Mukesh Patel School of Technology Management &

Engineering

Strategic Management Project Report

On Amazon

Group 3

Under the Guidance of

Prof. Rajesh Prasad

Dhara Dhakad (N214)

Akul Dhanked (N215)
Bhavya Gandhi (N218)
Neetima Gautam (N219)
Akshita Jasoria (N230)
Shivam Mishra (N248)
 Table of Contents

Sr. No. Topic Page

1. Evaluation of Customer Value Proposition

Evaluation of Amazon’s Vision, Mission, and Core

2.
Values

Evaluation of Amazon’s external environment (PESTEL,

3.
and 5 forces)

Evaluation of Amazon's Resources, Capabilities, and

4.
Competitiveness

5. Generic Competitive Strategy Chosen

6. Amazon Specific Company strategy

7. Integration strategy

8. Your recommendation to the Company

 Amazon

Evaluation of Customer Value Proposition

Amazon's customer value proposition is centered around providing customers

with a convenient and hassle-free shopping experience. The company achieves
this by offering a wide range of products and services, competitive prices, fast
and reliable shipping, and easy-to-use digital tools. Here is a more in-depth
evaluation of Amazon's customer value proposition:

➢ Product Offering:
Amazon offers a vast selection of products, from books and electronics to
groceries and home goods. This breadth of offerings provides customers
with the convenience of a one-stop-shop, which saves time and effort.
Additionally, Amazon offers proprietary products like Amazon Basics and
private-label brands, which can save customers money.

➢ Price:
Amazon is known for its competitive prices, which are often lower than
those of its competitors. Amazon achieves this by using its massive scale
to negotiate better deals with suppliers and passing on the savings to
customers. Additionally, Amazon offers daily deals and discounts to
incentivize purchases.

➢ Shipping and Delivery:

Amazon's Prime membership program offers free two-day shipping on
millions of items, making it a compelling value proposition for frequent
shoppers. The company has also invested heavily in logistics and
fulfillment centers to enable fast and reliable delivery. Furthermore,
Amazon offers various delivery options, including same-day, one-day, and
two-day delivery.

➢ Digital Tools:
Amazon's website and mobile app are user-friendly and offer various
features to enhance the customer experience. For example, customers can
easily search for products, read product reviews, compare prices, and track
their orders. Additionally, Amazon uses customer data to offer
personalized product recommendations and targeted promotions.

➢ Customer Service:
Amazon's customer service is known for being responsive, helpful, and
 efficient. The company offers various channels for customer support,
including phone, email, and live chat.

Overall, Amazon's customer value proposition has been successful in creating a

loyal customer base and driving sales. However, there are some areas where
Amazon could improve its customer value proposition:

➢ Sustainability:
Amazon has faced criticism for its environmental impact, including the
carbon emissions generated by its massive logistics network and the
waste generated by its packaging. Improving its sustainability practices
could enhance its reputation with environmentally conscious customers
and align with its core value of long-term thinking.

➢ Social Responsibility:
Amazon has also faced criticism for its labor practices, including low
wages and poor working conditions for its warehouse workers.
Addressing these concerns and improving its social responsibility
practices could improve its reputation and align with its core value of
customer obsession.

➢ Personalization:
While Amazon uses customer data to offer personalized
recommendations, it could further enhance its personalization
capabilities. For example, by using machine learning algorithms to offer
more accurate recommendations and incorporating customer feedback
to improve product suggestions.

In conclusion, Amazon's customer value proposition is centered around

convenience, competitive pricing, fast and reliable shipping, and easy-to-use
digital tools. While the company has been successful in leveraging these factors
to create a loyal customer base and drive sales, there are areas where Amazon
could improve its value proposition, such as sustainability, social responsibility,
and personalization.

