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Amazon Inc.

Paper Plan
1.1 Explain the importance of external factors affecting the chosen organisation?
PORTERS 5…….
1.2 Analyse the needs and expectations of stakeholders of the chosen organisation.
Internal: Employees
Managers
Owners
External: Suppliers
Society
Government
Creditors
Shareholders
Customers
1.3 Analyse the major changes taking place in the external environment that will affect
strategy of your chosen organization.
Discuss the: Porters five forces
ANSOFF Matrix
Boston Consulting Group BCG
SWOT Analysis
PESTEL Framework
Labor, Economy, raw material, Technology, competition, consumer
2.1 Use appropriate tools to analyse the effects of current business plans of your chosen
organization?

2.2 Review the position of your chosen organisation in its current market.
Economic (sales), market share
2.3 Evaluate the competitive strengths and weaknesses of your chosen organisation’s
current business strategies

3.1 Use any two modelling tools to develop strategic options for your chosen
organisation.

Bargaining Power of Amazon’s Customers/Buyers (Strong Force)


Amazon.com Inc.’s vision statement and mission statement highlight the company’s
customer-centric approach to e-commerce business. This aspect of Porter’s Five Forces
Analysis model determines the influence of consumers on firms and the industry
environment. The following external factors support the strong intensity of the bargaining
power of customers in affecting Amazon:

 High quality of information (strong force)


 Low switching costs (strong force)
 High availability of substitutes (strong force)

Consumers have access to high quality information regarding the services of online retailers
and the products they sell. This external factor affects Amazon.com Inc. in terms of the
ability of customers to find alternatives to Amazon’s online retail service. In relation, the low
switching costs make it easy for consumers to transfer from Amazon to other firms, such as
Walmart. Also, the high availability of substitutes further empowers consumers to shift from
one retailer to another. For example, instead of purchasing on Amazon’s e-commerce website,
a customer can easily go to one of Walmart’s stores, which are strategically located
throughout the United States. The external factors in this aspect of the Five Forces Analysis
show that Amazon must consider the strong bargaining power of buyers as a major factor in
addressing business challenges in the online retail industry environment.

Bargaining Power of Amazon’s Suppliers (Moderate Force)

Suppliers control the availability of supplies or materials Amazon.com Inc. needs for its e-
commerce operations. The influence of suppliers on the online retail industry environment is
outlined in this aspect of Porter’s Five Forces Analysis model. Amazon experiences the
moderate intensity of the bargaining power of suppliers based on the following external
factors:

 Small population of suppliers (strong force)


 Moderate forward integration (moderate force)
 Moderate size of suppliers (moderate force)

The small population empowers suppliers to impose a strong force on Amazon.com Inc.’s e-
commerce business. For example, changes in prices of equipment from a small number of
large suppliers could directly impact the company’s online retail operational costs. However,
the moderate forward integration limits suppliers’ actual effect on Amazon. Moderate forward
integration equates to a moderate degree of control that suppliers have in the sale of their
products to firms like Amazon. Moreover, the moderate size of most equipment
manufacturers limits their influence on the company. Based on this aspect of the Five Forces
Analysis of Amazon, the external factors emphasize the moderate significance of suppliers as
a strategic determinant in the online retail industry environment.

Threat of Substitutes or Substitution (Strong Force)

Amazon.com Inc. competes with substitutes in the online retail market. This aspect of
Porter’s Five Forces Analysis model identifies how substitutes affect the industry
environment. In the case of Amazon, the following external factors support the strong
intensity of the threat of substitution:

 Low switching costs (strong force)


 High availability of substitutes (strong force)
 Low cost of substitutes (strong force)

Amazon continually addresses the strong force of substitutes, which threaten the e-commerce
company’s performance. The low switching costs show that customers can easily transfer
from the company to other retailers. For example, consumers can easily decide to buy from
Walmart stores or other retail establishments instead of buying from Amazon.com Inc. The
high availability of substitutes and the low costs of their product offerings further increase the
influence of substitutes against the company. Thus, the external factors in this aspect of the
Five Forces Analysis of Amazon.com Inc. show that substitution is among the priorities in the
company’s strategies for long-term success in the online retail industry environment.

Threat of New Entrants or New Entry (Weak Force)

New firms potentially reduce Amazon’s market share in online retail. The effects of new
entrants are considered in this aspect of Porter’s Five Forces Analysis model. Amazon.com
Inc. experiences the weak intensity of the threat of new entry based on the following external
factors:

 Low switching costs (strong force)


 High cost of brand development (weak force)
 High economies of scale (weak force)

Amazon’s consumers can easily transfer to new firms, thereby empowering new firms to
impose a strong force against the company. This condition is due to low switching costs, or
the low negative effects of transferring from one provider to another. However, the high cost
of brand development in online retail weakens the influence of new entrants on the
performance of Amazon. For example, it would take years and billions of dollars to create a
strong brand that directly competes with the Amazon brand. In addition, Amazon benefits
from high economies of scale that make its e-commerce business strong. As such, new
entrants need to achieve similarly high economies of scale to compete against the company.
Based on the external factors in this aspect of the Five Forces Analysis, new entrants are a
minor strategic issue in Amazon’s performance in the online retail industry environment.

a. Use the 5 P’s by Minzberg Henry-Plan, ploy, pattern, position perspective


3.2 Develop a comparative understanding of activity from the chosen organisation with
any other organisation of your choice in the market.
a) In the media segment, Amazon competes with auction site eBay (EBAY); media game-
changer Netflix (NFLX); Time Warner Cable (TWX); Apple (AAPL) with iTunes; and
Google (GOOG) with its Play Store.
b) Amazon has several competitors in the electronics and general merchandise segment,
many of which are brick and mortar retailers, including Best Buy (BBY), Family
Dollar, Staples, Target (TGT), Walmart (WMT), Big Lots (BIG), and SysteMacs. Its
online competition in the electronics and general merchandise segment includes Alibaba
Group (BABA), LightInTheBox Holding Co. (LITB), Overstock.com (OSTK), PCM, Inc.
(PCMI), Vipshop Holdings (VIPS), JD.com (JD), Wayfair Inc. (W) and Zulily.
c) In the third operating segment, Amazon competes with several of the world's largest
companies including CDW (CDW), PC Connection (CNXN), Insight Enterprises (NSIT),
Oracle (ORCL), salesforce.com (CRM), Accenture (ACN) and Citrix Systems (CTXS),
among others.
3.3 Create options to form the basis of future organisational strategy of your chosen
organisation.

4.1 What key factors you consider while constructing a strategy plan for the chosen
organisation. Based on the key factors identified, propose a suitable structure for a
strategy plan that ensures suitable participation from all the stakeholders of the chosen
organisation.

4.3 Based on you answers of the AC 4.1 and AC 4.2, construct an agreed strategy plan
with resource implications.

5.1 a) Examine the existing factors affecting the chosen organisational strategy

b) Explain the core organisational values (ethical, cultural, environmental, social and
business) of the organisation and compare it with the current business objectives of the
chosen organisation?
5.2 Based on your analysis, knowledge and understanding about the chosen
organisation, what measures you develop to evaluate a strategy plan of the chosen
organisation?
Assessment Criteria 5.2 - develop appropriate vision and mission statements for an
organisation.
Assessment Criteria 5.3 - produce agreed future management objectives for an organisation.

Assessment Criteria 5.4 - develop measures for evaluating a strategy plan)

6.3 design monitoring and evaluation systems for the implementation of a strategy plan
in an organisation
References
Harvard style