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Strategic Management Analysis: A Case Study of AmazonStudent’s NameInstitutionStrategic Management Analysis: A Case Study of AmazonAmazon.com’s History and ProductsHeadquartered in Seattle, Washington, Amazon.com is one of the world’s largest online retailers and pioneer of online retailing. Jeff Bezos, the president and chief executive officer of Amazon.com, started the company in 1994 as an online bookstore before expanding into other products. Today, the company offers a range of goods and services via its websites. The organization’s products comprise of merchandise and contents that it buys from vendors and third party sellers for resale. It also produces and sells different types of electronic devices. Among its product lines are media, apparel, consumer electronics, gourmet food, groceries, baby products, and jewelry. Others include: health and personal care products, kitchenware, watches, garden items, industrial and scientific supplies, sporting products, musical instruments, toys and games, and automotive products.It operates via three segments-North America, Amazon Web Services, and International. Its Amazon Web Services products consist of analytics, Amazon CloudSearch, Amazon Kinesis, Amazon Athena, Amazon Streaming for Apache Kafka, and Amazon EMR. The segment also deals with other products such as Amazon Redshift, Amazon ElasticSearch, Amazon QuickSight, AWS Lake Formation, AWS Data Pipeline, and AWS Glue. Amazon Web Services solutions consist of machine learning, Internet of Things, containers, storage, analytics and data lakes, serverless computing, and containers.  In addition to advertising, the organization also offers Amazon Prime (Reuters, 2020). Critical EventsToday, Amazon is one of the world’s most valuable public organizations, with Mr. Bezos being the richest man in the world because of various critical events. What started as an online book retailer has grown into a global giant with physical stores, a wide delivery system, membership subscriptions, and its own smart devices. Thanks to its innovations, Streitfeld (2018) indicates that Amazon become the second company in the world, in 2018, to have a value of $1 trillion after Apple Incorporation. It also has the second highest market valuation after Microsoft Incorporation. Although the company can attribute its success to global expansion, the success can be to its diversification into other sectors. The United States Securities and Exchange Commission (2018) indicates that video streaming services and devices, groceries, and cloud services have allowed the organization to compete with other technology heavyweights such as Apple, Google, Netflix, and Facebook. Other key events associated with its success include: launching of online book sales in 1995, Amazon becoming the world’s largest online sales platform in 1999, launching of Prime membership in 2005, and launching of the Kindle in 2007 (Palumbo, 2019). LeadershipBezos’ transformational leadership has also played a significant role in the company’s tremendous growth since its inception.Forbes (2012) indicates that Bezos is committed to building effective relationship between himself and his customers and employees. He has managed to create major shifts in his followers’ thinking thereby creating a tremendous change in their behavior and drive toward extraordinary results. According to Northouse (2015),a transformational leader relies on charisma and is characterized by four qualities of individual consideration, inspirational motivation, idealized influence, and intellectual stimulation. CompetitionAmazon.com’s businesses encompass a wide variety of products, services, and delivery channels. The global market in which the organization operates experiences rapid evolution and intense competition. In this regard, the United States Securities and Exchange Commission (2018) indicates that Amazon.com faces numerous competitors from different industry sectors across the globe. Among its common competitors include: physical, ecommerce, and omni-channel retailers, vendors, manufacturers, and publishers of products that the company offers and sells to consumers. Other classes of competitors are publishers, manufacturers, and distributors of digital, interactive, as well as physical media; web search engines, social networks, and other online application based means of using and acquiring products; firms that offer e-commerce services such as advertising, payment processing, and customer fulfillment; and firms offering fulfillment and logistic services. Moreover, Amazon faces competition from firms that offer information technology services; and organizations that design, produce, and market consumer electronics and electronic devices. Strategic HistoryAmazon.com Incorporation’s concentric diversification has also played a significant impact on its success over the years. The company leverages