CASE STUDY

Rachel Armand
February 8th, 2017
Retail Management, Professor Richards
Contents
Industry Analysis........................................................................................................ 3
Amazons Strategies................................................................................................... 4
SWOT ANALYSIS.......................................................................................................... 5
Amazons Value Chain................................................................................................ 6
Amazons Strategy Execution Process........................................................................6
................................................................................................................................... 7
Recommendations...................................................................................................... 8

Industry Analysis
 When looking at the competition these days, it seems online Amazon seems to be

dominating the game. Amazons mission statement is to be the most customer-centric company

on earth. They want to be a source where anyone can find and discover anything from A to Z.

Amazons main competitors seem to be Netflix, Airbnb, GoPro, and Google. Continuing, will

discuss the breakdown of the competitive environment of the online retail industry, and how

Amazon is doing more for their customers.

Five Forces Model of Competition

Threat of Substitute Products

Strong: Low switching costs,
low cost of substitutes

Supplier Bargaining Buyer Bargaining

Power Rivalry among Competing Power
Sellers
Moderate: Small Strong: High quality
population of suppliers, Strong: High aggressiveness of information
moderate forward of firms, low switching costs
integration

Threats of New Entrants

Weak: High cost of brand
development, high economies
of scale

Amazons Strategies
CORE STRATEGY
 Amazons core strategy is to have anything that comes to your mind from A to Z. This

attracts people from every aspect of life who simply want things they cant find in stores or

anywhere online. Mainly you could say because that amazon has yet to open any physical,

tangible stores they target online users. Therefore, they try to have the best customer service in

the retail industry because everything is through a computer, phone, or mobile device; there isnt

any physical human interaction.

COMPLEMENTARY STRATEGIES
To become more elite, and have more stores to collaborate with, Amazon has a wide

range of things that they sell on their website. Theyve teamed up with many small mom &

pop type of businesses to help others and to also help themselves at a same time. Its easier to

look up an ancient grandfather clock on Amazon than to go look for one in Dudley, MA. Amazon

is different from all these large industries such as Apple, Facebook, and others because they

didnt create a product for people, they made a service that made it easier and faster to get the

products they want, at the same or a lower price. Since Amazon is a large online retailer, they

offer different benefits to using the website to do your personal shopping such as Amazon Prime,

Amazon Kindle, and access to over thousands of songs and movies, it makes a customer want to

come back and use these benefits.

SUPPORTING STRATEGIES
Amazon has a competitive advantage in the marketing industry. They acquired many

start-ups in the e-commerce industry such as pets.com, audible.com, zappos.com and more. This

helped them in improving their customer relations by using technology that already existed at a

low price. By doing this, it helps Amazon keep their prices lower than their competitors.
SWOT ANALYSIS
Strengths
Strong background and deep pockets-
Early success with books, Amazon has
product categories from toys, games to
home and kitchen. They have evolved
as an e-commerce.
Customer centric- Offering individual
items, related items, or bundled items
as they offer based on the customer
recommendations
Cost leadership- Amazon has created
several strategic alliances with other
companies as mentioned earlier, which
is why they can keep their prices low
Efficient delivery network- Amazon
has created a structured network to be
able to make products available
anywhere
GLOCAL strategy- Go global and act
local strategy is very effective for
Amazon, people talk about it as if it
was a local convenient store
Acquisitions- Reaching out to other
companies shows that it was
successful and helped generate more
revenue
Opportunities
Backward integration- If Amazon can
come up with another in house brand
and switch up their offering they could
be more profitable
Global expansion- Expanding their
business into Asia and developing
economies will help Amazon in the
market since those are low
competition in e-commerce
Acquisitions- Gaining e-commerce
companies can decrease competition
and help Amazon in that
Opening physical stores outside U. S-
Weaknesses
Shrinking margins- Margins are
shrinking which is causing them to
lose money
Tax avoidance issue- Amazon is
getting a bad rep for not paying their
taxes in the U.S and UK.
High debt- Amazon is struggling to
make their business profitable which
is making leading them to be in a high
debt crisis/situation
Product flops- Amazon created a fire
phone that was supposed to do
numbers but sadly it flopped. This
caused huge dents in their pockets
Threats
Low entry barriers of the industry-
This effects the business the more
competitive they get
Government regulations- There arent
any specific laws against multi brand
retail such as what Amazons whole
business is based off, which is a
leading cause to their success
Local competition- There are local
companies and businesses that are
making it hard for Amazon to make
their profits
 This will help Amazon engage with
their customers and improve customer
loyalty

Amazons Value Chain

PRIMARY ACTIVITIES AND COSTS

Inbound Operation Outbound Sales & Servicing

Logistics Logistics Marketing

SECONDARY ACTIVITES AND COSTS

Administrative, finance infrastructure Legal, accounting, financial management
Human resources management Personnel, lay recruitment, training, staff planning
Product and technology development Product and process design, production engineering,
market testing
Procurement Supplier management, funding, subcontracting, specification

Amazons Strategy Execution Process

 Increasin
g
pressure
on
consumer
s to join
Prime

Increasing Increasin
pressure g
on 3PL's pressure
through Amaz on sellers
loss of
buisness on to use
fullment
from or to by
Amazon Amazon

Incerasin
g ressure
on
Competit
ors to
lower
rices to
compete
 Recommendations
Amazon has a lot of competitive strengths and weaknesses, and I think it is their job to

turn those weaknesses into strengths, and to turn those strengths into tactics that could better

them and hurt their competition. Some major problems that Amazon is facing, and has faced in

the past is lawsuits. A recent lawsuit that has occurred is the federal agency filling a lawsuit

against Amazon for letting children make purchases too easily on mobile devices without the

parents recognition. This case could hurt Amazon in their customer service side of their

business, just because this isnt the type of attention they want.

With Amazon continuously competing with other retailers and their lower prices, it is

thought that it would hurt them more than it would help them. In their value chain, we can see

that it is online related so the chain is different than other businesses. One main difference is the

way the chain starts; they start their plan with logistics which shows us that this is what their

company is based off the commercial activity of transporting goods to customers. Their advance

at technology in the beginning with their Fire Phone wasnt as good as they thought it was

going to be. Unlike their other hits such as the Echo and the Kindle Fire these did better than

the others.

Amazon should create a new outlook that targets a whole new market of people. For

example, reaching out to their eco-friendly customers by using less plastic and cardboard when

shipping out items. This is just one way that Amazon could reach out to a different type of

market, since they are just an online store. Opening an actual store would be beneficial to

Amazon because it would reach out to the market that doesnt use mobile devices or dont trust

buying things online.

 Globally, opening a warehouse in the Euro-Asia area would be extremely beneficial for

Amazon. It would create jobs for many people at a low rate, and it would show how they are

internationally expanding to benefit not just for themselves, but for everyone.