Amazon: a Strategic Analysis

Amazon: A Strategic Analysis

Strategic Management Assignment One

Tyler N. Pahlke

September 2011 Accelerated Program

Instructor: Enrique Arce

Due Date: April 21, 2012

INTRODUCTION

As a first mover into the digital sales industry back in 1995, within Amazon’s first five years into the market they reached $2.8 billion in revenues, almost double that of Google and seven times that of eBay over the same time span. Today they boast a market leading capitalization of over $90 billion. A concise review of where Amazon sits strategically today is detailed below with a SWOT analysis, a significant stakeholder group review, as well as a Porter’s value chain and Porter’s Five Forces Analysis.

SWOT ANALYSIS (Appendix A)

Strengths

As the online retail market leader, Amazon has much strength from which to draw from. Amazon has diversified their product offerings over the years from its origins with a digital online book library to over fifteen main categories, including clothes, sports equipment, music and electronics. The diverse product offerings available to Amazon customers has allowed Amazon to develop a strategic cost leadership advantage over competitors, keeping their variable costs low as a result of digital online storage and third party shipping, and spreading their fixed costs over a large amount of customers (137 million in 2011). Amazon’s easy to use online ordering system and the lowest price on the Internet mentality has created significant brand name loyalty.

Weaknesses

While Amazon has much strength, they also have some glaring weaknesses. Amazon’s two main competitors in Apple and Google are leading the way in the development of proprietary electronic media devices. Not only do these devices such as the I-product range for Apple and the Android phones for Google boost sales of their respective digital media (i.e. music, books & games), but they are an attempt to create a “digital supremacy” within the digital sales industry...