Overall, Amazon's customer value proposition is highly effective in attracting and

retaining customers. By offering a wide range of products at competitive prices
with fast and reliable delivery, Amazon has created a shopping experience that is
convenient and appealing to many customers. Additionally, the company's focus
on customer service helps to ensure that customers have a positive experience
when shopping on Amazon. As a result, Amazon has become one of the most
successful and influential companies in the world.
Evaluation of Amazon’s Vision, Mission, and Core Values,
Vision:

Vision

Amazon's vision is to be the earth’s most customer-centric company, where

customers can find and discover anything they might want to buy online, and
where they can get the lowest possible prices, fast and reliable delivery, and a
trustworthy and convenient online shopping experience.

Mission

Amazon's mission is to continually raise the bar of the customer experience by

using the internet and technology to help customers find, discover, and buy
anything, and empowering businesses and content creators to maximize their
success.

Core Values

1. Customer obsession: Amazon's top priority is to obsess over its customers

and to provide the best possible customer experience.

2. Ownership: Amazon encourages its employees to take ownership of their

work and to take initiatives to improve processes and services.

3. Invent and Simplify: Amazon continuously challenges itself to come up

with innovative solutions to simplify and improve processes and services.

4. Bias for Action: Amazon values speed and action and encourages its
employees to take swift decisions and to execute them with urgency.

5. Frugality: Amazon believes in being efficient and cost-conscious and

encourages its employees to think creatively and to do more with less.

6. Earn Trust: Amazon believes in building trust with its customers,

employees, and partners by being transparent and delivering on its
promises.

7. Learn and Be Curious: Amazon encourages its employees to be curious

and to never stop learning, and to continuously seek out new ideas and
knowledge.
 Evaluation

Amazon's vision and mission are aligned with the company's customer-centric
approach and its focus on using technology to enhance the customer experience.
The core values, such as customer obsession, ownership, and bias for action, are
integral to Amazon's success and have helped the company to continuously
innovate and improve its services.

However, there have been criticisms of Amazon's treatment of its employees,

particularly regarding working conditions and wages. Some have also raised
concerns about the company's impact on small businesses and the environment.
These issues may suggest a misalignment with the company's core values,
particularly regarding ownership and earning trust.

Overall, while Amazon's vision and mission are aligned with its customer-centric
approach, the company may need to address concerns around its treatment of
employees and impact on society to fully embody its core values.
Evaluation of Amazon’s external environment (PESTEL,
and 5 forces)

PESTEL Analysis

1. Political Factors: Amazon operates in multiple countries and is therefore

subject to a range of political factors, such as trade policies, tariffs, and
regulations regarding data privacy and security.

2. Economic Factors: Amazon's performance is influenced by economic

factors such as GDP growth, exchange rates, inflation, and consumer
confidence. It is also affected by macroeconomic trends, such as the rise of
e-commerce.

3. Sociocultural Factors: Societal attitudes and cultural norms can impact

Amazon's operations, such as changing consumer preferences,
demographics, and trends in social media.

4. Technological Factors: Amazon has always been a technology-driven

company, and technological advancements can impact its operations. This
includes advancements in artificial intelligence, automation, and robotics.

5. Environmental Factors: Amazon has faced criticism for its

environmental impact, and sustainability is an increasingly important
factor in consumer decision-making.

6. Legal Factors: Amazon is subject to a range of legal factors, including

intellectual property rights, competition law, and regulations regarding
privacy and data protection.

Five Forces Analysis

1. Threat of New Entrants: The e-commerce industry has a relatively low

barrier to entry, and new players can enter the market with minimal capital
investment. However, Amazon's market dominance and scale create
significant challenges for new entrants.

2. Bargaining Power of Suppliers: Amazon has a diverse range of suppliers,

and its size and scale enable it to negotiate favorable terms with its
suppliers. However, if a supplier has a unique or proprietary product, it
may have more bargaining power.
 3. Bargaining Power of Buyers: Amazon's customer-centric approach
means that it prioritizes the needs of its customers. This means that buyers
have significant bargaining power and can influence the company's
operations.

4. Threat of Substitutes: E-commerce faces competition from traditional

brick-and-mortar stores as well as other e-commerce players. Amazon's
brand strength and low prices make it less vulnerable to the threat of
substitutes.

5. Rivalry Among Existing Competitors: Amazon faces competition from

other e-commerce companies such as Walmart, Alibaba, and eBay.
However, its scale and market dominance give it a significant advantage
over its competitors.

