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Amazon As An Employer Case Study: Supervived By: Dr. Ossama Mossalam
Amazon As An Employer Case Study: Supervived By: Dr. Ossama Mossalam
MANAGING ORGANIZATION
ORGANIZATION DESGINDESGIN &
& CHANGE
CHANGE
05
Passion To Create And Change
01. SWOT
STRENGTHS
1. Strong brand name WEAKNESSES
2. Brand valuation
3. Customer oriented
4. Differentiation and Innovation 1. Easily imitable business model
5. Largest Merchandise Selection 2. Losing Margins in Few Areas
6. Large number of third-party sellers 3. Tax Avoidance Controversy
7. Large number of acquisitions 4. Limited brick-and-mortar presence
8. Involved into 3 key business – Amazon Marketplace, Amazon Web 5. Employees treatment
Services (AWS), and Amazon Prime 6. Unfair use of third party data
9. Market Leader
10. Superior logistics and distribution systems
11. Minimum pay raise to $15 per hour
OPPORTUNITIES THREATS
2. Brand valuation
Amazon is ranked at #2 position (Apple at #1 and Google at #3), with a brand value of $200 Billion.
3. Customer oriented
Amazon caters to a large number of customers for everyday needs at inexpensive prices. This has made it a customer-oriented
brand
9. Market Leader
With over $1 Trillion market capitalization and above $386 billion annual revenues, Amazon is truly a market leader in online
retail industry.
Strengths
10. Superior logistics and distribution systems
Amazon uses highly efficient logistics and distribution systems. It even has fixed rates for different delivery time periods. Thus, it
executes reliable, secure, and fast delivery of goods and products to the customers.
5. Backward Integration
Can do backward Integration by expanding its production of in-house brands such as Amazon basics to differentiate its offerings
and improve profit margins. More acquisitions of e-commerce companies can increase the company’s market share and reduce
the competition level.
Opportunities
6. More acquisitions of e-commerce companies
2. Government regulations
Government regulations can also threaten the business proceedings of Amazon in some critical countries. Amazon does not
ship to Cuba, Iran, North Korea, Sudan, and Syria.
4. Increasing cybercrime
Increasing cybercrime can affect the network security system of the company.
5. Aggressive competition
Aggressive competition with big retail firms like Walmart and eBay can give Amazon a tough time in the future. In addition, now
Amazon competes with the following companies:
In Video Streaming Service: Apple TV+, Netflix, Disney+
In Logistics: FexEx
In Self Driving Technology: Tesla, Uber, Ford
Threats
6. Imitation
Imitation is simple as many new entrants are coming up in the market usually with the same business model of Amazon
7. Fake Products
The increase in counterfeiting and fake products threatens Amazon’s profits. The company recently filed a lawsuit against New
York-based online retailer for allegedly counterfeiting Valentino shoes, a luxury Italian shoe brand offered by Amazon .
8. Economic Recession
Amazon is not immune to an economic recession. If economic uncertainty worsens, it can impact Amazon’s sales.
9. Fake reviews
Amazon has an overwhelming amount of fake reviews, and the problem has worsened in recent times due to the pandemic.
Product reviews are a critical indicator of quality and authenticity, and customers rely heavily on reviews to make purchases.
Passion To Create And Change
02. PESTEL
POLITICAL P
1. Political stability of developed countries, especially the U.S.A. and European countries (opportunity)
This condition creates an opportunity for the company to expand or diversify its business in developed countries. For example,
Amazon could expand its brick-and-mortar operations in the United States to complement its e-commerce business.
Such governmental support facilitates Amazon’s continuing expansion in relevant markets. However, the same external factor
threatens the company because of rising competition, such as that involving Chinese online retail firms that are expanding their
operations
3. Increasing governmental efforts on cyber-security (opportunity)
A major opportunities that the company can exploit to increase its resilience in the remote or macro-environment of the
information technology services and e-commerce industry
POLITICAL P
4. High government investment in national ICT infrastructures (opportunity)
Faster, better and more reliable internet access for national users
5. Relaxed EU and North American competition policies on e-retailing as opposed to heavy industries
(opportunity)
The British and American government are currently holding discussions about potential trade deals between the two countries
,This could serve to ease Amazon's operations in the UK as an American firm, potentially reducing import taxes and resulting in
less
regulations.
