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1. Introduction and Background on Organization

The company Amazon has revolutionized itself within a period of two decades since 1994, the
year in which company was founded. In the earlier days, the company’s operations were carried
out in the garage of the CEO Jeff Bezos. Started with just selling books and later converting it into
world’s largest online shopping place was not an easy task. In the beginning days, the company
executives used to place order for a book online themselves whenever an order comes, get it
delivered to their office, repackage it and then ship it to their customer. The company’s logo shows
an arrow from A to Z, which means the company, is ready to offer anything to anyone, anywhere
in the world.

The Company’s CEO and founder Jeff Bezos vision of taking their company to new heights in the
e-commerce market environment and for which he formulated various kinds of business strategies
which helped them in achieving their goals. The business of the company keeps on flourishing
year by year and at present Amazon is offering more than 500 million products online. The
company’s user interactive website is easy to use and has played a very important role in grabbing
the attention of the customers. Most of the Company’s revenues are generated by selling of the
products and services online but the company is also successful in generating huge revenues
through their Amazon Web Services (AWS) and Netflix services as these home products of the
company captured a large amount of consumer market globally.

To have a strong product line, the company has decided to ease the burden of the packaging and
to automate the delivery process for which the company has purchased a fleet of more than 20,000
robots in 2012 for $775 million dollars from an automation provider Kiva system to proceed with
the order fulfillment process. In 2013, the company purchased The Washington Post for $250
million dollars which is a popular newspaper of the States.

At present the company ranked third by the Fortune World’s most admired companies. By offering
more than 562,382,292 products till date the company is looking forward for many more successful
years of business by offering the world class customer service to its customers and their esteemed
efforts in making successful their upcoming business strategy which is focused entirely on the
usage of drones to complete the delivery of the products.
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2. Strategic Analysis

2.1 External Analysis

Since Amazon is a global company, there are certain external factors which affects the business of
the company. To overcome some of the expected or unexpected issues, PEST analysis is followed.
In this analysis, each category will be explained with some relevant examples.

 Political:

Political issues include the factors which are related to the government. Here are some factors
which can have pros and cons on the company. Efforts in improving cyber-security is an
opportunity as the company will also focus on maintaining a network which is secured, and this
will build the trust among the customers for sharing their details like credit card information and
address etc.

 Economic:

Increasing buying power of the developing countries is an opportunity as the countries are in urge
of exploring new products which gives Amazon a chance to grow. Amazon is trying to create
opportunities in e-grocery just like Walmart, this is going to be a threat for the organization as the
company like Walmart is already establishes in the product line of grocery and this will lead to
drop in share price of Amazon. Currency fluctuations can be a threat as this can impact the
economic conditions of different countries. For example: the prices shown are in USD and
converted to different currency at the time of purchase will be different from the time of delivery.
If the rate increases, this is a loss to Amazon else the customer will pay extra for the same product.

 Sociocultural

Increasing consumerism in developing countries is an opportunity as the buying power of the

customers is increasing after the disposable income. Increasing online buying habits by the
millennial is an opportunity as they are not being lazy, they just want to get their work done with
ease and a threat as they will be exploring more websites which will lead to comparison of the
price.

 Technological

Technological undesirability is increasing is a threat as the company must constantly improve their
IT department resulting, outdated servers can’t be used to manage the load of the website and an
opportunity as they will be having a secured network for their website which will build trust among
the customers. Information Technology proficiency is increasing making the platform of the
application as user-friendly is an opportunity as if the application or website is easy to understand
and access, more customers will attract towards it.
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Porter’s Five Forces Model of Industry Competition

The threats of new entrants (Low): The reason behind this is that, Amazon is already a global
wide organization which has the USD $177.9 Billion in the year 2017. For a new entrant, first it
should have strong customer base, economically should be strong so that they can go international
and has the capability to compete with Amazon. That is why, we have considered this as a weak
thread.

The bargaining power of buyers (High): The bargaining power of customers mean that, how
easy it is for the customers to switch to alternatives. For example: We believe that it is easy for the
customers of Amazon to switch to a company like Walmart as they provide wide variety of
products. To maintain the strong customer base, Amazon must focus on high quality of information
provided to the customers so that they can make their decision wisely.

The bargaining power of suppliers (Medium): The idea behind keeping this force as medium is
that, there are small number of suppliers available whereas the control over the company by them
is minimum.

The threat of substitute products and services (High): Since the switching cost for the
customers is very low as there are wide variety of cheap products available in the market which
are not sold by Amazon to maintain their brand image can be a huge thread for them.

The intensity of the rivalry among competitors in an industry (High): After observing the
market strategies of Amazon and other retail store, we have concluded that Amazon is daily
competing with other companies either online or brick-and-mortar companies. For example:
companies like Walmart, they also provide same quality of products like Amazon and have variety
of products. That is why we believe that the switching cost for the customer is low as there are a
lot of options and since the cybercrime is increasing, it is very easy for the company to lose their
reputation just by losing customer’s data.

2. 2 Internal Analysis
Management – The management of the company including Jeff regulates the company standards
very minutely, analyzing the current market scenario and making key decisions based on that,
makes Amazon separate from the other ecommerce companies.