its technological capabilities and competencies for business success. It also follows a cost leadership strategy that focuses on offering maximum value to its clients at the lowest possible price on top of wrapping its business operations around customer needs. The focus is to have the company the go to portal for online shopping requirements. The strategy has paid off as evidenced by the fact that Amazon is the largest online retailer around the world and has consistently been the market leader in all segments that it serves. In addition to concentric diversification, the company’s success is driven by its competitive advantage. It uses its technology, leverages the benefits from synergies between its internal resources and external factors as the foundations of its business model. Moreover, the company utilizes data analytics to map out consumer behavior. In fact, the company has embraced big data to an extent that it markets it as another service offering. Mission Statement and Vision StatementThe company’s mission statement is “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience” (Whittington & Whittington, 2018, p.60). The company’s mission statement promises customers effective e-commerce services, affordable prices, best selection, and utmost convenience to satisfy their needs.The company’s vision statement is, “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online”(Whittington & Whittington, 2018, p.60). The vision statement underscores the company’s aim of becoming the world’s best e-commerce business. It emphasizes global reach, customer prioritization, and widest product selection. External Factor EvaluationAmazon.com Incorporation’s external factor evaluation comprises of opportunities and threats within its industry. David and David (2017) assert that this evaluation helps in assessing political, economic, socio-cultural, technological, legal, and competitive factors affecting an organization. By determining opportunities and threats within the industry, Amazon.com can examine how it is responding to the aforementioned factors. Table 1: External Factors Evaluation Matrix for Amazon Key External Factors Weight Rating Weighted score Opportunities 1. Improving economic condition 0.09 3 0.27 2. Increasing customer spending 0.07 3 0.21 3. Appreciation of United States dollar 0.05 3 0.15 4. Increasing number of Internet users 0.04 3 0.12 5. Increasing broadband access technology 0.06 4 0.24 6. Increasing number of online sales 0.07 3 0.21 7. Increasing potential of Internet of Things and Big data 0.07 4 0.28 Threats 1. Rising unemployment levels 0.07 3 0.21 2. Aggressive competition 0.08 4 0.32 3. Identity theft 0.08 2 0.16 4. Declining economic performance 0.09 2 0.18 5. Volatile stock market 0.07 2 0.14 6. Depreciation of United States dollar 0.08 2 0.16 7. Government regulation and taxes 0.08 2 0.16 Total 1.00 2.72 Each factor is given a weight according to significance, resulting in a total weight of 1. The factors are then rated according to how well Amazon.com is responding to each factor with 1 representing poor response and 4 being a superior response. The weights are then multiplied by their corresponding ratings to get a score, which are also totaled. The identified opportunities and threats give Amazon.com a combined weighted external factor evaluation score of 2.72. Competitive AnalysisA competitive profile matrix identifies Amazon.com Incorporation’s rivals and its strengths as well as weaknesses relative to its strategic position. Some of Amazon’s competitors are eBay and Barnes & Nobles. The key factors that make up the competitive profile matrix include market share, price, financial position, product quality, customer loyalty, global expansion, and advertising. Other critical factors are software technology, e-commerce expertise, and management.  Table 2: Competitive Profile Matrix for Amazon.com Amazon eBay Barnes & Nobles Critical Success Factors Weight Rating Weighted score Rating Weighted score Rating Weighted score Market share 0.05 4 0.20 4 0.20 3 0.15 Financial position 0.15 2 0.30 3 0.45 4 0.60 Product quality 0.10 3 0.30 3 0.30 3 0.30 e-commerce expertise 0.05 4 0.20 4 0.20 3 0.15 Advertising 0.15 4 0.60 4 0.60 3 0.45 Global expansion 0.15 4 0.60 4 0.60 3 0.45 Price 0.10 4 0.40 4 0.40 3 0.30 Customer loyalty 0.10 4 0.40 4 0.40 3 0.30 Management 0.10 4 0.40 4 0.40 4 0.40 Software technology 0.05 4 0.20 3 0.15 3 0.15 Total 1.00 3.60 3.70 3.25 Each organization is rated on whether a given critical success factor is a strength or a weakness, with a score of 2 representing a weak and a score of 4 representing a major strength. Amazon has the same high score as eBay in market share, e-commerce, advertising, global expansion, price, customer loyalty, and management. Amazon has higher score in software technology than its competitors. Barnes & Nobles dominates in financial position followed by eBay. Internal Factor Evaluation