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examine the industry in which the entity operates. Use any or all of the following resources to conduct research on the company:

Company website

Public filings from the Securities and Exchange Commission EDGAR database

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Introduction

The growth of e-commerce business in the last few years has changed the consumer behavior across the world in terms of shopping experiences. However with the phenomenal growth the industry has experienced several challenges have also been discovered which has the potential to hamper the business (Aydiner et al. 2019). The current assignment will focus n the internal and external threats which Amazon has been facing in recent times and the ways through which it can solve them.

Industry analysis

Global e-commerce grew at an exponential rate of 18.0% which is far more than the saturated U.S. market. Globally consumers purchased $2.86 trillion in the internet in 2018, an increase from $2.43 trillion the previous year, as per analysis (Cao et al. 2019)As per Internet Retailer's estimates, the same becomes slowdown from the year of 2017, whereas in the year 2016 the online dale was grew 21.3%. Different studies showed that the fastest growing online sales are there in the following counties Philippines, Colombia, UAE, China, and India. From 27% to 51% growth was there in these countries in e-commerce selling.

SWOT analysis

Strength

The biggest strength of Amazon lies in its discounted pricing structure, the largest merchandise selection and a large capacity of third party sellers. Through this method Amazon has become the largest online retailer in the world earning $140 billion in 2017, which is larger than all its competitors (Dronova, Smagorinskiy and Yastrebov, 2019). Mainly the number of products that the company have sold in the last decade is greater than most of its competitors and is still at an advantageous position owing to larger scale of business and massive supplier network.

Weakness

Amazon operates “zero margin” business method that has affected its profits as well as high sales volumes and huge revenues. The profitability has remained out of its bounds leading to massive cash burn. This has impacted the stakeholder confidence and is one of the reason why they have shifted to new businesses.

Opportunity

Induction of its own online payment system, Amazon has created opportunists to scale up its business considering the fact that apprehension over online shopping as far as safety and confidentiality are concerned are among the topmost issues on the minds of consumers (Fan, 2019). Furthermore, profit margins would improve due to the advantages of using its payment gateway.

Threat

Amazon faces competition from local retailers who are more responsive and dexterous when compared to its large scale type of strategy.

Resources

The resources of Amazon include offices and warehouses from where it distributes its products. The core competency of the company lies in compiling a huge volume of products and sells it at minimal price to the customers as per their convenience. Their intangible resources include goodwill among the customers and patents of the products that they sell as a third party organization.

Two segments that rank highest in their influence on Amazon

Dealing with Government regulations

As governments keep on changing the regulatory policies have been a difficult hurdle to cross for online retailers.  Fresh scrutiny of tech giants also poses challenges in business.  The EU and other countries like France have increased their regulation and taxation efforts of major tech companies, including Amazon (Iqbal and Yadav, 2019). In the U.S., headquarter expansion of Amazon and the tax evasion strategies which it had followed became a flash point for criticism for Amazon's size and influence over policymakers. Additionally with a change of guard in Congress, privacy and antitrust concerns are expected to be issues to watch as lawmakers on both sides of the aisle stepping up their scrutiny of the tech firms.

Competition

Amazon although has been an undisputed leader in e-commerce, but formidable rivals could get more aggressive in their efforts to siphon market share from Amazon. In a report, Kwak, Zhang, and Yu, (2019) pointed out that Amazon has reduced promotions and price matching versus rivals last year, and in turn, brick-and-mortar competition have increased its foothold of Amazon's less aggressive stance targeting an apparent profit focus, rather than a growth. For investors, saber-rattling from other retail giants, ever eager to deepen their online presence is worth keeping an eye on in 2019.

Two forces of competition that are the most significant for Amazon

Finding alternate revenue streams

Amazon has a large database of products and consistently adds new product categories. It's always on the lookout for ways to expand revenue generation and drive its growth prospects. Given Amazon's history, analysts have observed that the company is expected to grow by 25% in the next five years (Parnell, 2019). The company is trying to consistently innovate new products or improvements to its lineup, Amazon must also take steps to secure future growth. The big question will be if any of these strategies will contribute meaningfully to the bottom line.

Competition

Amazon has millions of items for its customers which provide greater options to choose from. . In order to provide such an extensive inventory, they integrate their product selection by giving consent to other retailers for selling goods on the company’s website. In 2018, Wal-Mart have also announced that they will be allowing third parties to sell goods through their retail websites (Rana et al. 2019) Amazon has spent a decade establishing their brand, and they have reaped benefits out of it in the long term. Amazon offers broad selection at low prices, creating a large number of loyal shoppers.

Addressing the above two forces: Strategic initiatives

Addressing revenue streams issue

In finding new revenue alternatives Amazon has been optimizing its technology platform to offer web-related services. They have also made strategic acquisitions of companies like Zappos.com that balance Amazon's business model. Setting partnerships with multiple organizations Amazon has increased its volume of private-label products, such as Ethernet and A/V cables leading to a massive increase in sales volume (Saura, Palos-Sanchez and Correia, 2019). The company has also launched services in addressing the customer demand, such as Amazon Fresh, its grocery delivery service.

Tackling competition

In order to tackle competition Amazon needs to diversify their product base and invest in new business ventures which the company has already initiated. As they are a unicorn with billion dollar valuations Amazon has the capacity to invest in widespread business activities which will help them in limiting down competition to a trickle (Simon and Fassnacht, 2019). In addition to this the company also built a strong rapport with premium sellers and distributors so that before anyone can initiate offline store transform Amazon will be able to sell the products at a lower price.

Identification of the greatest external threat for Amazon

Price Manipulation

As the e-commerce segment continues to grow several new organizations have entered the bandwagon leading to an all out price war. In this issue the manufacturing companies, suppliers and venture capitalists all have different point of view and this creates severe hurdle in the pricing strategies leading to manipulation (Suri, 2019). Automated systems which are controlled by high end analytics software have been affected through manipulative results, pricing and interpretation.  Stealing is the most common intention of price manipulation. It gives space to an intruder to slide or install a lower price into the system and get away with all the data. One of the main reasons to e-commerce threats is poor management. The cash burnout has severe financial repercussions to the profitable margin leading to losses and stakeholder uncertainty increases also. Moreover pressure from the management in increasing volume sales has also affected the average revenue per user of the company (Yu, 2019). In order to address this issue Amazon must balance between premium product selling and discounted mass sales. The former should give them committed customers for increasing average revenue while the latter will add on to their figures. Venturing with the offline retailers have also been found to be a good idea to improve pricing policies.

Greatest opportunity for Amazon and its significance

The greatest opportunity which Amazon had is the increasing popularity of online shopping among the millennial who are the drivers of growth. Moreover the company is challenging traditional offline stores. The company is not only seeing double digit growths in the emerging markets, it is also generating massive volume sales of exquisite items, imported premium goods and customized products (Simon and Fassnacht, 2019). The company should increase their deep discounting strategies as a measure to further pave their ways into the untapped market, thereby increasing its presence on a long term basis. The penetration will help Amazon build a greater set of customers leading to a larger segment of the market pie leading to greater profitability. Partnership with brick and mortar stores also has great potential in building up the business leading to a massive proliferation exercise (Saura, Palos-Sanchez and Correia, 2019).

Conclusion

The growth of e-commerce industry and the various opportunities and threats that it brings in have been discussed thoroughly in the discussion. Moreover considering the technological innovation, greater economic prosperity and the digital boom Amazon is expected to grow sustainably in the long term as observed through detailed research.

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