Amazon Incorporation analisys - Research Paper Example

? Amazon.com, Inc Amazon.com, Inc history, development and growth The organization, Amazon.com, Inc. is one of the renowned electronic commerce organizations. It is an American international multibillion dollar organization with its headquarters situated in Seattle, Washington of United States. It was established Jeff Bezos in the year 1994 of July and it became live in the year 1995. It was established after the name of the longest river: Amazon. It is one of the world's largest online retailers used to sell variety of reputed books through online means. Numerous famous books which are almost unavailable in physical stores may be easily attained in Amazon.com (Amazon.com, Inc. 2013). However, soon it also decided to keep many other articles like DVD, VHS, CD, MP3 and video downloading as well. Apart from this, it also offers the opportunity of attainment of varied software, video games, apparels, clothes, food items, toys and different designed jewelries also at a competitive price on these online sites. Moreover, varied types of electronic items are also present in these sites at a quite affordable cost. Side by side, the organization also presents varied types of consumer electronics as well as per the requirements of the consumers. Not only this, it also comprises of separate retail websites for the citizens of United States, Canada, United Kingdom, France, Germany , Italy Kingdom Spain, Brazil, Japan, China and Austria as well. Other than this, it also presented varied products to other counties in order to enhance the brand image of the organization among others in the world of online. This helped in amplifying its reputation thereby improving its position in the market among others. In order to fulfill the mission and to become the Earth’s most customer-centric organization, so as to present varied types of requirements to its customers, it came into limelight. It was developed only for the motto to find and determine anything that they desired to purchase through online services. Another motto of this organization is to present the products at a quite lower cost as compared to others. This is one of the most evident reasons that enhanced its competitiveness in the market among other rivals (Amazon.com, Inc. 2013). Apart from this, Amazon.com also presents millions of ethnic and unique as well as refurbished items of varied categories such as books, movies, music & games, electronics and computers; home & garden; toys; kids and baby; grocery; apparel; shoes and jewelry; health and beauty; sports and outdoor; and tools, auto and industrial and many others. This is one of the prime causes that lead to the development of Amazon.com and also improved its portfolio within the minds of the customers. Side by side, technological innovation also enhanced the growth of Amazon.com in the world among others. Other than this, due to wide range of products, international retail websites, worldwide network of fulfillment along with customer service centers enhanced its growth to a significant extent. This helped Amazon.com to become a Fortune 100 company. Due to which, the economic performance of the organization improved to a certain extent as compared as shown in the below graph: Economic performance of Amazon.com Thus, due to its vision to expand in numerous countries with the help of internet enhanced the goal of becoming the number one organization in the entire world. 2. SWOT analysis Strength: Amazon is one of the most reputed and profitable organization. In 2005, it enhanced a significant growth due to its wide range of products at a competitive price. Although due to implementation of huge initial set up costs, Amazon suffered high level of loss. However, in order to increase its profit margin, it presented wide range of products at a competitive cost. This acted as a boon for the organization to increase its portfolio and popularity in the online sector. The high level of promotion also helped the customers of Amazon.com to increase its awareness about the products. Customer Relationship Management (CRM) is also another renowned business strategy that improved its net sales and profit margin. Information Technology (IT) also supported Amazon.com to improve its economic performance and growth. Along with this, it also helped the customers to access the site from varied locations in order to attain the products. Amazon is also a global brand and also an original dotcoms due to the presence of huge range of customer in entire world. It became the first online retailer due to the presence of ecommerce techniques. This enhanced the performance and ROI of the organization in the world that proved extremely significant for it (Spector, 2009). Weakness: Due to the introduction of varied new categories to its business line, it created high level of risks for Amazon.com. As a result, the brand image and brand value of the organization reduced significantly in the market among others. Induction of Toy-R-Us created confusion for the customers and reduced its profits. Along with consumer electronics and automotive also created a confusing effect for its customers. The strategy of the organization to offer free shipping costs also proved