Strategic Analysis of Amazon.com Essay Example | Topics and Well Written Essays - 1250 words

Strategic Analysis of Amazon.com - Essay ExampleAmazon.com is an on-line(a) retail company established in 1994 by Jeff Bezos and based in Seattle, Washington, U.S.A. The company, ranked 273 last twelvemonth amongst Fortune 500 companies in America, began as a seller of books through the meshwork but has liberal into what is essentially a technology and logistics business enterprise, selling services such as Web hosting and offer bowed stringed instrument management, and brand recent and used products purchased from distributors, manufacturers, and publishers. The company operates seven retail Web sites, two lookup and navigation sites, and a movie database site (Amazon.com, 2006a). As of December 13, 2006 the company had annual revenues of $9.7 billion, EBITDA of $567 million, net income of $292 million, and rough 12,000 employees worldwide. Table 1 shows a summary of how NASDAQ-listed Amazon.com comp ars with its competitors in the meshing Software and Services such as e-Ba y and Barnes and Noble (Yahoo.com, 2006).Amongst the various manners of conducting a strategic abridgment, this paper will focus on customary techniques such as SWOT (Ansoff, 1965 Chandler, 1962), PESTEL (Andrews, 1987), and Porters Five Forces model and Generic Strategies (Porter, 1980 and 1985).SWOT-PESTELFor this first part, we blend the SWOT-PESTEL approach. The SWOT analysis is so-called because of the acronym of four factors required for assessing the organisations internal (Strengths and Weaknesses) and external (Opportunities and Threats) environments. The PESTEL analysis considers six environmental factors that affect the enterprise and its business Political, Economic, Social, technical, Environmental, and Legal.The strengths of Amazon.com are its customer-centred focus, the quality of its technology fundament, supply chain management experience, its brand name, and its huge database of global customers. Amongst its major weaknesses are product innovation (it sells for others), technology infrastructure utilisation, and a sagging stock price (down 22.3% in the last year) that opens it to takeover risk from other Internet (e-Bay and Google) or software (Microsoft) giants. The more important opportunities are the growth of on-line shopping and the need to enclose products and services to continue growing sales to generating higher margins and profits. These would address the threat from an increasing number of competitors that are eating into the business activity (on-line shopping) it used to dominate.The following PESTEL factors affect the industry and Amazon.com Political American statute law on taxation of on-line transactions threatens to reduce usage and margins. Economic Slowdown in consumer outlay in countries with high Internet penetration would drag down profits and margins. Retail giants (Wal-Mart and Tesco) would compete with Internet service providers. Social Potential backlash from Internet users and competing brick-and-mortar reta il shops that discover the anti-social effects of on-line transactions. Technological Web 2.0 Internet technology is deemed to have a different set of users and protocols that may attract new upstart dotcoms as competitors. The fast obsolescence of the companys technology needs to be utilised and depreciated quickly. Security concerns of on-line transactions remain. Environmental Server farms are ugly and consume huge amounts of energy. Legal The risk of identity theft opens Internet companies to