Amazon as One of the Most Creative and Innovative Online Retailers - Case Study Example

Amazon.Com Company Evaluation Introduction Amazon Corporation is usually known as Amazon.com Inc. Amazon is an electronic commerce company in the United States which is a computing organization. This company is the most prominent e-commerce corporations worldwide. The organization is also involved in the consumer electronics production which include Fire tablets, Amazon Kindle e-book readers, Fire TV and phone and it is the largest supplier of the cloud infrastructure amenities in the world (Mudambi, and Schuff, 2010). By market capitalization in 2015, Amazon suppressed Walmart as the most valuable United States retailer. Amazon proves a case of a company that is a giant e-commerce, logistics, hardware, data storage payments and media. Amazon is the site for online merchants and shoppers alike; Amazon has the estimated 85 million subscribers in the united states, that is equal to approximately two-thirds of the American household. It describes the cycle in which the company minimizes prices to increase sales and attract more customers. The strategy allows the company to make an advantage of the economies of scale. Amazon’s SWOT Analysis Strengths Amazon Corporation has several strengths which it develops from the way it strategizes its market operations. The company uses various strategies which include cost leadership, differentiation as well as cost leadership (Sarbah & Otu-Nyarko, 2014). The company is the biggest online retailer in the globe which has resulted to the company gaining profits leading to the competitive advantage of the firm. Amazon Company is one of the leading firms in the industry and thus it has several strengths that help it in attaining success in the market. The corporation is committed to maintaining its strong financial position apart from managing its growth and business initiatives. The firm has the most appropriate liquidity and financial flexibility level and believes that maintaining a financial profile that supports the investment credit rating is vital to the firm’s financial flexibility and long term strategic growth (Sarbah & Otu-Nyarko, 2014). The firm uses a balanced and disciplined approach to cash deployment and capital allocation as it has several priorities for using its available cash which includes making payments of quarterly cash dividends to debt repayment, shares repurchasing, financing targeted growth initiatives and paying quarterly cash dividends to shareholders. The firm’s management observes that the firm combines strong generation of cash flow and a solid balance sheet provides it with the needed flexibility to continue with the organic and inorganic growth objective. The firm also has Good returns on its capital expenditure. The firm is relatively successful in generating the best returns on capital for its shareholders by establishing new revenue streams and executing new projects. Leveraging Information Technology, Amazon majorly leads the industry because the firm majorly leverages various IT services as well as using e-commerce as the most accessible platform which ensures that the organization is way ahead of its competitors. Another primary strength of Amazon is that it enjoys its strong brand from the customers globally and the recognition has resulted to the company to enter into a new market which was out of bounce for several e-commerce companies. The company provides superior distribution systems and logistics. The company can use better consumer edge which has given the company a competitive advantage over its competitors. Weakness Weaknesses of the company include the specific areas where the firm needs to improve upon to develop a competitive advantage and position itself strategically. First the net percentage contribution and the profitability ratio of the firm are below the industrial average. Also financial planning is not conducted effectively and properly because its current asset ratio and its liquid asset rations show that the firm can utilize its cash more efficiently than what it is doing currently (Sarbah & Otu-Nyarko, 2014). Also, the firm has not been very successful at integrating businesses with different work cultures. The SWOT analysis aspect gives a list of internal factors that impose challenges in the growing business. In Amazon’s case, they are various weakness including business models that re imitable, reduced penetration in the low-income countries. Presence of mortar and brick. Amazon’s business model can be imitated easily. For instance, other companies can develop the online retail website that sells anything. Opportunities for Amazon.Com There are several opportunities that are available to amazon.com. The opportunities include implementing its online payment system (Sarbah & Otu-Nyarko, 2014). Amazon also has the opportunity to considerably expand its consumer platform and market for shopping online by enhancing privacy and security. These are the most important issues that are on the customer’s thoughts. The strategy will enhance further the benefits and profit margin of the company as it is able to gain through offering a Gateway for Down Payment. Amazon can also capitalize on another opportunity which enables the firm to develop several items through its brands. The company can avoid being used as a third party for other corporations and deal with the customers which will be more efficient(Sarbah & Otu-Nyarko, 2014). This implies that the company can improve and increase its brand rather than just stocking and selling items that are produced by its suppliers. The firm can also enhance its offering of the collection where it could stock more products than usual currently place the company in its comfort and strength position. This translates to high profits (Laudon, and Traver, 2013). Amazon also has an opportunity of increasing its worldwide presence by establishing itself in the global emerging markets. The strategy will provide the company with the competitive age in the online uber-competitive retail market. Threats The most significant threat faced by Amazon corporation in its aim of becoming successful in the industry are the emerging issues related to online shopping and computer security concerns such as hacking and identity theft that leave the date of the clients exposed. Amazon, therefore, has no quick move to relieve the concerns of their customers over its sites and ensure the privacy of the customers and their security is guaranteed (Lin, 2014). Due to the aggressiveness of the company, the strategy for pricing, Amazon has the challenge of being involved in several lawsuits from its competitors and the retail industry publishers. The beneficial cost leadership strategy that is used by the firm has also been its source of problems because the firm’s rivals are often outdone from the market. The firm encounters competition from the local online retailers of the countries where it operates. Most of these local retailers are always aggressive and nimbler hence forcing the firm to adopt local strategies which could be expensive. Also this means that the firm cannot adopt its global strategy and lose sight of the local marketing conditions. Conclusion Amazon is the company specializes in online shopping platform by involving technology search, internet advertising platform and even a startup of the internet incubator. In 2012 its returns increased 42% to 50.8% billion. Amazon is one of the most creative and innovative of the online retailers (Laudon, and Traver, 2013). It has to lead a significant failure and success, a reflected record in the share price that has oscillated from a high $ 100 in 2009 to $ 6 in 2012, increasing to $ 60 in 2016, only to fall to $ 20 in 2017. Recently Amazon stock has operated above $ 170. Amazon enjoys its distinctive business plus its increasing enterprises in development and opportunities. References Mudambi, S. M., & Schuff, D. (2010). What makes a helpful review? A study of customer reviews on Amazon. com. Laudon, K. C., & Traver, C. G. (2013). E-commerce. Pearson. Lin, Z. (2014). An empirical investigation of user and system recommendations in e-commerce. Decision Support Systems, 68, 111-124. Sarbah, A., & Otu-Nyarko, D. (2014). An Overview of the Design School of Strategic Management (Strategy Formulation as a Process of Conception). Open Journal of Business and Management, 2(03), 231. Read More