SWOT Analysis. BUS 5116 W1 WA PDF

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This paper is intended to be a SWOT analysis of the company Amazon. SWOT stands for strengths, weaknesses, opportunities, and threats (Ritson, 2013)....

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1 SWOT Analysis: Amazon

SWOT Analysis: Amazon Cory Sprott University of the People

2 SWOT Analysis: Amazon This paper is intended to be a SWOT analysis of the company Amazon. SWOT stands for strengths, weaknesses, opportunities, and threats (Ritson, 2013). Strengths and weaknesses provide an in depth understanding of the internal aspects of the company’s infrastructure, whereas the opportunities and threats provide an understanding as to how this company fits into the overall market and economy. Amazon was originally started in 1994 in Seattle, WA by a gentleman named Jeff Bezos as a small online bookstore. Today, however, it is one of the largest companies on the planet with over 310 million active users worldwide (G, 2020). While it’s most drastic shift happened in the first 10 years of the company’s development, we will delve into it’s more recent changes starting in 2013. In 2013, Amazon had become a retail giant. Bezos had already been named Times Person of the Year back in 1999 (DePillis, 2019). It had begun to acquire major retailers, such as Zappos and Audible. It had expanded into China, and had even developed a membership program called Prime. But it didn’t stop there. In 2013, Amazon acquired the Washington Post, giving it both press and political power. In 2015, the company release the Echo, it’s smart speaker, which allows people the command the device to find information for them across the web, order products, and play music. In 2017, Amazon acquire Whole Foods and entered the grocery marketplace. In 2018, the company becomes the second in history to reach $1 trillion market capitalization, right behind Apple. Not only that, but 2018 marks the year they raised minimum wage to $15 per hour, an important stance for the company that was frequently under scrutiny for poor work conditions for employees (DePillis, 2019). What a profound story for a company. They closed out 2019 with a share price of nearly $2000. This company is a force. Now let’s take a look at its strengths, weakness, opportunities, and threats.

Strengths Amazon as a sheer giant has a fairly substantial list of strengths, however, for the purpose of this analysis, we will focus on three of them. The first strength of Amazon is it’s brand name and brand valuation (G,2020). Looking back to 1999 when Bezos was named Times Person of the Year, Amazon’s name became even more of a powerhouse. The term Amazon has become synonymous with online retail. For example, when people want a facial tissue, they may ask for a Kleenex. The brand became the product. When someone plans to order something online you may hear, “I’ll just order it on Amazon.” The brand has become the industry. The second strength we will look at is acquisitions (G,2020). Bezos is known for taking advantage of what might be called ‘value companies.’ He identifies companies that under the Amazon name may have immense potential, but on their own may struggle. As such, he is able to purchase the companies for lower price points and stand to profit immensely from their acquisition. In addition to value companies, Bezos considers other factors in his acquisition strategy. For example, in purchasing the Washington Post, not only did Bezos acquire a company with immense potential at a bargain deal, but he gained press and political power as a result. The third strength we look at is it’s customer focus (G,2020). Amazon was already known for it’s focus on the consumers needs, wants, and wishes. However, the Echo took this to a whole new level. These smart speaker allow the consumer to verbally tell the robot what they want, and give

3 SWOT Analysis: Amazon the robots permission to listen into their daily lives. The thoughts and secret desires of the consumer were brought to light and Amazon delivers.

Weaknesses The first weakness we will focus on happens to also be a strength for Amazon. It’s their customer focus. Being so focused on the customer has positioned Amazon in some cases to face some serious losses (G, 2020). For example, some of their electronic ventures have been major flops. And in some markets, their free shipping has caused them to have smaller margins. Secondly, due to its immense marketshare, Amazon faces an immense amount of public scrutiny (G, 2020). The work conditions of their employees is largely publicized and criticized. As such Amazon, took a drastic action, increase their minimum wage immensely to attempt to overcome this image concern.

Opportunities Due to its immense size and cash position, Amazon can continue to acquire other e-commerce companies (G,2020), reducing potential competition and increasing its market share. With its large history in doing this previous, Amazon has the experience and resources to do this effectively. Amazon can do what is called “backward integration” (G, 2020). Amazon is known for being the retailer, but not the producer of products. Amazon could begin to expand their own product lines, thereby increasing its potential profit margin.

Threats Amazon faces three major threats. The first obvious one is competition (G, 2020). It’s difficult to skim a financial magazine today without hearing about how Walmart or Target’s planned online platform will take down the Amazon giant. Being such a large retailer already and a brand that companies have been able to build an in-person relationship with, Walmart does stand the potential to challenge Amazon’s market share. The second major threat deals with cybercrime (G, 2020). Hundreds of millions of customers have provided their financial information online through one platform or another to purchase a product from Amazon. This places a huge liability on the company. While Amazon prides itself in its cybersecurity, it also knows that this a huge potential area for attack. The last major threat involves policy decisions (G, 2020). Amazon is already unable to mail to certain countries due to the country’s laws. If Amazon were to infringe upon American law, it’s largest marketplace, potential legal mandates maybe freeze the company’s ability to expand.

4 SWOT Analysis: Amazon Recommendations and Conclusions As we have discussed at length, Amazon is a giant and a powerhouse in the online retail space. In 2018, it accounted for nearly half of online retail sales (DePillis, 2019). The strengths of the company far outnumber the weaknesses. While it may seem the Amazon has grown as far as it possibly can, there is still opportunity for continued improvement in the company and growth in the marketplace. It is my recommendation that Amazon continue to expand via acquisition and continue to focus on improving its areas of weakness. Employee treatment and environmental footprints are topics that have headlines the news lately as our society begins to favor environmentally and socially responsible companies. If Amazon continues to grow along these lines, it has to potential to go further than anyone could have imagined that small online bookstore back in 1994 could have ever gone.

5 SWOT Analysis: Amazon Resources DePillis, L., & Sherman, I. (2019, July 05). Amazon's extraordinary 25-year evolution. Retrieved June 25, 2020, from https://www.cnn.com/interactive/2018/10/business/amazon-historytimeline/index.html G, S. (2020, May 30). Amazon SWOT 2020: SWOT analysis of Amazon. Retrieved June 25, 2020, from https://bstrategyhub.com/swot-analysis-of-amazon-amazon-swot/ James, T. (2011). Operations Strategy. Bookboon. Ritson, N. (2013). Strategic Management. Bookboon....