer electronics within the market. Market concentration in the Singapore
electronics industry is now shifting towards offering Wi-Fi, MP3 playback and movie play, web
surfing that is readily available within the electronics goods market. Distribution through internet
detailing is deemed to be the fastest trowing channel that offers great a huge potential because of
its high convenience to the consumers (Irani 2015).
Several companies are entering the electric goods market of Singapore and many new
products launch is deemed to be lined up in future. For instance, TAG Heuer is the biggest entry
within the consumer electronic market as it has positioned itself to be the first Swiss watch

5STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
manufacturer that has launched a smart watch with the introduction of connected TAG Heuer.
Market concentration of the electronic goods sector in Australia is focussed on introducing and
distributing new consumer electronic goods to attain high industry growth (Lasserre 2017). The
smart watches offered by the leading companies in Singapore are observed to offer stainless steel
frame, large display along with operation within the Android wear platform. One major example
of developing distributing channels in the Singapore consumer market is Michael Kars (Ritala,
Golnam and Wegmann 2014). Collaborative distribution systems are also observed to get
common in the industry that is building increased brand exposure. A major collaborate
distribution within the industry took place between Apple and Hermes for developing luxury
leather brands for Apple watches. This resulted in increased demand for new product
development in Aitkin consumer electronics market for maintaining competitive edge (Loaiza et
al. 2017).
3. SWOT Analysis
SWOT Analysis of Amazon Company is conducted in the table below that has explained
the company’s strengths, weaknesses, opportunities and threats in the industry. Moreover, threats
and weaknesses of the company will also be revealed that can facilitate in addressing its major
issues (Kew and Stredwick 2017).
Strengths
 Strong background and good financial
performance
 Highly consumer centric
 Cost leadership strategy
Weaknesses
 Decreasing profit margins
 Issue of tax avoidance
 Increased debt
 Product innovation failure

6STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
 Effective network of delivery
 Profitable GLOCAL Strategy
 Successful acquisitions
Opportunities
 Strategy of backward integration
 Increased chances of acquisitions in
new market
 International expansion
 Opening physical stores outside the US
market
Threats
 Low entry barriers within the industry
 Increasing local competition
 Strict government regulations
4. Explanation of SWOT Analysis
Amazon is positioned as among the top online book stores that converted into a top
online retailer all through the world and recently is facing a tough competition. The company is
observed to have a strong loyal consumer base that repeatedly purchases the online retailer
(Pisano 2017). In order to analyze the position of the company within the industry, SWOT
Analysis is carried out below:
 Strengths: Amazon is observed to have strong background that builds in its success with
books. The company has attained expanded product categories that encompass toys,
electronics, home and kitchen, games along with white and brown goods. The company
has also turned out to be an e-commerce giant over the past decades. In order to

7STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
differentiate itself through offering strategic alliances with other organizations to provide
better consumer service (Ritala, Golnam and Wegmann 2014). With its strategic partners
and because of Amazon’s fulfillment centres, the company has generated a deep along
with structured distribution network for making the product available within the remote
locations. The company’s CRM has generated consumer processes for carefully
recording information regarding consumer purchasing behavior.
 Weaknesses: Because of wide network of delivery along wit price wars, Amazon
margins are observed to be decreasing that is resulting in high losses. In India, the
company has lost more than $359 in the year 2014 (Rothaermel 2015). The company also
introduced fire phone in US that turned out to be a large product failure. At the same
time, Kindle fire did not succeed as profoundly as Kindle did. The company has also
attained negative publicity in the areas of tax avoidance in nations like UK and US
(Ritala, Golnam and Wegmann 2014). Most of the company’s revenue is attuned from
these established markets.
 Opportunities: Through backward integration, Amazon can introduce its in-house
brands within distinct product categories. The company can also differentiate its products
that can facilitate it in attaining increased profits in the e-commerce sector (Tjemkes, Vos
and Burgers 2017). Expansion within the Asian and developing economies can facilitate
the company as these are the markets with low competition within e-commerce sector
and are less saturated like developed economies. Opening more physical stores outside
US can facilitate Amazon Company in supporting its consumers to get involve with its
brand that can result in increased repeat purchases and boost in loyal consumer base.

8STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
Through acquiring the e-commerce organizations Amazon can decrease its competition
level and can use other companies’ specialised capability (Zhu and Liu 2016).
 Threats: Low entry barriers faced by Amazon can affect the recent player’s business as
an increasing number of companies are emerging as a tough competition. This is resulting
in price wars, decreasing margins along with losses those results to questioning the
sustainability of the businesses. Government regulations are another threat as not having
clarity regarding concerns associated with FDI within multinational retail can hamper the
success of e-commerce companies in several developing nations (Sarbah and Otu-Nyarko
2014). Local completion from the established brands like Flip cart and Snap deal are
taking away major market shares. There are also many local players that grabs market
share of Amazon and it becomes difficult for the company to attain huge profits.
5. Recommendations
5.1. New Product Description
The new products that will be launched by Amazon in the Singapore market include new
gadgets those do not cost more than $150. It most considers launching quirky Echo Buttons that
has cost of $20 per year. Other new product launch that must be considered by the company
includes Echo Connect Landline and Fire TV that is 4K enabled (Fitzroy, Hulbert and
O'Shannassy 2016). The company must successfully launch a new private level product on the
company’s website. These products can include organic goods that are highly in demand with the
Singapore market. Product innovations must also be focused on hardware and new services that
can include launching Kindle e-readers, Fire tablet and Amazon fashion with the service of
unlimited free shipping (Ritala, Golnam and Wegmann 2014).

9STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
5.2. Target Market
Target market of Amazon in Singapore are the people those have access to the internet
along with having financial paying tools including debit card, credit card and PayPal. The
company’s consumers belong to various consumer segments within the nation. The company
must grab attention of its target consumers those are those consider shopping their products
through online medium (Fitzroy, Hulbert and O'Shannassy 2016). Moreover, the company’s
prime program must be focused on appealing to its old shoppers in comparison to the young
shoppers. This target mart must be selected by Amazon for the reason that data exist regarding
the fact that consumers above the of 40 years tends to remain loyal to the services of any
company in comparison to the people belonging to the age group of 40 years (Hill, Jones and
Schilling 2014).
5.3. Consumer Value Proposition
Consumer value proposition strategies of Amazon must be focused on consumer usage
along with engagement trends that can maintain the company’s competitive positioning over
time. Focusing on the products and services engagement with time the company is recommended
to encompass portraits of Amazon shopper with encompassing segmented subscription (Kew and
Stredwick 2017). Increased attention must be provided to the Amazon Prime as it can result in
increasing engagement and sales. With consideration to the online grocery purchasing trends a
better online and in-store purchasing channel must be developed by Amazon that can result in
better usage of Amazon survives by consumers. Such services include Amazon Fresh, prime
pantry, whole foods acquisition along with subscribes and save that can offer a great value to its
consumers (Hill, Jones and Schilling 2014).

10STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
5.4. Choice Justification of New Product
Based on the demands and trends in the Singapore market, Amazon is recommended to
launch for addressing the needs of its target consumer base. Second generation of Echo speaker
of Amazon will have modified features (Ritala, Golnam and Wegmann 2014). It will offer
exceptional value to all its consumers in the new market as it will have certain exceptional
features such as being wireless, web search options, create to-do and shopping lists, obtaining
instant weather reports along with having the ability to control all the popular smart phone
products (Kew and Stredwick 2017).
6. Conclusion
The objective of this report is to analyze the strategic position of Amazon. Considering
the same SWOT analysis will be carried out that will facilitate in analyzing the strengths and
opportunities of the company in attaining competitive advantages. It is also revealed that
Amazon is positioned as among the top online bookstores that converted into a top online retailer
all through the world and recently is facing a tough competition. The company is observed to
have a strong loyal consumer base that repeatedly purchases the online retailer. It is gathered
from the report that consumer electronics segment such as smart wearables, analogue activity
watches, and OLED televisions along with wireless speakers indicated high volume gains and
contoured to attain increased consumer interest.

11STRATEGIC MANAGEMENT ANALYSIS OF AMAZON
References
Dyer, J.H., Godfrey, P., Jensen, R. and Bryce, D., 2015. Strategic Management: Concepts and
Cases. Wiley Global Education.
Fitzroy, P., Hulbert, J.M. and O'Shannassy, T., 2016. Strategic management: The challenge of
creating value. Routledge.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Irani, L., 2015. Difference and dependence among digital workers: The case of Amazon
Mechanical Turk. South Atlantic Quarterly, 114(1), pp.225-234.
Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context. Kogan
Page Publishers.
Lasserre, P., 2017. Global strategic management. Palgrave.
Loaiza, T., Borja, M.O., Nehren, U. and Gerold, G., 2017. Analysis of land management and
legal arrangements in the Ecuadorian Northeastern Amazon as preconditions for REDD+
implementation. Forest Policy and Economics, 83, pp.19-28.
Loaiza, T., Borja, M.O., Nehren, U. and Gerold, G., 2017. Analysis of land management and
legal arrangements in the Ecuadorian Northeastern Amazon as preconditions for REDD+
implementation. Forest Policy and Economics, 83, pp.19-28.

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Phx.corporate-ir.net., 2018. Amazon - Investor Relations - Annual Reports, Proxies and
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Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Sarbah, A. and Otu-Nyarko, D., 2014. An Overview of the Design School of Strategic
Management (Strategy Formulation as a Process of Conception). Open Journal of Business and
Management, 2(03), p.231.
Tjemkes, B., Vos, P. and Burgers, K., 2017. Strategic alliance management. Routledge.
Zhu, F. and Liu, Q., 2016. Competing with complementors: An empirical look at amazon. com.