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In-Class Assignment: A SWOT ANALYSIS (Adapted from: Amazon Swot…
In-Class Assignment: A SWOT ANALYSIS
(Adapted from: Amazon Swot Analysis, Business Teacher https://businessteacher.org.uk/swot/amazon.php AND
SWOT Analysis of Amazon, https://www.managementstudyguide.com/swot-analysis-of-amazon.htm)
THINKING: /20 marks COMMUNICATION: /5 marks
PART A: Explain what a SWOT analysis is and why it is important for businesses to practice this type of situational analysis. [THINKING: 3 marks; COMMUNICATION: 2 marks]
PART B: Read the following case study. Using the information provided in the case study, create a SWOT analysis using the matrix attached. Properly label the matrix (use full words to label) [THINKING: 2 marks] . Complete each section of your matrix. If you choose to use bullet points, please make sure enough detail is provided so that your idea is clearly communicated [THINKING: 10 marks].
PART C: Make a recommendation on whether Amazon should continue with its diversification strategy and further expand into the brick and mortar market. For full marks, you must support your conclusion with details from your SWOT analysis. Remember to use appropriate marketing terms. [THINKING: 5 marks; COMMUNICATION: 3 marks]
PART A: THINKING: /3 marks COMMUNICATION: /2 marks
Explain what a SWOT analysis is and why it is important for businesses to practice this type of situational analysis.
PART B:
INTRODUCTION
Amazon is one of the world’s leading online retailers that offers books, movies, music, clothing, groceries, sporting goods and housewares to many countries around the world. The online retailer is looking for ways to increase market share in an ever-expanding and changing online retail format driven by changing consumer needs, new regulatory environments, and interest in introducing its retail model in new countries to sustain its growth and revenue objectives. In light of increasing competition amount online retailers, Amazon is also looking to move into the “brick and mortar” market to compete with companies like Walmart and Costco. It has already acquired Whole Foods Market this past summer.
This SWOT analysis will examine what Amazon does well and what it could do better in addressing the opportunities and threats that it faces. It will also examine whether further expansion into the brick and mortar markets is the best next step for Amazon.
What is ‘Brick and Mortar’: “Brick and mortar is a traditional street-side business that deals with its customers face-to-face in an office or store that the business owns or rents. The local grocery store and the corner bank are examples of brick-and-mortar companies. Brick-and-mortar businesses can find it difficult to compete with web-based businesses like Amazon.com, Inc. (AMZN) because the latter usually have lower operating costs and greater flexibility” .Source: http://www.investopedia.com/terms/b/brickandmortar.asp#ixzz4wFmWoxkM
SOME MORE INFORMATION
Amazon is the world’s largest online retailer, indicating that it has captured the largest percentage of market share than all competitors in the same market. Its success has spurred other physical, brick, and mortar retailers to have an online presence. It is often referred to as the online equivalent of Wal-Mart because of its reach and global footprint as well as its aggressive pricing strategies and its focus on volume sales. However, Amazon has to rethink its business model of operating at close to zero margins and the fact that the company has not returned a decent profit in the last five years.
Amazon primarily derives its competitive advantage from leveraging IT (Information Technology) and its use of e-Commerce as a scalable and an easy to ramp up platform that ensures that the company is well ahead of its competitors. Amazon also enjoys top of the mind recall (brand awareness) from consumers globally and this recognition has helped it enter new markets.
A number of Amazon services have been expanded to new markets in the past year, including the expansion of on-demand Amazon TV subscription channels to the UK, the two-hour delivery Prime-Now service to Singapore and the Amazon Fresh delivery service of groceries to Germany. It has also recently acquired Whole Foods Markets. The cloud computing division of Amazon, the Amazon Web Services, continues to grow, with the net income from the three months to the 30th of June growing to $914 million as opposed to $718 million the previous year. However, Amazon’s diversification strategy has been “spreading itself too thin” meaning that it has allowed its focus to waver from its core competence of retailing books online and allowed itself to venture into newer focus areas.
Google and Apple are significant competitors to Amazon in terms of its technological offerings, and with both having significant customer bases, each of these, including Amazon, is not capturing the potential market share they could. With increased on-line retailers consumers have been increasingly concerned about online shopping because of identity theft and hacking which leaves its consumer data exposed. Government agencies have increased their watch and regulation in this regard. Furthermore, Amazon’s aggressive pricing strategies has led to an increased push-back by competitors who have looked to the courts by starting law suits seeking the imposition of sanctions against Amazon and damages (compensation awards) for loss of business opportunities.
PART C: Make a recommendation on whether Amazon should continue with its diversification strategy and further expand into the brick and mortar market. For full marks, you must support your conclusion with details from your SWOT analysis. Remember to use appropriate marketing terms.
THINKING: /5 marks COMMUNICATION: /3 marks
