Running head: AMAZON ANALYSIS 1

Amazon's Mission and Vision Statement with Operational Management Strategy Analysis

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Executive Summary

Amazon operates in the online retail industry. It is the most successful online store across

the globe. Amazon strives to attain mission and vison through exemplary customer service. It

employs product differentiation to satisfy consumers better. The reviews database eases

consumers’ purchase decisions and creates a shopping community. Also, the A9 search

algorithms have provided an improved search experience. Amazon has an ethical for both

employees and consumers. They entail price-fixing, conflict of interest, not disclosing users’

data, full disclosure of product information, a safe working environment, and abiding by existing

laws. Amazon has met and exceeded its financial projections in the fourth quarter of 2019. The

organization faces a strong competitive force and high substitutes threat. Suppliers have

moderate power while customers' bargaining power is high. The organization suffers a low risk

from startups. Amazon’s significant strengths are a vast capital base and product differentiation.

However, it has few physical stores and has faced instances of online fraud. Amazon can utilize

the opportunity of the prevalence of online shopping by creating their branded products.

However, the threat of counterfeiting and spoiling confronts the opportunity. Remarkable

recommendations for the research are that Amazon should innovate more in IT, mitigate

counterfeiting, introduce Amazon-branded merchandise, increase the number of physical stores,

and intensify marketing to lessen competitive rivalry force.

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Amazon's Mission and Vision Statement with Operational Management Strategy Analysis

Amazon operates in the online retail industry. It is the most successful online store across

the globe. Amazon is a business-to-consumer since its primary focus is the customers (Lincoln

IV, 2018). The organization's vision statement is being the most customer-centered company on

earth, provide an avenue where consumers can locate anything; they need to purchase at the

lowest cost possible. Amazon’s mission statement to attend to customers online as well as

physical stores, centering on section, convenience, and price.

Customer Service

The amazon has strived to attain its vision and mission statements through improved

customer service. The organization has a vast pool of products from which consumers can select,

such as clothing, books, music, food, robotics, movie database, among others (Lincoln IV, 2018).

To increase the personalization of their stores, Amazon reconfigured the online stores to conform

with each customer’s preference by establishing the “your store service,” which has been critical

in conveniently delivering services at low prices by employing economies of scale (Majed,

Nuraddin, & Hama, 2018). Also, Amazon launched the A9 ranking algorithm that provides a

convenient product search experience to the consumers. Besides, the company also employs a

vast pool of reviews as well as ratings. The reviews are a crucial component of Amazon’s

shopping experience. They induce a common approach of shopping through the participatory

work, creating a social community that translates to end customers with a sense of belonging.
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Performance

Furthermore, the company’s remarkable performance continues to make it a global

market leader. The report of the release of its financial statements made Amazon’s market

capitalization surpass $ 1 trillion (Palmer, 2020). Amazon’s revenue has grown by 21%, totaling

to $87.44 billion (Palmer, 2020), and its net income for the third quarter increased by 8%.

However, there was a 1% decline in revenues from the company’s physical stores that

prominently feature Whole Foods.

Ethical Standards Towards Customers and Employees

On the other hand, Amazon employs ethical standards towards its customers and

employees to achieve their mission and mission. The first guiding code states that “employees

must follow applicable laws, rules, and regulations at all times” (Amazon, 2020). Also, the

organization does not support sexual harassment or discrimination. Amazon demands that sellers

should provide the correct product information to the consumers and not harm reviews and

ratings of other sellers. Besides, sellers should destroy consumers’ data after transaction and

avoid undesired messaging to consumers. Standards also bound Amazon’s employees on conflict

of interest, insider trading, bribery, and price-fixing. Also, the company provides a safe, healthy,

and clean working environment (Amazon, 2020). It is the responsibility of workers to ensure

such conditions by abiding by the organization’s safety rules.

Porter Analysis

Threat of Substitutes

Amazon faces a high risk of substitutes because of insignificant switching costs from

Amazon to alternatives such as eBay. Besides, there is the availability of other options, for
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instance, Walmart that is supported by physical stores for urgent shopping scenarios (Greenspan,

2017). Low switching cost creates a weak barrier that enables consumers to shift among retailers

undemandingly.