Overall, Amazon operates in a dynamic and challenging external environment.

Its success is due in large part to its ability to adapt to changing circumstances
and to its customer-centric approach, which allows it to stay ahead of its
competitors. However, Amazon also faces challenges such as increasing scrutiny
from regulators, concerns about sustainability, and competition from other e-
commerce players.
Evaluation of Amazon's Resources, Capabilities and
Competitiveness

Key Financial Ratios

One of the key indicators of a company's financial health is its financial ratios.
Amazon's financial ratios highlight the company's strong financial position. As
of the end of 2020, Amazon had a revenue of $386 billion, with a net income of
$21.3 billion. The following are some of the key financial ratios of Amazon:

➢ Gross Profit Margin: Amazon's gross profit margin was 39.0% in 2020,
which is higher than the industry average of 32.4%. This indicates that the
company can generate more profit from its sales.

➢ Operating Profit Margin: Amazon's operating profit margin was 5.4% in

2020, which is lower than the industry average of 6.1%. However,
Amazon's operating margin has been increasing steadily over the years.

➢ Return on Assets (ROA): Amazon's ROA was 6.9% in 2020, which is

higher than the industry average of 4.4%. This indicates that Amazon is
able to generate more profits from its assets.

➢ Return on Equity (ROE): Amazon's ROE was 21.3% in 2020, which is

higher than the industry average of 18.4%. This indicates that Amazon is
able to generate more profits for its shareholders.

Resources and Capabilities

Amazon has a wide range of resources and capabilities that contribute to its
success in the market. The following are some of the key resources and
capabilities of Amazon:

➢ Brand Image: Amazon has a strong brand image and is known for its
customer-centric approach. The company has built a reputation for offering
a wide range of products, low prices, and fast delivery.

➢ Customer Data: Amazon has a large amount of customer data, which it

uses to personalize its offerings and improve the customer experience. This
data is also used to develop new products and services.

➢ Infrastructure: Amazon has a strong infrastructure that includes data

 centers, warehouses, and logistics. This enables the company to offer fast
and reliable delivery to its customers.

➢ Technology: Amazon has developed advanced technology, including

artificial intelligence and machine learning, that enables it to offer
personalized recommendations, improve search results, and optimize its
operations.

➢ Human Capital: Amazon has a large and diverse workforce that includes
talented employees with a range of skills and expertise. The company
invests in the development of its employees and offers competitive
compensation and benefits.

SWOT Analysis

A SWOT analysis is a useful tool for evaluating a company's strengths,

weaknesses, opportunities, and threats. The following is a SWOT analysis of
Amazon:

Strengths:
• Strong brand image and customer loyalty Large and diverse product
portfolio.
• Advanced technology and data analytics capabilities Strong logistics and
supply chain management financial strength and stability.

Weaknesses:
• Dependence on third-party sellers
• Limited international market share in some regions Issues with counterfeits
and unauthorized sellers.
• Negative publicity related to employee treatment and environmental
impact.

Opportunities:
• Expansion into new markets and product categories Growth in cloud
computing and artificial intelligence.
• Increased focus on sustainability and environmental impact Acquisitions
and partnerships to expand offerings.

Threats:
• Competition from other e-commerce companies Government regulations
and antitrust concerns.
 • Economic downturns and global events impact consumer spending.
Cybersecurity threats and data breaches.

Value Chain Analysis of Amazon

Value chain analysis is a tool that helps in evaluating a company's primary and
support activities to identify areas of potential competitive advantage. The value
chain of Amazon can be analyzed as follows:

➢ Inbound logistics: Amazon has a complex inbound logistics process due

to the sheer volume of products it handles. The company has established
an extensive network of suppliers and distribution centers to manage this
process efficiently.

➢ Operations: Amazon's operations involve receiving, storing, and

processing customer orders. The company uses sophisticated algorithms to
track and manage inventory, which helps in reducing costs and increasing
efficiency.