Amazon.com Incorporation’s internal factor evaluation comprises of strengths and weaknesses in important business functional areas. After determining the strengths and weaknesses specific to Amazon.com, each factor is weighted based on importance. An evaluation of internal environment shows that various factors affect Amazon.com Incorporation’s business Table 3: Internal Factor Evaluation Matrix of Amazon.com Key Internal Factors Weight Rating Weighted Score Strengths 1. Strong customer service 0.09 4 0.36 2. Strong management 0.09 4 0.36 3. Advanced technology and software 0.10 4 0.40 4. Strong brand name 0.10 4 0.40 5. Strong corporate culture 0.08 3 0.24 6. Wide distribution network 0.08 3 0.24 7. Strong strategic alliances 0.06 3 0.18 8. Decreasing operating expense 0.08 4 0.32 Weaknesses 1. Decreasing total sales 0.15 1 0.15 2. Decreasing net income 0.15 1 0.15 3. Breach of customer privacy rights 0.05 2 0.10 4. Small number of suppliers 0.05 2 0.10 5. High inventory risk due to seasonality 0.05 2 0.10 Total 3.10 The key strength factors are rated as either a 4, representing a major strength or as a 3 to represent a minor strength. The weakness factors are rated as either a 1 to represent a strong weakness or as a 2 to represent a minor weakness. The weights are multiplied by their corresponding ratios to compute a weighted score. The weighted scores are summed to determine the total weighted score which is 3.1. Financial Analysis Ratio 2018 (amount in millions) Net Margin = Net income/sales *100 =2,371/135,987*100% =1.74% Current ratio = current assets/current liabilities =60,197/57,883 =1.04 Debt to Equity = long term liabilities/shareholders’ equity =45,718/27,709 =1.65 Total asset turnover= sales/average total assets =135,987/(131,310+162,648)/2 =0.92 A profitability analysis shows that Amazon.com is less profitable as evidenced by a lower net margin of 1.74%. Nonetheless, the company is in a better position to meet its short term financial obligations as evidenced by a current ratio of 1.04. Block, Hirt and Danielsen (2011) indicate that a current ratio of more than 1.0 implies that an entity can finance its short term obligations by using its current assets. Amazon.com Incorporation’s debt to equity level of 1.65 implies that the organization is insolvent. The company can be declared bankrupt if it is not in a position to pay its debt using its assets. The asset turnover ratio of 0.92 implies that for every $1 dollar worth of assets, Amazon only managed to generate $0.92 worth of revenue.  Conclusionand RecommendationAmazon.com Incorporation’s external factor evaluationof 2.72, which is above the average score of 2.5, indicates that the company is effectively manipulating its opportunities to counter environmental threats. Nonetheless, the company should manipulate its opportunities such as appreciation of United States dollar and increasing number of Internet users to overcome some threats such as intense competition and rising unemployment levels. Competitive analysis indicates that Amazon’s weighted score of 3.60 is slightly higher than Barnes & Nobles’ score of 3.25, but lower than eBay’s score of 3.70. The score does not imply that Amazon is not as good as eBay. The organization should use its numbers to determine what it must do to gain competitive advantage in the industry. The company’s the total weighted score of 3.10 is greater than the average of 2.5, which demonstrates Amazon’s strong internal position. However, the organization should address issues such as declining revenue and declining net income.ReferencesBlock, S. B., Hirt, G. A., &Danielsen, B. R. (2011). Foundations of financial management (14th
ed.). New York, NY: McGraw-Hill/IrwinDavid, F. R., & David, F. R. (2017). Strategic management: A competitive approach, concepts(16th ed.). New York, NY: Pearson Education, IncForbes. (2012, April 4). Jeff Bezos reveals his no.1 leadership secret. Retrieved from https://www.forbes.com/forbes/2012/0423/ceo-compensation-12-amazon-technology-  jeff-bezos-gets-it.html#557be68e5227Northouse, P. G. (2015).Leadership: Theory and practice (7th ed.). Thousand, Oaks, CA: Sage
publications.Palumbo, D. (2019, July 5). Amazon at 25: The story of a giant. BBC Business. Retrieved from https://www.bbc.com/news/business-48884596Reuters. (2020).  Amazon.com, Inc. AMZN.OQ. Retrieved from https://www.reuters.com/companies/AMZN.OQStreitfeld, D. (2018, September 4). Amazon hits $1,000,000,000,000 in value, following Apple.   New York Times. Retrieved from       https://www.nytimes.com/2018/09/04/technology/amazon-stock-price-1-trillion-value.htmlUnited States Securities and Exchange Commission. (2018). Form 10k: Amazon.com, Inc.       Washington, DC: U.S. Government Printing OfficeWhittington, D., & Whittington, W. (2018). Digital innovation and entrepreneurship. New York,       NY: Cambridge University Press

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