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Business and Management (SWOT Analysis)
Name: Kathryn Campbell
Business and Management (SWOT Analysis)
Introduction & Background
The company I have selected for the SWOT Analysis is Amazon Inc. Amazon was founded in the year 1994, and its headquarters are situated in Seattle, Washington, USA. It got started from the idea of providing online bookstore services to users, but it very soon it got converted to providing fast retailing services to its customers through the internet selling each and everything one could have need of, manufacturing of readers of electronic books, and Web service. Amazon has become a world known retailer and a symbol of the success of online trading. Moreover, it is providing a platform for sellers to have their products delivered anywhere in the world.
Through continuous success and expansion, Amazon has become a listed company, annual revenue is more than $220 Billion and the Net Income is $9 Billion, and it currently has more than 613,000 employees. With its presence across the Globe Amazon has more than 310 million active users, and more than 100 million subscribers. One more interesting thing said about Amazon that in the initial days when a buying transaction was completed through Amazon a bell used to ring at its office, and very soon that bell was shut down because of the very high volume of sales and the continuous ringing of the bell CITATION Ano192 \l 1033 (Anon, 2019).
SWOT Analysis
Strengths
Amazon has too many strengths and is making effective use of those strengths since its inception. First, it has captured the greatest market share that any new entrant into the market in e-commerce field had not been able to capture in the past and would not be able to capture in the near future. Amazon has established a strong worldwide known brand name, and it holds a very solid place in the market. Other strengths of Amazon are discussed as follows:
Amazon has always been customer oriented and focuses on fulfilling customer needs, therefore it is always preferred by its customers.
Amazon follows differentiation strategy and it keeps on introducing new, innovative, and creative ideas and products in the market.
Moreover, the company is operating in a very cost effective and efficient environment i.e. it doesn’t have to hold large stocks of inventory.
It has an enormous range of products, and it owns a wide product mix that is offered through its portal which ultimately attracts a large number of customers from all over the world.
Many sellers have also got their products listed on Amazon’s websites and are trading through Amazon earning profits. We can conclude that Amazon is earning a lot from its third-party sellers as well.
Amazon has adopted the strategy of going global and providing its services globally regardless of boundaries.
Moving further Amazon has acquired many other brands such as Whole Foods, Zappos.com, woot.com, Junglee.com, IMDB.com, and so many others as well through which it has made huge profits.
Amazon is involved in three businesses i.e. Amazon Marketplace, Amazon Web Services (AWS), and Amazon Prime. All these businesses are functioning well and they all provide backing to each other.
It is the company with the highest turnover in the industry i.e. over $220 Billion in revenues, and over $9 Billion in Net Income per year.
Moreover, Amazon possesses the most efficient and cost-effective distribution channels through which it has been able to get its goods delivered to customers rapidly.
Weaknesses
Amazon’s liabilities account for more than 75% of its Total Liabilities and Stockholder’s equity i.e. it heavily relies on debt financing CITATION Ama19 \l 1033 (Amazon, 2019).
It faces a lot of competition from other well-known online businesses (such as Walmart, ebay.com, etc.).
It's business model is straightforwardly imitable. Online retail businesses are becoming so popular all over the world, so contenders always pose a risk of giving Amazon a tough time.
Amazon has experienced losses in some areas of the world, and the reason behind those losses could be its free delivery services. But these cost-free delivery services prove to be too costly when estimated in an international context.
Some of the innovations by Amazon (such as Fire Phone and Kindle) were not able to gain popularity and were ultimately failed.
Amazon has been experiencing public criticism over tax avoidance. And these controversies would lead to a negative image of the company.
Due to its limited presence in physical form, it has been unable to reach and provide its services to its customers over far-flung areas.
Amazon cannot hold items such as food, etc. in its inventory for long because such items are easily
A huge challenge is customer service and Amazon is bearing too many costs in such respect.
New marketplaces where Amazon enters there it may have still had to suffer challenges of credibility, and customers may not trust it.
Opportunities
Being an e-commerce business there is always an opportunity for Amazon to increase the scope of its operations and penetrate new markets.
Along with the online extension of the business, it should consider an increasing number of its physical stores as well.
It has the chance to decrease fake sales by developing technologically and refining its organizational policies.
Amazon can go for backward integration i.e. having direct involvement in the process of producing a product.
It should consider purchasing more online businesses to enlarge the scale of its operations.
Amazon has credibility among all its stakeholders, so it has easy access to financing for expansion plans.
Being a largely profitable company, it should keep investing in welfare projects to meets is Corporate Social Responsibilities and to have an image among the public.
As it is already running on a technological base it should try to reduce human intervention in processes to as much extent as possible to save its labor costs.
Customers have their accounts registered with Amazon’s website. It can access customer data to identify their needs and fulfill them in an efficient manner.
Being customer-centric Amazon should adopt the strategy of providing customized products to its customers to capture more market share.
Threats
Recent controversies against Amazon have caused it to face customer dissatisfaction.
Government regulations in home and foreign countries can have an adverse effect on business activities and profits.
Customer data that is lying on Amazon’s websites may be subject to theft with some cybercrime attack.
Other large retail companies such as Walmart, ebay.com, no matter they are not as large as Amazon, but still these can be a sign of danger for it.
There are no barriers to entering the e-commerce business, so Amazon may have to face a challenge from some wholly new entrant.
Third-party sellers may damage Amazon’s reputation by selling defected products.
Amazon’s intellectual property such as logos, pictures, product descriptions, videos, and music, etc. may be copied by others and damage Amazon’s image.
Search Engine Optimization websites (i.e. Google or others) may change their algorithms. Ultimately causing a complete descent in Amazon’s web traffic.
Returns and guarantees/warranties of the defected products may cause Amazon to pay a lot.
There may be stock out situations when many orders come. So, it is necessary to have a warehouse.
Conclusion
From the SWOT analysis, we have formed a clear picture and status of Amazon. There may be some modifications and enhancements needed to better run its operations. Summarizing the above Amazon needs to improve the condition of its key areas, overcome its weaknesses, and utilize all of its available resources to avail the opportunities in the best way possible, and to have strategies in place to counter any threats it may have to face in future CITATION ROB17 \l 1033 (GREENSPAN, 2017).
References
BIBLIOGRAPHY Amazon. (2019, June 6). FORM 10-K. Retrieved from www.sec.gov: https://www.sec.gov/Archives/edgar/data/1018724/000101872419000004/amzn-20181231x10k.htm
Anon. (2019, June 6). Amazon SWOT 2019 | SWOT analysis of Amazon. Retrieved from bstrategyhub.com: https://bstrategyhub.com/swot-analysis-of-amazon-amazon-swot/
GREENSPAN, R. (2017, February 20). Amazon.com Inc. SWOT Analysis & Recommendations. Retrieved from http://panmore.com: http://panmore.com/amazon-com-inc-swot-analysis-recommendations
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