effective. However, it became a rumor that in case of huge cost, it gets included in the main cost of the products. So, it affected negatively thereby reducing its brand equity in the market. Only online presence is also another significant reason for its weakness. As the organization lacked physical presence like other retailers, its total sale reduced. This is because the customers lacked the facility to touch the products before purchasing them so it affected its sale. Numerous products are offered by Amazon.com at zero margins so as to enhance the market share and remain dominant in the market. Similarly, the cost leadership strategy also affected the firm’s profits considerably. So it reduced the total sales and net profit of the organization in the market among others. Due to the presence of excess negative publicity due to the avoidance of tax in varied countries (UK and US), Amazon earned high amount of revenues. So Amazon is also highly criticized for poor warehouse conditions, anti-competitive actions, price discrimination and many others. Thus it affected the status and portfolio of the organization in the market. Opportunities: The presence of online payment system of Amazon.com highly enhanced the total sales of the organization. Along with this, it also introduced the system of PayPal to attain payments from the customers. So it proved extremely effected for the mobile buyers all over the country. It is of high use for the customers finding it hard to provide the bank details or any other personal information essential at the time of purchasing any types of products. This amplified the demand of Amazon.com in the market within its customers. Due to its large market access, Amazon.com became successful in presenting wide range of its products and services resulting in retention of its older ones and attracting new customers. It is essential for Amazon.com to establish some physical presence in the markets so as to present an opportunity to its customers to touch the products prior purchasing it. Side by side, presence of store-warehouses outlets, distribution systems also might increase its fame in the market among others (Spector, 2009). Amazon.com might try to acquire varied organization so as to expand its product lines in the market thereby amplifying its range of customers. Open more new online stores in various countries to improve its sustainability and demand in the market and level of reliability of the customers as well. Threats: Amazon.com stores its online shoppers’ personal information, so as to protect varied types of its details. This enhanced its level of reliability within the minds of the customers.  Regional low cost online retailers might help the Amazon.com to improve faster and cheaper shipping levels, localized product offering along with better knowledge about local markets (Spector, 2009). The business has attracted much negative notice from UK as well as the authorities from U.S. for tax avoidance. Lawsuits are expensive and is also time consuming. As Amazon.com is a one of the renowned online shopping site that might overshadow the smaller competitors in a very easy way. It helped to enhance its demand and status among other competitors like Apple. This amplified its net operating value and revenues to a certain extent.  Moreover, the growing concerns of the multinational companies, to avoid the payment of taxes to the customers in the entire world. This might become enhanced only after pass of legislation passed by the government of the country. This might improve the profit of Amazon significantly (Spector, 2009). Competition would increase to a high rate due to the presence of low barriers to entry in the market. This proved extremely profitable for the organization in the market among others. 3. External Environment of Amazon.com The external environment of Amazon might be analyzed with the help of the analytical tool PEST. The PEST analysis helps in presenting a detailed scenario of the situation in which the organization operates. Political/Legal: due to the introduction of varied laws and regulations, Amazon.com became successful in spreading its companies in varied countries United Kingdom, Denmark and France and many others. This helped in reduction of taxes of the products as well as helped in launching its web site in varied countries. This improved its range of total sales (Mirow, 2005). Legal: Amazon.com is highly affected by the US Federal Trade Commission (FTC), taxation laws as well as the Cyber-laws. As a result, it improved its brand value and market share. Economic: due to the presence of exchange rates of the different countries, it implemented the strategy of presenting the products or services in varied countries. This attracted large array of customers from all over the world resulting in its economic growth. Social: Amazon.com offered varied products that might surely influence changing cultures and demographics of the citizens in the entire world. So, almost the each and every citizen of varied demographics (age groups and culture) became attracted towards these online sites to purchase the products of his or her choice (Mirow, 2005). Technological: the introduction of internet browsing software technology proved extremely