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Running head: AMAZON CORPORATION 1

AMAZON CORPORATION 2

Amazon Corporation’s SWOT Analysis

Donald Lipford

Columbia Southern University

Amazon Corporation’s SWOT Analysis

Introduction

Amazon is a multinational company that is based in Seattle and its main business lines include e-commerce, cloud computing, and artificial intelligence. The organization is considered one of the big four technology companies in America and is credited for technological innovation. The other of its praises is that it is the largest internet company in terms of revenue in the entire world while holding the position of the second-largest private employer in the United States of America. The establishment has been in existence for close to three decades since its inception in 1994, the proprietor behind the business being Jeff Bezos. An analysis of the organization’s strengths and weaknesses, as well as the opportunities and threats, would help in the formulation of appropriate strategies for enhanced performance.

Strengths

Amazon takes pride in multiple strengths, one of which is a strong employees’ attitude, whereby they work tirelessly for the realization of set goals and objectives with favorable work conditions and satisfactory remuneration being their motivation. Exemplary customer service is the other strength, which entails the provision of services in real-time for customer convenience and responding to their concerns and complaints without delay for loyalty. A large market share is the third strength, where the establishment controls a sizeable market in both the United States and the entire globe owing to its unique selling mode of going online. Through its online platforms on its website and social media pages, the company forms a personal relationship with the consumers in addition to establishing the closeness with clientele who visit its physical stores. Leadership in product innovation is the other strength, which entails being the first mover in new markets with new products for the realization of significant profits before potential rivals join the market (Robischon, 2017). The business is also credited for highly efficient, low-cost business operations that enable the involvement in price leadership as well as the maximization of profits. Above all, the business has a reputation of high integrity in the stocking and delivery of high-quality commodities as well as accepting liability in case goods are damaged during delivery.

Weaknesses

The firm also has a share of weaknesses, one of which is an inadequate definition of customers for comprehensive product or market development endeavors. Confusing service policies represent the other weakness, whereby some instances of delivery of ineffective or damaged products involve compensation delays. The other weakness is multiple reporting levels in the organizational structure that, at times, render following up on complaints difficult and tiresome. In like manner, employees experience difficulties while proposing policy changes. Limited product availability at times proves Amazon’s weaknesses, whereby some popular electronic products run out of stock (Shead, 2017). Worse cases, although rare, entail the inclusion of non-available products on the website only for the customer to be informed that the commodities do not exist when they have already placed an order. The other weakness is that employees and low-ranking employees decry a lack of involvement in the development of new services, a situation that renders the deployment of such services troublesome. The lack of quantitative goals is the other weakness and many of the objectives.

Opportunities

Amazon’s venture into online business and its somewhat unique business model implies multiple opportunities, one of which is online referral services through third-party service companies for increased clientele numbers, while it may also explore direct selling for the provision of customized services to specific customers and the ensuing loyalty. The business is significantly large and management often proves challenging. For efficient management, however, the firm should explore management consulting for appropriate expertise and on specific projects (Ernst & Haar, 2019). The other opportunity is a wide market that is largely unexploited and that the firm may explore with its online stores. In the context, virtually all continents have potential that is not utilized and that may Amazon may exploit for the generation of profits. The other opportunity is favorable trade policies in various countries of the world, which allow cross-border trade with minimal levies and restrictions. The availability of multiple distributors and enhanced distribution channels renders the delivery of ordered commodities to regions that were previously inaccessible possible. Moreover, the existence of multiple international television channels and network interconnectivity to the remotest regions implies a lucrative advertisement opportunity for increased sales. The firm may also diversify to other product lines as a way of absorbing possible economic downturns and crises that may affect a product line. Furthermore, the business may also consider establishing its distribution channels with a special examination of costs and benefits, and the purpose of the option would be increasing delivery efficiency.

Threats

The business also faces threats in the course of operations, one of them being employee medical cost inflation and the subsequent reduction of profits. In this case, the unfortunate trend would make it increasingly harder to invest in the expansion of the business. The other threat that closely resembles the first one is increasingly high employee benefit costs in the form of exceptionally high wages and salaries in an attempt to comply with various labor regulations. Cyber and technology risks, as well as data breaches, represent the other risk, whereby the attackers may access sensitive customer data and execute actions that may potentially lead to loss of finances and/or loss of confidentiality. The other one would be the legal risk and the organization fears that competitors, aggrieved clients, or regulators may launch legal suits against the firm. The other threat is the inability to attract and retain competence and talent as workers may exhibit the tendency to leave the company if their demands, some of them unrealistic are not met. The other risk is uncertain economic situations and crises that adversely affect clients’ buying power, therefore, impacting negatively on the organization’s operation prospects. The adoption of unfavorable laws and regulations in various world regions, America included, is the other threat particularly if such regulations have the effect of rendering the operation of business activities difficult (Wu & Gereffi, 2018). The firm also faces financial risks in the form of the inability to access adequate capital from lenders as well as cash flow risks. The other threat is instances of inefficient distributors whose distribution endeavors involve unwarranted delays and/or practices that potentially damage the products. If such occurs, the client(s) hardly understand that Amazon contracted a third-party firm to distribute merchandise to the client and its reputation sustains dents. The acquisition of sub-standard goods from the manufacturers and supplying them to consumers leads to a widespread outcry, the aftermath being the replacement of commodities whereby they are shipped without charging the consumer(s). In the context, the losses become pronounced, particularly if the manufacturer denies liability for the defectiveness.

Conclusion

In conclusion, Amazon Corporation has a fair share of strengths that may be enhanced for improved performance, while areas of weakness call for the formulation of strategies to turn the shortcomings into strengths. The opportunities represent potential areas of exploitation, whereas threats are wake up calls for the avoidance of risks therein.

References

Ernst, R., & Haar, J. (2019). Competitiveness. In Globalization, Competitiveness, and Governability (pp. 47-67). Palgrave Macmillan, Cham.

Robischon, N. O. A. H. (2017). Why Amazon is the world’s most innovative company of 2017. Fast Company Magazine, 2.

Shead, S. (2017). Amazon now has 45,000 robots in its warehouses. Business Insider, 4.

Wu, X., & Gereffi, G. (2018). Amazon and Alibaba: Internet governance, business models, and internationalization strategies. International business in the information and digital age, 327-356.

It is important to remember that whenever working with weighted averages, the weight column should always total 1.0, or 100%, regardless of how many factors are included in the EFAS analysis. It is up to the analyst to decide how much weight each individual external factor is assigned. An important factor may have a weight of 0.5 (50%) while a less important factor may have a weight of .05 (5%). When all is finished, however, all factor weights should total 1.0 or 100%. Please also note that the total weighted score for an average firm in an industry is always 3.0. When the EFAS analysis is complete, the subject company weighted score is evaluated against the industry average score of 3.0 to determine how well it is doing. A weighted total score greater than 3.0 indicates the subject company is doing better than the average industry firm. A weighted average score less than 3.0 indicates that the subject company is doing worse than the average industry firm.

In this section, add your commentary about if the company is doing better or worse than others in the same industry. At the end of this section, add any references you may have used for the assignment.