➢ Outbound logistics: Amazon's outbound logistics involve the delivery of

products to customers. The company has established a vast network of
delivery partners to ensure timely delivery of products to customers.

➢ Marketing and sales: Amazon's marketing and sales strategy is focused

on creating a personalized experience for each customer. The company
uses customer data to offer personalized recommendations and
promotions, which helps in increasing customer loyalty.

➢ Service: Amazon's customer service is one of its key strengths. The

company offers a range of services such as free shipping, easy returns, and
24/7 customer support, which helps in enhancing the customer experience.
Generic Competitive Strategy Chosen
Amazon has implemented a variety of generic competitive strategies to establish
itself as a dominant player in the e-commerce industry. These strategies include
cost leadership, differentiation, and focused differentiation.

Cost Leadership

The Cost Leadership Competitive Strategy is one of the primary strategies

employed by Amazon, which allows the company to offer products and services
at a lower cost than competitors. This strategy is aimed at achieving operational
efficiency, reducing costs, and offering the lowest prices to customers.

To implement the cost leadership strategy, Amazon has focused on various

aspects of its operations, including:

➢ Economies of scale: Amazon has been able to achieve economies of scale

by operating on a large scale, which enables the company to lower the cost
per unit of production. By offering a wide range of products and services
and selling them in high volumes, Amazon is able to reduce its costs and
pass on the savings to its customers.

➢ Logistics and supply chain management: Amazon has invested heavily

in logistics and supply chain management to streamline its operations and
reduce costs. The company has built a vast network of warehouses and
fulfillment centers worldwide to ensure faster and more affordable
shipping options for customers. Amazon has also implemented advanced
inventory management systems to reduce the cost of inventory storage and
management.

➢ Technology: Amazon has leveraged technology to automate various

processes, which has helped the company to achieve operational efficiency
and reduce costs. The company has also invested in artificial intelligence
and machine learning technologies to personalize customer experiences
and optimize its operations further.

➢ Low overhead costs: Amazon has focused on minimizing overhead costs

by keeping its organizational structure lean and outsourcing non-core
activities. By reducing overhead costs, Amazon is able to lower its prices
while maintaining profitability.

➢ Thin margins: Amazon operates on a thin profit margin, relying on high

volume sales to generate profits. This allows the company to offer products
 and services at lower prices while still maintaining profitability.

In conclusion, the Cost Leadership Competitive Strategy is a crucial strategy

employed by Amazon to maintain its position as a dominant player in the e-
commerce industry. By focusing on operational efficiency, logistics, technology,
low overhead costs, and thin margins, Amazon has been able to offer products
and services at lower prices than competitors, attracting more customers and
achieving higher sales volume.

Differentiation

The Differentiation Competitive Strategy is another key strategy employed by

Amazon, which involves offering unique and distinct products or services that set
the company apart from its competitors. This strategy is aimed at creating a
unique and valuable customer experience that differentiates the company from its
rivals.

To implement the differentiation strategy, Amazon has focused on various

aspects of its operations, including:

➢ Wide range of products and services: Amazon offers a vast selection of

products and services, ranging from books to electronics, clothing,
groceries, and more. This broad range of offerings helps the company to
appeal to a wide range of customers and differentiate itself from
competitors that specialize in certain product categories.

➢ Amazon Prime: Amazon Prime is a subscription-based service that offers

a variety of benefits to members, including free two-day shipping, access
to streaming services, and exclusive deals. This service differentiates
Amazon from other retailers and creates a loyal customer base that is more
likely to shop on Amazon.

➢ Personalized recommendations: Amazon leverages advanced algorithms

and machine learning technologies to personalize recommendations for
customers based on their browsing and purchase history. This creates a
unique and personalized shopping experience that sets Amazon apart from
its competitors.

➢ Customer service: Amazon is known for its exceptional customer service,

which sets it apart from competitors. The company offers a variety of
customer service options, including phone, email, and chat support, and is
quick to resolve any issues or complaints.
 ➢ Innovation: Amazon is constantly innovating and introducing new
products and services to the market, such as Amazon Echo and Alexa.
These products differentiate Amazon from its competitors and help the
company to maintain its position as a leader in the industry.