Suppliers’ Bargaining Power

Amazon experiences a moderate force from suppliers. The low number of suppliers

enables dominance over materials and supplies availability. A negative vicissitude of prices from

a significant number of suppliers would adversely affect Amazon’s operational costs (Greenspan,

2017). However, the company employs a forward integration model that moderates the force of

suppliers.

Competitive Rivalry

There is an intense rivalry force. Amazon faces direct competition from other E-

commerce giants like eBay and book stores such as Noble (Majed, Nuraddin, & Hama, 2018).

Besides, the company experiences a strong rivalry force because of it of high presence of

substitutes. Lack of patented technology such as “Click Ordering” also makes the industry have a

high rivalry force.

Customer Bargaining Power

The buyers’ power is high. The organization’s consumers have the liberty of purchasing

from the vast network of online and offline retailers (Greenspan, 2017). Low switching costs and

readily available substitutes strengthen customer’s bargaining power.

Threat of New Entrants

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Amazon has a low threat from new entrants. It would be challenging for a startup

company to attain the inventory magnitude held by Amazon (Majed, Nuraddin, & Hama, 2018).

Also, current principal markets are unfavorable to internet startups. Therefore, it less likely for a

new online retailer to enter the market.

Swot Analysis

Swot analysis encompasses strengths, weaknesses, threats, and opportunities. The

strengths of Amazon are that it has a large capital base (Majed, Nuraddin, & Hama, 2018).

Besides, the organization has employed differentiated product strategy with products such as

cloud computing, streaming services, brick and mortar stores, among others. Besides, Amazon

has significant leadership in technology. However, Amazon has less presence of physical stores

for the population, not inclined to online shopping. Also, internet users worry about fraud

associated with online purchases (Greenspan, 2017). Amazon has various opportunities. First, it

can expand the number of physical stores which would stringent its competitiveness with “big

box” sellers. Besides, Amazon should utilize the prevalence of online shopping and develop their

brands rather than selling third party products. However, the company is threatened by the

emergence of other new entrants, which will affect their prices and future operations. Besides,

they could suffer huge losses due to counterfeits and spoiling of products.

Recommendations

i. Amazon can mitigate intense rivalry by improving its brand image through marketing

campaigns.

ii. The organization should introduce their branded products.

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iii. More effort should be utilized in countering counterfeits such as by employing public

awareness, lawsuits, third-party, and customer reporting.

iv. Amazon should innovate more in IT to remain a market leader.

v. The organization should increase the availability of physical retail stores.

vi. Should encourage the utilization of its payment platform.

Conclusion

Amazon has employed strategies such as customer reviews, low prices, product

differentiation, and improved customer experience to achieve its mission and vision statements.

The organization also has an employee and customer standards of conduct and ethics. Amazon

faces strong buyer bargaining power and competitive rivalry. Besides, Amazon has a low

physical presence. Amazon should encourage the utilization of its payment platform to reduce

fraud, establish more physical stores, mitigate high rivalry force by improving its brand image

through marketing campaigns, and innovate more in IT.

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References

Amazon. (2020). Code of Business Conduct and Ethics. Retrieved from

https://ir.aboutamazon.com/corporate-governance/documents-charters/code-business-

conduct-and-ethics

Greenspan, R. (2017) ‘Amazon.com Inc. Five Forces Analysis and Recommendations (Porter’s

Model). Panmore Institute. Retrieved from http://panmore.com/amazon-com-inc-five-

forces-analysis-recommendations-porters-model

Lincoln, I. V. A., C., E. (2018). Porter Analysis: A Business Strategy of Amazon. Com Through

a Value Chain and Comparative Advantage Analysis of Amazon’s Trademarks and

Intangibles. In Practical Guide to US Transfer Pricing. Matthew Bender & Company, Inc.

Majed, S., Nuraddin, S., & Hama, S. (2018). Analyzing the Amazon Success Strategies. Journal

of Process Management. New Technologies, 6(4), 65-69. doi: 10.5937/jouproman6-

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Palmer, A. (January 30, 2020). Amazon Soars After Huge Earnings Beat. CNBC. Retrieved from

https://www.cnbc.com/2020/01/30/amazon-amzn-q4-2019-earnings.html