ECONOMIC E
1. Economic stability of developed markets, especially the U.S. and European countries (opportunity)
The economic stability of developed countries increases the likelihood of success for Amazon.com, this situation minimizes
economic issues in the remote or macro-environment, thereby minimizing risks to the company’s online retail business
expansion
The increasing disposable incomes in developing markets can boost the company’s financial performance
An increasing characteristic of the globalized world and its levels of uncertainty, and Amazon's expansion into the grocery
sector further served to heighten this uncertainty, with competitors such as Walmart all facing drops in their share prices
ECONOMIC E
4. Growing of Chinese e-commerce market
Chinese e-commerce market is set to grow from sales revenue of 13.8 trillion yuan ($2.1 trillion) in 2021 to
19.6 trillion yuan ($3.0 trillion) in 2024.
This year alone, e-commerce sales in China are expected to register growth of 17.2 percent and,
according to an eMarketer report released earlier this year, will surpass offline sales for the first time. In
2021, it predicted, 52 percent of China’s sales will take place online, up from almost 45 percent in 2020
The increasing wealth disparity refers to the increasing gap between the rich and the poor in many countries. This is a threat
against Amazon.com. in terms of the potential stagnation of disposable income levels and the corresponding stagnation of the
remote or macro-environment of the industry
Higher disposable income levels are more favorable in increasing the e-commerce company’s potential revenues. In addition, an
increasing degree of consumerism creates opportunities for growing the e-commerce and IT services business. For example,
higher consumerism in developing markets increases the potential success of
Amazon.com Inc.’s generic strategy for competitive advantage and intensive strategies for growth , as the company looks to
expand its global online retail operations in these locations.
With 711 million people across the globe being classed as overweight and increasing pressure resting on Governments to
encourage physical activity and a healthy lifestyle .It could be argued that by extending its delivery services to the extent that
customers can even have their groceries delivered to their doorstep, Amazon are encouraging the non-active lifestyles that are
resulting in the obesity pandemic.
TECHNOLOGICAL T
1. Rapid technological obsolescence (threat & opportunity)
Amazon.com faces the threat of rapid technological obsolescence, which imposes pressure on the company to continuously
develop its technological assets. However, such a condition is also an opportunity in optimizing the business. For example, the
corporation’s continued heavy investment in information technology can boost its competitive advantage and protect the business
from new entrants in the e-commerce industry.
Amazon also has opportunities to further improve its performance based on the rapid increase of IT resource efficiencies. For
instance, new computing technologies can maximize online retail productivity and minimize operational costs
The company also faces the constant threat of cybercrime. This external factor threatens the quality of customer experience as
well as the integrity of Amazon’s business.
TECHNOLOGICAL T
4. In terms of logistics, increasing levels of technology are now a necessary requirement to efficiently and
effectively deal with the demands of highly globalized, complicated and interconnected supply chains
Amazon continue to develop high levels of technology to aid their logistics services, Anew service called 'Hub' rolled out, which is
a locker system that allows amazon deliveries to be dropped off even when the customer isn't home; the first technology of this
kind to be used for non-business customers in the online omnichannel retail field
5. In a drive to expand their UK workforce to 24,000 by 2018, Amazon have recently announced that they will
be doubling the amount of staff that they employ in their Research and Development center in London,
signifying that the company is focusing on increasing their technological proposition.
6. Development of technology provides an increase of online shopping. ( Accessibility from computers &
Smartphones) &Security of online payment ,facilitation of online payment
ENVIROMENTAL E
1. Rising interest in environmental programs (opportunity)
Amazon has opportunities to improve its environmental impact in response to the rising interest in
environmental programs.
Such interest is a direct consequence of ecological challenges, such as waste management and energy
consumption.