In conclusion, the Differentiation Competitive Strategy is a critical strategy

employed by Amazon to differentiate itself from competitors and create a unique
and valuable customer experience. By offering a wide range of products and
services, personalized recommendations, exceptional customer service, and
innovative products, Amazon has created a loyal customer base and established
itself as a leader in the e-commerce industry.

Focused Differentiation

The Focused Differentiation Competitive Strategy is a variation of the

differentiation strategy that involves offering unique and distinct products or
services targeted at a specific customer group or market niche. This strategy is
aimed at creating a unique and valuable customer experience that differentiates
the company from its competitors in a specific market segment.

Amazon has employed the Focused Differentiation Competitive Strategy in

various ways, including:

➢ Amazon Web Services (AWS): AWS is a cloud computing platform

offered by Amazon that caters to the needs of businesses and developers.
AWS offers a wide range of services, including computing, storage,
database, and analytics, and is targeted at businesses of all sizes. AWS is a
prime example of Amazon's Focused Differentiation Competitive Strategy,
as it is targeted at a specific customer group (businesses) and offers unique
and distinct services that differentiate it from competitors.

➢ Amazon Fresh: Amazon Fresh is a grocery delivery service offered by

Amazon that delivers fresh produce and groceries to customers' doorsteps.
This service is targeted at customers who want the convenience of grocery
delivery and fresh produce. By offering a unique and convenient service,
Amazon Fresh differentiates itself from competitors and creates a loyal
customer base.

➢ Amazon Business: Amazon Business is an e-commerce platform targeted

at businesses that offers a wide range of products, including office supplies,
electronics, and industrial supplies. Amazon Business offers unique
features such as business-only pricing and free two-day shipping, which
differentiate it from competitors and cater to the specific needs of
 businesses.

➢ Amazon Handmade: Amazon Handmade is a platform that offers unique

and handmade products created by artisans and small businesses. This
platform is targeted at customers who appreciate handmade and unique
products, and it differentiates itself from competitors by offering a curated
selection of high-quality handmade products.

In conclusion, the Focused Differentiation Competitive Strategy is a critical

strategy employed by Amazon to differentiate itself from competitors in specific
market segments. By offering unique and distinct products or services targeted at
a specific customer group or market niche, Amazon is able to create a unique and
valuable customer experience and establish itself as a leader in those market
segments.

Amazon has successfully implemented a combination of cost leadership,

differentiation, and focused differentiation strategies to maintain its position as a
dominant player in the e-commerce industry. By offering low prices, a wide range
of products and services, and personalized customer experiences, Amazon has
established a strong competitive advantage over its rivals.
Amazon Specific Company strategy

Amazon's specific company strategy can be described as a combination of

offensive and first mover strategies. Amazon has been an industry leader in online
retail since its inception and has consistently pursued a strategy of aggressive
expansion into new markets and segments. The company has also been a first
mover in many areas, such as e-books, cloud computing, and voice assistants.

One key aspect of Amazon's offensive strategy is its focus on customer

satisfaction. The company has a reputation for offering a wide selection of
products at competitive prices, with fast and reliable shipping. Amazon also
invests heavily in technology and logistics to continually improve its customer
experience, such as with the development of one-day and same-day delivery.

In terms of first mover strategy, Amazon has consistently been ahead of its
competitors in terms of introducing new products and services. For example,
Amazon was the first to introduce the concept of online customer reviews, which
has now become a standard feature of most e-commerce platforms. The company
was also a pioneer in the e-book market, launching the Kindle e-reader in 2007,
which has since become the dominant device in the market.

Overall, Amazon's offensive and first mover strategies have enabled it to maintain
a strong competitive position in the online retail industry. The company's focus
on customer satisfaction and investment in technology and logistics has allowed
it to offer superior customer experience, while its early adoption of new
technologies and markets has kept it ahead of its competitors.
Integration strategy

Amazon has implemented a variety of integration strategies, including both

horizontal and vertical integration as well as strategic alliances with other
companies.