Interactive Website – Amazon provides the most interactive website to its customers and its
customers find it very easy while placing orders as all the products are aligned according to their
respective categories due to which customers overall enjoy a user-friendly experience.

Impressive Infrastructure – In the year 2015, Amazon has purchased a fleet of more than 40,000
robots, thus creating an automated packing process which lowers of the risk of product damage
and superior packaging of the products.

Reputation: Amazon has been successful in maintaining their reputation by providing them risk
free and reliable deliveries.
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3. SWOT Analysis
SWOT is defined as Strength, Weakness, Opportunities and Threats to the organization. This is a
very good tool for analyzing the current situation of the organization and by using this information
the company can plan its future. Here are some of details about each factor of it:

 Strength:

The Application: Due to the emerging technology, Amazon has been able to make their mobile
application with best security features to maintain the privacy and securing the data of the
customers. The company has established a strong customer base with widest range of products
with the lowest prices offered on a variety of products.

 Weakness:

The biggest weakness that the company is having is they have outsourced their distribution and
delivery to third party for the delivery of some of the products. This implies, the dependency of
the company is on third party companies, which is a great thread for their reputation. For example:
If the company claims that the product will be delivered next day but due to the delay by
distribution company, Amazon will be risking its reputation and cost.

 Opportunity:

The biggest opportunity for Amazon is the developing countries like India as they are improving
their economic conditions which give Amazon to boost their business. The laws for importing will
be beneficial for the company and the opportunities in terms of customer will be more as they are
trying to adapt western culture. The high-speed internet available: As we all know that, in today’s
world we have high speed internet which is a growth for Amazon as they are getting customers
who can access their website easily while sitting anywhere. With the advancement of the
technology, the customers can have a user-friendly application and website for shopping. The labor
in developing countries is cheap so they can open their own or outsource their warehouses in India
so that they can emerge their business in India and the neighboring countries.

 Threats:

Since the new entrants are not a big thread for Amazon, but the biggest thread can be the customers
and the third-party distributors as the cost of switching is low and they can easily switch to other
alternatives. Like, in India Flipchart the new emerging e-commerce giant has gained a lot of
popularity and can be a great challenge for Amazon.

Conclusion: After reviewing the SWOT analysis of the firm, we have concluded that the company
has strengths which include the management which runs the company is profit oriented and they
believe in taking risks and following the strategies to make the weakness and threats as their
opportunities to grow.
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4. Strategic Formulation
Vision Statement: “To be Earth’s most customer-centric company, where customers can find and
discover anything they might want to buy online.” The vision statement depicts that the company
always prioritize its customers who wants to purchase anything while sitting at home and wants
their products to be delivered right at their door steps with widest range of variety with making the
company international. The company had the target market as Earth which implies that the
company has the vision to reach every corner of the world to deliver best quality products and
providing world class service to their customers at their door steps.

Mission Statement: “We strive to offer our customers the lowest possible prices, the best
available selection, and the utmost convenience.”
The word customer defines the company’s target market is Earth providing them with the widest
range of products with lowest price. The utmost convenience describes as the customers must
use the internet from placing the order till the order is delivered successfully. We as a group
believe that the mission statement of the company is describing about their major stakeholder
which is customers. Moreover, the company wants to provide the best products to them with
affordable prices.

Strategic Issues: The issues that the company might can face in the coming years related to
strategies or in the business are as follows: The company should find new area for the expansion
of the business and the solution for this is to expand their business in the sophisticated areas which
are less connected with the world. For example, Denmark and Sweden will be a new target market
for Amazon to increase their income.

Business Level Strategy: Amazon is following the Cost Leadership strategy at the business level
as the company focus on wide range of products that are avaSilable at low prices. The profit of the
company is calculated on the number of products sold as the margin for e-retailers is like razor
thin which implies the margins on a single product is very less. So, if more the number of products
is sold, more the income of the company would be. However, we believe that the company can
also try to implement differentiation, as this strategy also has broad scope in terms of products.
The company should understand the needs of the customer and starts to focus on premium
products. Since, there are some premium products available on the website, but we are discussing
here about the products which are liked by customers. For example: customers like to read books
from kindle, they should launch a product of premium quality which will give them the opportunity
to have their own premium products.

Corporate Level Strategy: The Company has mainly three main customers: Consumers, Sellers
and Developers. All of them are important in the growth of Amazon, this implies that these three
are the pillars of the Amazon. The strategy that company follows is Customer Satisfaction which
implies that the company’s priority is to make the customers happy by providing them best

Conclusion: The vision and mission statement of the firm is giving a precise idea about the
company is customer-centric firm. Moreover, after all the strategies been followed by the firm, it
has been concluded that the firm is having a diversified range of products which means they have
followed all the four strategies which are explained in the Ansoff Metrics.
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Conclusion of the Strategic Plan

It has been clearly observed that the company is growing at a rapid pace and it is expected to
growth more in the coming 3 years. The reason for that is because they have followed all the
strategies suggested by Ansoff Metrics like, Alliances, Product Development, Market
Development and Diversification. After this, the internal and external analysis of the company
depicts that the company is following the strategies to overcome any risks which may impact the
growth of the firm.

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