Based on this external factor, an improvement in Amazon CSR could enhance the company’s environmental
impact
Major opportunities in the area of business sustainability. For example, higher sustainability standards can
further improve environmental impact and strengthen the brand image of the e-commerce organization,
based on the business strengths
ENVIROMENTAL E
3. Increasing popularity of low-carbon lifestyles (opportunity)
The increasing popularity of low-carbon lifestyles provides opportunities for the company to boost its
corporate image as a leader in the e-commerce industry. The company could implement extensive
energy-saving policies in its operations for this purpose
More online shopping means less ( travelling shopping) by vehicle , and less carbon dioxide emission
LEGAL L
1. Rising product regulation (opportunity)
Rising product regulation is seen as a result of societal demands on consumer safety and customer security.
This creates opportunities for Amazon.com to intensify its efforts in reducing counterfeit sale on its online
retail website.
The company has opportunities to grow, based on the external factor of changing import and export
regulations. For example, Amazon can expand its global operations to exploit the increasing ability of sellers
to access overseas suppliers
LEGAL L
3. Rising environmental protection regulations on businesses (opportunity)
The e-commerce company has opportunities to strengthen its brand image through appropriate corporate
social responsibility policies that address rising environmental protection regulations
4. No uniform regulations governing e-commerce covering all the countries e.g Data Protection Act in UK and
Federal Trade Commission in USA
Removes legal obstacles and provides a more secure and transparent legal environment
6. Amazon has further come under fire from the Federal trade commission in the U.S. for producing misleading
claims about pricing discounts on around 1000 products
LEGAL L
7. At present, increasing pressure is placed on multinational corporations to risk assess their clients, and any
politically sensitive clients or clients on terrorist watch lists should be sanctioned .Amazon is currently under
federal investigation for selling goods to individuals on terrorist watchlists and violating US sanctions,
showing a disregard to international law and safety
Passion To Create And Change
NEW ENTRY
THREAT OF
SUPPLIER POWER
(Moderate Force) (Weak Force)
COMPETITIVE
SUPPLIER POWER RIVALRY BUYER POWER
BUYER POWER
(Strong Force)
(Strong Force)
SUBSTITUTION
THREAT OF SUBSTITUTION
THREAT OF
(Strong Force)
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Competitive Rivalry
In the case of Amazon.com Inc., the following external factors are responsible for the strong intensity of
competition or competitive rivalry in the online retail industry environment:
Retail firms are generally aggressive, and they exert a strong competitive force against each other.
For example, Amazon.com Inc. directly competes against giants like Walmart, which has a significant and
expanding e-commerce website.
Amazon also experiences the strong force of substitutes because of their high availability. For instance,
Walmart’s physical or brick-and-mortar stores are substitutes to Amazon’s online retail service.
Other brick-and-mortar bookstores and smaller retailers also compete against Amazon.
Low switching costs impose a strong force on the company. Low switching costs correspond to low barriers
for consumers to transfer from one retailer to another, or from one company to a substitute provider.
Based on the external factors in this aspect of the Five Forces Analysis of Amazon, competition must be
a strategic priority to ensure the company’s long-term competence.
Bargaining Power of Amazon’s Customers/Buyers
Amazon mission & vision statements highlight the company’s customer-centric approach to e-commerce
business.
This determines the influence of consumers on firms and the industry environment.
The following external factors support the strong intensity of the bargaining power of customers in affecting
Amazon:
Consumers have access to high quality information regarding the services of online retailers and the
products they sell. This external factor affects Amazon.com in terms of the ability of customers to find
alternatives to
the company’s online retail service.
The low switching costs make it easy for consumers to transfer from Amazon to other firms, such as
Walmart.
The high availability of substitutes further empowers consumers to shift from one retailer to another.
For example, instead of purchasing on Amazon’s e-commerce website, a customer can easily go to one of
Walmart’s stores, which are strategically located throughout the United States.
Bargaining Power of Amazon’s Suppliers
Suppliers control the availability of supplies or materials Amazon.com Inc. needs for its e-commerce
operations, such as hardware components for information systems.
Amazon experiences the moderate intensity of the bargaining power of suppliers based on the following
external factors:
The moderate forward integration limits suppliers’ actual effect on Amazon. Moderate forward integration
equates to a moderate degree of control that suppliers have in the sale of their products to firms like
Amazon
The moderate size of most equipment manufacturers limits their influence on the company.
