Amazon SWOT Analysis
An introduction with a detailed description of the company
Jeff Bezos founded Amazon in 1994. The company started in a garage with meetings held at a nearby Barnes and Noble outlet. When Amazon was set up, Jeff Bezos intended to create an entity that was customer-oriented and offered clients various goods.
To be Earth’s most customer-centric company. Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon.
The main leadership principles that guide the company include obsession with the clients, ownership, invention and simplification, curiosity and desire to learn, thinking big, offering products and services with the highest standards, trust, being results-oriented, among others. These principles dictate Amazon’s way of doing business and ensure that they remain oriented toward customers (Amazon.com, Inc., 2021).
A SWOT analysis diagram that includes strengths, weaknesses, opportunities, and threats
· Economies of scale
· Established as an e-commerce site
· Customer orientation
· Cost leadership
· Extensive merchandise
· Entry into emerging markets
· Acquisition of other players
· Improvement of policies and measures
· Increasing the best sellers’ inventory
· Ease of imitating the business model
· Tax avoidance issues
· Overdependence on its distributors
· Litigations for using third-party data unfairly
· Competition from other players
· Imitation by new entrants
· Counterfeit products
· Economic recession
· Invalid product reviews
An evaluation of how specific internal factors (strengths and/or weaknesses) support and/or promote a competitive advantage; examples may include:
Amazon’s strengths collectively promote its competitive advantage in the market. The company’s stability offers economies of scale, leading to greater margins. Amazon has already invested in the necessary technological infrastructure. The software supports multiple products, reducing the company’s fixed costs. It also facilitates the inclusion of new products into the already extensive merchandise. In addition, the wide variety allows Amazon’s clients to have their needs and wants met sufficiently. Amazon is also established as a market leader among e-commerce retailers. Most importantly, its ability to prioritize the client’s needs and remain oriented toward the group of stakeholders creates a favorable reputation in the market (Krishnamurthy, 2005). Most importantly, Amazon does not have any physical stores. This allows it to retain the low-cost structure and reduce the impact on its margins.
On the other hand, Amazon’s competitive advantage remains at risk due to its avoidance of tax and litigations that have been placed against it. Amazon is one of the numerous multinationals that have been accused of avoiding taxes. Investigations by the IRS have not established actual figures. However, Amazon insists that it is a low-margin entity that uses its profits for investments and job creation. In addition, the company also faces litigation within the European Union for collecting data from a third party for competition. Its overdependence on other distributors increases the risk of reduced client satisfaction as the other companies operate on different policies (Cho, 2018). These aspects have the potential to reduce Amazon’s popularity by creating negative publicity.
An evaluation of how specific external factors (opportunities and/or threats) support and/or promote a competitive advantage; examples may include:
Amazon is a popular e-commerce site, especially when books are concerned. However, the current book titles are slow-moving, leaving the opportunity to hold best sellers untapped (Krishnamurthy, 2005). This gap could increase the company’s market share significantly. Amazon’s acquisitions have widened its reach in the market, making it possible to cater to varying demographics. The company also has the chance to improve its policies regarding counterfeit products (Kestenbaum, 2020). These products could damage the company’s reputation and competitiveness reasonably. The improvement of such policies is ideal for ensuring that Amazon retains its market share and remains competitive as well as customer-oriented. Counterfeit products are risky due to their effect on customer satisfaction. Most importantly, fake or invalid product reviews highlight the products’ counterfeit quality. This situation also presents a dilemma concerning Amazon’s integrity (Sadq, Sabir, & Saeed, 2018). Such aspects can be dealt with by creating policies that combat their occurrence or presence.
Conclusion with an evaluation of how the company has retained its competitive advantage
Amazon is already a well-known e-commerce site. It has retained its competitive advantage by being customer-oriented, creating a wide variety of products, relying on a low-cost structure, and maintaining economies of scale. However, the current competitive advantage is threatened by various internal and external factors. Some of these include the presence of fake products and reviews, litigations that expose the company’s unethical practices, overreliance on distributors, and possible competitors with similar financial muscle. The company should increase its acquisitions to cover a wider geographical area to combat these aspects. The company could also stock products from popular personalities such as authors to meet the needs of more clients. It is also recommended that Amazon revise its policies regarding counterfeit products. Failure to do this could lead to loss of clients and low client satisfaction. Such an occurrence goes against the company’s most important element, which is to be customer-oriented. Most importantly, the company should tackle all ethic-related aspects to repair its reputation.
Amazon.com, Inc. (2021). Amazon Store. Retrieved 2021, from Amazon: https://www.aboutamazon.com/what-we-do/amazon-store
Cho, Y. E. (2018). Tax Evasion. Retrieved from https://core.ac.uk/download/pdf/161421856.pdf
Demir, A. (2017). Management Information System: Case Study ofAmazon.Com. Journal of Research in Business and Management, 4(11), 11-17.
Kestenbaum, R. (2020, February). Amazon Could Be Vulnerable To Competition, And This Is How. Forbes.
Krishnamurthy, S. (2005). Amazon.com – A Comprehensive Case History. Retrieved from https://www.researchgate.net/publication/228319552_Amazoncom_-_A_Comprehensive_Case_History
Sadq, Z. M., Sabir, H. N., & Saeed, V. S. (2018). Analyzing The Amazon Success Strategies. Journal of Process Management –New Technologies, International, 6(4), 65-69.
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Company SWOT Analysis Technique Paper
Successful businesses regularly analyze their processes to ensure they’re operating as efficiently as possible and maintaining their competitive advantages. Although you can assess a company in many ways, a common technique is the SWOT analysis. In this assignment, you will practice using a SWOT analysis to better understand the factors involved in making business decisions that promote sustainable competitive advantage.
Select and research a company from the 2019 Fortune 500 list that demonstrates a sustainable competitive advantage in the marketplace. (Amazon)
Evaluate the selected company’s sustainable competitive advantage using the SWOT analysis technique.
Reminder: You can view sample SWOT Analyses by visiting the University Library > Databases > B > Business Source Complete: SWOT Analyses. In addition, detailed company profiles is available Databases > H > Hoovers
Write a 700- to 1,050-word modified SWOT analysis that includes the following:
- An introduction with a detailed description of the company
- A SWOT analysis diagram that includes strengths, weaknesses, opportunities, and threats
- An evaluation of how specific internal factors (strengths and/or weaknesses) support and/or promote a competitive advantage; examples may include:
- Financial, physical, or human resources
- Access to natural resources, trademarks, patents, or copyrights
- Current processes (employee programs or software systems)
- An evaluation of how specific external factors (opportunities and/or threats) support and/or promote a competitive advantage; examples may include:
- Market trends (new products or technology advancements)
- Economic trends (local and/or global)
- Regulations (political, environmental, or economic)
- Conclusion with an evaluation of how the company has retained its competitive advantage
Include APA-formatted in-text citations and a reference page with at least 2 sources. Note: You may include your textbook as 1 of the sources.
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