A strategic audit is an in-depth review to determine whether a company is meeting its organizational objectives in the most efficient way. Additionally, it examines whether the company is utilizing its resources fully. A successful strategic audit is beneficial to any company. It assesses various aspects of a business and evaluates and determines the most appropriate direction for the company to move toward in achieving its goals.
The purpose of this research is to examine Amazon’s worldwide position, as well as how its present business plan compares to its rivals and fits within the company's global outlook. The research was done utilizing financial data and public information from the company's website to see where they shine and where they fall short. To better analyze Amazon.com and identify areas for development, graphs and comparative studies were created. The charts and tables that support the data are included in the following report. According to the findings of the data analysis, Amazon is a very successful company that continues to be a dominant competitor in the online retail market. The researcher applied the most known tools in strategic management to assess the company’s competitive strategy.
Table of Contents
Executive Summary
The Company
Amazon's mission statement
Amazon's corporate vision statement
Amazon's Generic Strategy (Porter's Model)
Products and Services
External Environment
PESTEL Analysis
Political Factors
Ecological Factors
Social Factors
Technological Factors
Economic Factors
Legal Factors
Competitive environment
Competitive Rivalry
Threats of New Entrants
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threats of Substitutes
IFE Analysis
EFE Analysis
CPM Matrix
IE Matrix
VRIO Framework
Competitive Advantages, Core Competencies
Non-core Competencies
Value Chain Analysis
Primary Activities
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Service
Support Activities
Infrastructure
Human Resource Management
Technology Development
Procurement
Amazon's SWOT Matrix
SPACE Matrix
Strategy recommendations
QSPM Matrix
Strategy Recommendations
Research Objectives and Topics
This research aims to evaluate Amazon's global market position and business strategy by utilizing financial data and public information to assess its competitive performance against key rivals.
- Strategic analysis using PESTEL and Porter's Five Forces models.
- Internal and External Factor Evaluations (IFE/EFE) of Amazon.
- Assessment of core competencies through the VRIO framework.
- Detailed breakdown of the company's value chain and support activities.
- Strategic recommendations based on SWOT, SPACE, and QSPM matrix outputs.
Extract from the Book
The Company
Amazon started its activity in the market in July 1995 as an online book seller, within a month, the fledgling retailer had dispatched books to 45 countries and all 50 states in the United States. "Get large fast," as founder Jeff Bezos put it, and Seattle-based Amazon grew into an e-commerce behemoth, offering everything from groceries to furniture to live ladybugs, and revolutionizing the way people buy.
After graduating from Princeton University with a bachelor's degree in computer science and electrical engineering in 1986, Bezos worked in the financial services business in New York City. He relocated to Washington state in 1994 after discovering the financial potential of the Internet and believing that books may sell well online. After the word Cadabra (as in abracadabra) was misheard as "cadaver," Bezos decided to rename his company Amazon, after the massive river in South America, a nickname he felt would not limit him to selling only one sort of goods or service.
Summary of Chapters
Executive Summary: Provides an overview of the research scope, highlighting the use of financial data and strategic tools to confirm Amazon's dominance in the online retail market.
The Company: Details the historical evolution of Amazon from an online bookseller in 1995 to a global e-commerce giant, including its leadership and product expansion.
External Environment: Presents a PESTEL analysis examining how political, ecological, social, technological, economic, and legal factors influence Amazon's operations.
Competitive environment: Utilizes Porter's Five Forces to explain the high competitive rivalry and the dynamics of bargaining power within Amazon's industry.
IFE Analysis: Evaluates Amazon's internal strengths, such as its brand name and customer loyalty, alongside weaknesses like margin pressure and employee morale.
EFE Analysis: Analyzes external opportunities like internet user growth and threats such as cybersecurity breaches and competitors.
CPM Matrix: Compares Amazon against major competitors like Alibaba and Walmart across critical success factors.
IE Matrix: Positions Amazon within the 'Grow and Build' quadrant, suggesting strategies like market penetration and integration.
VRIO Framework: Analyzes the company's resources to identify sustained competitive advantages, such as AI capabilities and global brand equity.
Value Chain Analysis: Breaks down Amazon's primary and support activities to demonstrate how it creates value and achieves operational efficiency.
Amazon's SWOT Matrix: Synthesizes internal and external factors into actionable SO, WO, ST, and WT strategies.
SPACE Matrix: Plots Amazon's aggressive competitive position based on financial and industry strength metrics.
Strategy recommendations: Suggests future directions, prioritizing Market Development based on attractiveness scores.
QSPM Matrix: Uses the Quantitative Strategic Planning Matrix to compare the attractiveness of different growth strategies.
Strategy Recommendations: Concludes that Market Development is the most preferable strategy for Amazon's continued international growth.
Keywords
Amazon, E-commerce, Strategic Management, PESTEL, Porter's Five Forces, VRIO Framework, Value Chain Analysis, SWOT, SPACE Matrix, QSPM, Cost Leadership, Market Penetration, Market Development, Retail, Competitive Advantage
Frequently Asked Questions
What is the core purpose of this strategic audit?
The research is designed to examine Amazon's worldwide position and assess how its current business plan compares to its primary rivals within the global e-commerce landscape.
Which management frameworks are utilized in this report?
The report applies several standard strategic management tools, including PESTEL, Porter's Five Forces, IFE/EFE Matrices, the VRIO Framework, Value Chain Analysis, SWOT, SPACE, and QSPM.
What is Amazon's stated generic strategy?
Amazon follows a strategy of cost leadership, leveraging technology and process automation to minimize operating expenses and maintain competitive pricing.
What are the primary findings regarding Amazon's competitive environment?
The analysis indicates high competitive rivalry due to the growth of online competitors, while noting that new entrants face significant barriers due to the capital and scale required to compete.
What does the VRIO analysis reveal about Amazon?
The VRIO analysis identifies Amazon's core competencies—such as its global brand equity, AI capabilities, and distribution network—as sources of sustained competitive advantage.
What is the final strategic recommendation of the report?
Based on the quantitative analysis (QSPM), the report concludes that Market Development is the most preferable strategy for Amazon to pursue.
How does Amazon handle its supply chain management?
The report highlights that Amazon utilizes a "Fulfillment by Amazon" service as part of its inbound logistics, alongside a highly developed distribution network that uses robotic technology.
Why did the researcher choose to focus on Market Development over Market Penetration?
The decision is based on the total attractiveness scores derived from the QSPM matrix, where Market Development scored 5.31 compared to 4.42 for Market Penetration.
What impact does Amazon's AWS division have on its competitive edge?
AWS provides Amazon with a significant competitive advantage by offering reliable cloud computing and storage solutions that have become industry standards, creating an additional revenue stream.
- Quote paper
- Dr Khaled Bekhet (Author), 2020, Strategic Management Audit Report for Amazon (2020), Munich, GRIN Verlag, https://www.grin.com/document/1183677