Horizontal integration refers to the acquisition or merging with companies in the

same industry. Amazon has pursued this strategy through numerous acquisitions,
such as its purchase of online shoe retailer Zappos in 2009 and its acquisition of
Whole Foods Market in 2017. These acquisitions have enabled Amazon to
expand its product offerings and reach new customer segments.

Vertical integration, on the other hand, involves expanding into different stages
of the supply chain. Amazon has pursued this strategy through the creation of its
own logistics and delivery network. This includes the establishment of Amazon
Air, a cargo airline that allows the company to transport goods more efficiently,
and the development of Amazon Prime Now, a delivery service that offers same-
day delivery.

In addition to these integration strategies, Amazon has also formed strategic

alliances with other companies. For example, the company has partnered with
major brands like Nike and Calvin Klein to create exclusive product lines that are
only available on Amazon. This type of alliance allows Amazon to offer unique
products to its customers while also benefiting from the reputation and marketing
of established brands.

Overall, Amazon's integration strategies have enabled it to create a more efficient

and vertically integrated supply chain, expand its product offerings, and form
alliances with other companies to offer exclusive products and services to
customers. These strategies have been keying to Amazon's success and have
helped the company maintain its position as a leading player in the retail industry.
Your recommendation to the Company

Customer Value Proposition:

1. Enhance the customer experience by investing in emerging technologies

such as artificial intelligence, augmented reality, and chatbots to improve
customer service, personalization, and recommendations.

2. Expand the product offerings to new markets, especially in emerging

economies, to tap into new revenue streams and increase market share.

3. Focus on improving sustainability practices, such as increasing the use of

renewable energy sources, reducing carbon footprint, and promoting
responsible sourcing, to attract environmentally conscious customers.

Vision and Mission:

1. Align the company's strategic initiatives and investments with its vision
and mission to foster a more customer-centric culture and drive long-term
growth.

2. Communicate the company's vision and mission more clearly to all

stakeholders, including customers, employees, shareholders, and partners,
to increase engagement and support.

Core Values:

1. Strengthen the company's commitment to its core values of customer

obsession, ownership, long-term thinking, and innovation, by embedding
them in all aspects of the business, from recruitment and training to
performance management and reward systems.

2. Encourage more transparency and accountability in the company's

operations to enhance trust and credibility with stakeholders.

External Environment:

1. Monitor and respond to external trends and disruptions, such as regulatory

changes, geopolitical risks, emerging technologies, and changing
consumer preferences, to mitigate risks and leverage opportunities.
 2. Build strategic partnerships with other industry players and stakeholders to
enhance the company's network and ecosystem, foster innovation and
collaboration, and improve customer value proposition.

Resources and Capabilities:

1. Continue to invest in the company's core resources and capabilities, such

as logistics, supply chain, data analytics, and cloud computing, to sustain
the company's competitive advantage and enable future growth.

2. Enhance the company's talent management practices, such as recruitment,

training, development, and retention, to attract and retain top talent, foster
a culture of innovation, and enhance performance.

Competitiveness:

1. Differentiate the company's offerings and value proposition from

competitors by focusing on niche markets, developing proprietary
technologies and products, or offering unique services and experiences.

2. Enhance the company's brand image and reputation by fostering a more

ethical, socially responsible, and sustainable business model, and by
communicating the company's values and contributions more effectively
to stakeholders.

Generic Competitive Strategy:

1. Leverage the company's current cost leadership strategy by continuing to

optimize operational efficiencies, reducing costs, and offering competitive
prices to customers.

2. Diversify the company's generic competitive strategy by investing in

product differentiation, such as developing exclusive partnerships with
high-end brands, offering more customized and personalized products and
services, or creating a more engaging and immersive shopping experience.

In summary, Amazon can improve its overall performance and competitiveness

by aligning its strategic initiatives and investments with its customer value
proposition, vision, mission, and core values, while also adapting to the changing
external environment and leveraging its resources, capabilities, and
competitiveness. By focusing on innovation, differentiation, sustainability, and
talent management, Amazon can continue to grow and succeed in the global
marketplace.