Threat of Substitutes or Substitution
Amazon.com competes with substitutes in the online retail market.
In the case of Amazon, the following external factors support the strong intensity of the threat of substitution:
The high availability of substitutes and the low costs of their product offerings further increase the influence
of substitutes against the company. Thus, the external factors in this aspect of the Five Forces Analysis of
Amazon.com show that substitution is among the priorities in the company’s strategies for long-term
success
in the online retail industry environment.
Threat of New Entrants or New Entry
New firms potentially reduce Amazon’s market share in online retail.
Amazon.com Inc. experiences the weak intensity of the threat of new entry based on the following external
factors:
However, the high cost of brand development in online retail weakens the influence of new entrants on the
performance of Amazon. For example, it would take years and billions of dollars to create a strong brand
that directly competes with the Amazon brand.
In addition, the company benefits from high economies of scale that make its e-commerce business strong.
As such, new entrants need to achieve similarly high economies of scale to compete against the company.
Passion To Create And Change
Improve knowledge and cultural awareness of the Chinese population, implementing services
which best suits the Chinese market to increase market share by 50 % by 2024.
Strategic Goals
1. Market penetration in China
Now China is the second largest internet market in the world after the US
By 2030, China’s private consumption is set to more than double to reach $12.7 trillion.
Chinese e-commerce market is set to grow from sales revenue of 13.8 trillion yuan ($2.1 trillion) in 2021 to
19.6 trillion yuan ($3.0 trillion) in 2024, representing a compound annual growth rate (CAGR) of 12.4 percent
according to newly-released GlobalData forecasts.
In 2021, it predicted 52 percent of China’s sales will take place online, up from almost 45 percent in 2020
Strategic Goals
2nd Strategic objective:
Increase Amazon private label product list by 30 % by 2024
Strategic Goals
2- Developing Amazon’s private brands further and marketing them to the loyal customer base they have built
(Backward integration)
Currently Amazon offers roughly 7,217 private labeled products with 86% of those listed under $50 with an average rating of 4.04 out of 5.
Amazon's other private brands, Amazon Basics and Amazon Exclusive, have a combined product listing of roughly 20,000 products.
Develop further private brands for Amazon, because the company already has industry strength introducing more of their own brands into the
market would benefit their brand. Having more private brands would make Amazon a more competitive company, similar to Walmart's private
brand strategy
Walmart, one of Amazon's biggest competitors, has an estimated 30,000 products across there 319 private label brands
Amazon should take steps to increase their product listings to compete with others in the industry while maintaining the quality and competitive
pricing they currently offer.
Strategic Goals
3rd Strategic objective:
Not only will this decrease warehouse strikes and attrition rates but also will provide good press and
marketing for the company and a new path forward with customers who otherwise think that Amazon is
a corporate company with no thought to its employees.
The average turnover rate for warehouse workers in places with fulfillment centers belonging to Amazon is
150 %
Strategic Goals
This strategy could be extremely profitable as online grocery sales grew 22% in 2020 and are projected to
increase 40% in 2022
In May 2020 there were an estimated 73.5 million online grocery orders valued at $6.6 billion worth of sales.
Strategic Goals
5th Strategic objective:
To improve Amazon’s employees efficiency to reach a figure of $ 60,000 Profit per employee by
2024
Strategic Goals
5- Improve Profit per employee
The figure “profit per employee evolution” shows that Apple had succeed in creating new profitable
markets and Google is the most efficient company because it ears $209,000 per employees, Apple
$157,00, and
Amazon $31,000; this data indicates that profits from per employee is not satisfactory considering
competitors’ profit margin.
Thus, the company needs to develop the efficiency level of the employees and need to develop long-term
strategic plan to find out some way to increase profits by using talents of the staff.
Strategic Goals
6th Strategic objective:
By doing so Amazon can build continued customer trust that their data is protected while shopping on the platform. Specifically
beefing up AWS. As recently as March 2020 there was a database breach that left unsecured customer records from the EU
and UK on AWS. Amazon benefits from the continued investment and focus on cyber security.
Passion To Create And Change
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