beneficial for the organization resulting in amplification of its growth rate and image in the market (Mirow, 2005). Thus the external environment also proved highly advantages for the organization of Amazon.com. 4. Evaluation of the position of Amazon.com After evaluating the SWOT analysis of the Amazon.com, it may be examined that due to the presence of high-end technology, the loyalty of the customers towards the site enhanced. Apart from this, the presence of high brand image and CRM amplified its range of profits and net operating value. Moreover, due to the presence of wide range of products and services for its customers of varied age groups and culture, huge range of customers get attracted towards it (Casey & Carroll, 2004). This enhanced its reliability and trust of the customers towards Amazon.com and hence its level of sustainability improved a lot. Side by side, it also remained in the dominant position in the market by turning down its weakness. This helped in amplifying its position and reputation in the entire world of online sites among others like ebay and others. Hence, the presence of varied laws also proved quite effective for the Amazon.com. Thus from the above point it may be depicted that, it helped in amplifying its business strategy of making it the best place to purchase anything (Casey & Carroll, 2004). 5. Corporate level Strategy of Amazon.com 1.1 Started its business as one of the only online organization selling products of varied categories over the internet to improve its business prospects 1.2 Began as one of the renowned seller of books through online sites 1.3 It diversified into numerous products and services to attract many customers 1.4 Desired to become the multinational ecommerce organization 1.5 Tried to become the largest online retailer Due to these strategies, the net sales of Amazon increased by merging with varied other small organizations(IMBD, exchange .com), presented in the below graph: 6. Business-level strategy The business level strategies of Amazon are to increase its customer’s bases along with profit margin. Moreover, it also tried to prove the, it is the best place to purchase varied types of products and services. This is because, it offers the products and services at a very lowest price. Apart from this, it also presents diversified products and services as per customer requirements and demands (Byers, 2007). Moreover, in order to attract more and more customers towards its site, it also offers free shipping facility for its products resulting in amplification of the trust of the customers. It might help in increasing the growth and competitiveness of the organization in the market among other rivals (Byers, 2007). Competitive Advantage Competitive scope This improved the performance of Amazon to a significant extent as shown below: Performance of Amazon.com due to business strategy 7. Structure and Control system of Amazon.com The structure of the organization of Amazon is formed in such a way that each and every decision is taken by the employees so as to improve the profit and image of the organization. Along with this, the management also tries to involve the employees so as to maintain proper coordination and supervision of the tasks of the organization (Amazon.com, Inc. 2013). This might help in improvement of the culture of the organization resulting in enhancement of the level of motivation and performance of the employees towards work and duties of the organization. Internal structure of Amazon People culture Structure process System The organization follows vertical differentiation process in which the decision making process is mainly centralized within the employees of the organization. This helps in improvement of the communication process within the employees along with presentation of varied new ideas and values. This might help in analyzing the pros and cons of varied ideas and information given by the employees (Amazon.com, Inc. 2013). Amazon.com follows a control system that the activities are performed in such a way that might present desired results. Such diversified products lead to large range of customers. This helps in presenting numerous rewards to its managers for such type of advises for the betterment of the organization. 8. Recommendations Introduction of varied other product lines Physical presence so as to present the opportunity to touch the items before purchase Making the sales tax option entirely optional for varied countries Diversifying to some other product lines like : apparels, shoes and cosmetics Special type of discounts on festive seasons Coupons for the customers purchasing huge range of items References Amazon.com, Inc. (2013). Today’s deals. Retrieved from: http://www.amazon.com/ Byers, A. (2007). Jeff Bezos: the founder of amazon.com. New York: The rosen publishing group. Casey, R. & Carroll, W. (2004). The impact of e-commerce industry turmoil on amazon.com: a strategic perspective. Retrieved from: http://jib.debii.curtin.edu.au/iss01_casey.pdf. Mirow, M. (2005). Strategies to achieve market leadership: the example of amazon. Retrieved from: http://preibusch.de/documents/PreibuschS_FleckensteinM_Amazon.pdf. Spector, R. (2009). Amazon.com. New York: Harpercollins. Read More