Amazon Case

Amazon.com INC

Presented to: Mr. Zaffar Manan

Amazon.com

• Earths Biggest Book Store

• CEO and Founder Jeff Bezos

• Internet based companies (Yahoo, Google)

• Named After the mightiest river in the world

• Fast Becoming worlds Biggest anything Store

Internal Factors

Strengths

1. Large customer database.2. Worlds Biggest Book Store.3. Efficient Web Browsing.4. Amazon has proven themselves to be the most

successful retailer online.5. Enables customers to compare prices across different

products being sold by amazon.6. Product Offering is easily understandable.7. Customized home pages for website Members.8. Effective promotions and advertisements.9. Expansion has propelled Amazon.com in innumerable

directions.

Weaknesses

1. Lack of business skills in all products being sold.

2. Purchasing items from distributors rather than manufacturers.

3. A huge need of adding values to the online shopping experience (aesthetics needs).

4. More browsers than buyers.

5. Fear of competition is high as there are low barriers to market entry.

External Factors

Opportunities

1. Market size is growing.2. More things can be easily sold on the internet.3. More people are willing to buy online.4. Number of women internet users are growing.5. Increasing availability of other access channels is

providing more opportunities for customers to shop online.

6. Increase in acceptance of E-Commerce. 7. Growth in consumer to consumer auctions.

Threats1. High competition from direct and indirect sources.2. New entry barriers in the industry.3. High Taxation possibilities4. Customer might shop at partner's website for the next

purchase after the first shopping at Amazon. 5. Threat that retailers will draw back the partnership at

the end of the alliance agreement. 6. Some retailers may get jealous if Amazon promotes

one company more than another.7. Customers still prefer try-and-buy shopping habits for

clothing.

TWOS Strategy

STRENGTHS WEAKNESS

OPPORTUNITY

SO strategies WO strategies

THREAT

ST strategies WT strategies

Internal Factor Evaluation Matrix

IFE Matrix

IFE StrengthsINTERNAL FACTORS Weighted Rated TWS

Strengths

1 Large customer database. .10 4 .40

2 Worlds Biggest Book Store .10 4 .40

3 Efficient Web Browsing .05 4 .20

4 Amazon has proven themselves to be the most successful retailer online

.05 3 .15

5 Enables customers to compare prices across different products being sold by Amazon

.05 4 .20

6 Product Offering is easily understandable. .05 3 .15

7 Customized home pages for website Members.

.05 3 .15

8 Effective promotions and advertisements. .05 4 .20

9 Expansion has propelled Amazon.com in innumerable directions.

.05 3 .15

.55 2.00

IFE WeaknessINTERNAL FACTORS Weighted Rated TWS

Weakness

1 Lack of business skills in all products being sold

.05 2 .10

2 Purchasing items from distributors rather than manufacturers

.05 1 .05

3 A huge need of adding values to the online shopping experience (aesthetics needs).

.10 2 .20

4 More browsers than buyers .05 2 .10

5 Fear of competition is high as there are low barriers to market entry

.05 1 .20

.45 .65

TOTAL (ST + WK) 1.00 2.65

External Factor Evaluation Matrix

EFE Matrix

EFE StrengthsEXTERNAL FACTORS Weighted Rated TWS

Opportunities

1 Market size is growing. .10 .40

2 More things can be easily sold on the internet

.15 .40

3 More people are willing to buy online .05 .20

4 Number of women internet users are growing .05 .15

5 Increasing availability of other access channels is providing more opportunities for customers to shop online

.05 .20

6 Increase in acceptance of E-Commerce .05 .15

7 Growth in consumer to consumer auctions .05 .15

.55

EFE WeaknessEXTERNAL FACTORS Weighted Rated TWS

Threats

1 High competition from direct and indirect sources .05 2 .10

2 New entry barriers in the industry .05 1 .05

3 High Taxation possibilities .10 2 .20

4 Customer might shop at partner's website for the next purchase after the first shopping at Amazon

.05 2 .10

5 Threat that retailers will draw back the partnership at the end of the alliance agreement

.20 2 .40

6 Some retailers may get jealous if Amazon promotes one company more than another

.

7 Customers still prefer try-and-buy shopping habits for clothing

.45 .65

TOTAL (ST + WK) 1.00 2.65

Strategic position and Action Evaluation Matrix

SPACE Matrix

SPACE MATRIX:FINANCIAL STRENGTHS

5

6

6

5

4

5

4

Total 35

Average 5

SPACE MATRIX:

COMPETITIVE ANALYSIS RATES

-1

-5

-4

-1

-1

-2

Total -14

Average -2.33

ENVIRONMENTAL STABILITY RATES

- 4

- 4

- 3

- 3

-2

Total - 16

Average -3.20

SPACE MATRIX:

INDUSTRY STRENGTH RATES

4

5

4

4

2

Total 19

Average 3.80

SPACE MATRIX:

SPACE MATRIX:

X-Axis :IS + (-CA) = 3.8 + (-2.33)= 1.47

Y-Axis :FS + (-ES) = 5.0 + (-3.20)= 1.80

SPACE MATRIX

I S C A

F S

E S

Aggressive

SPACE Matrix:

STRATEGIES TO BE PURSUED– Intensive

Strategies– Integrative

Strategies– Conglomerate

Diversification

– Concentric Diversification

– Horizontal Diversification

– Combination

Amazon Growth

Fiscal Year-End December

2004 Sales (mil.) $6,921.1

1-Year Sales Growth 31.5%

2004 Net Income (mil.) $588.5

1-Year Net Income Growth 1,567.1%

2004 Employees 9,000

1-Year Employee Growth 15.4%

Source : www.iwishiknew.com

Boston Consulting Group Matrix

BCG Matrix

BCG MatrixG

row

thR

ate

Relative Market Share

Low

0.0

High

1.0

Medium

0.5

High +20

Low -20

Medium 0

Question Mark

“?”

Star “*”

Cash Cows

Dogs

Grand Strategy Matrix

Grand Strategy Matrix

Rapid Market Growth

Quadrant II

Quadrant I

Weak Strong

Competitive Competitive

Position Position

Quadrant III Quadrant IV

Slow Market Growth

Strategies From Grand Strategy Matrix

• Market Development

• Market Penetration

• Product Development

• Forward Integration

• Backward Integration

• Horizontal Integration

• Concentric Diversification

IE Matrix

IE MATRIX:

DIVISIONS IFE EFE

Amazon.com 2.65

Others 1.8 2.2

1.0

1.0

2.0

2.0

3.0

3.04.0

LOW

WEAK

MEDIUM

HIGH

AVERAGE

STRONG

EFE SCORES

IFE SCORES

Build & Grow

IE - Matrix

Quantitative Strategic Planning Matrix

CP Matrix