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Amazon.com Strategic Audit

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Patricia Manning

on 16 December 2013

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Transcript of Amazon.com Strategic Audit

Administrative Policy
Final Project

Amazon.com
Strategic Audit

By : Patricia Manning
Adrian Miller
Tom Morrison
Kelsey Piper
Executive Summary
Problem
: Steadily declining growth rates

Background Info
: Spending outpaces revenues as they were investing in warehouses, technologies and the Kindle tablet

Analysis
: Eventually pay dividends to investors

Recommendation
: Pause strategy for short term then market development strategy
External Environment Analysis
Internal Environment Analysis
Network and Divisional structure (S)
Line of Business : Online Superstore and Tablet Development (S)
Culture: Competitive. Everything is a win-lose situation (W)
Jeff Bezos very involved with decisions in company (S)
Focus of company split in many directions (W)
Bezos not concerned with making money at all (W)
SWOT Analysis
Current Situation Assessment
Mission Analysis
Analysis of Strategic Alternatives
Recommended Strategy
Implementation Management
R&D
New ideas are encouraged (S)
Amazon is a product innovator (Kindle e-reader/tablet) (S)
Production/Operations
Marketing/Sales/Distribution
Customer Service/QA
Information Systems
Human Resources
Finance
Expanding, possibly too quickly (W)
Core competencies: cloud storage and world-wide distribution (S)
"Word of Mouth" marketing for website (W)
Distribution sites all across the country (S)
One big focus is customer service (S)
Most claims dealt with through email service (S)
Customer service reps overworked and underpaid. Standards too high (W)
Managerial decisions made with long meeting (S)
Private network of communication for those in the company (S)
Site is easy to use (S)
Disloyal employees and high turnover rate (W)
Recently hired many employees, with no financial strain (S)
Have not posted profit since 2001 (W)
Revenues consistently growing (S)
Investors in love with company (S)
Debt may become a problem if spending continues (W)
Pause strategy for period of one year. This is so they can realign goals with making money and posting profits.
Then, market development strategy. Amazon can work on products they already own and make them even better for customers
Goal of posting a profit that is at least 5% of revenues
Strengths:
Adaptive and innovative organizational structure
Many different product offerings
Employee input and ideas are highly encouraged
Innovative products such as the Kindle e-reader
Best distribution and delivery in industry
Customer-oriented business model
Revenues have seen consistent growth
Weaknesses:
Promotion system is based upon competition among employees
Are expanding at a higher rate than their profit/growth may allow
Customer service employees are often unhappy with their job, resulting in subpar customer experience
Disloyal employees resulting in high turnover rates
Have rarely seen profits
CEO Jeff Bezos is not focused on profits
Bezos is trying to balance too many responsibilities
Opportunities:
Moving into other industries through acquisitions
Physical presence
Newly released aerial drone delivery system
New deal with UPS to provide Sunday deliveries
Inclement weather can boost online sales
Threats:
Internet sales tax pressure
Security
Older market segment that prefers printed books
EBay, Walmart online store, Google, and other e-commerce sites
Brick and mortar stores
Low entry barriers for online companies resulting in more competitors
MISSION: Amazon’s mission is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices,”
ANALYSIS: Amazon’s mission is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices,”
Objectives:
Sells more items at a lower cost rather than focusing on few items at a higher cost;
Cut operating costs;
Identify areas of potential growth
Focus more on global market
Product differentiation
Expected Achievements/Results
The pause strategy is to be implemented for a period of one year to evaluate the company and formulate new, profit-oriented goals
A market development strategy will be implemented following the one year pause strategy
Amazon must start turning in profits not just growth. The growth strategy will be shelved while the market development strategy is fully integrated into Amazon’s business functions. The time frame for this will be year 2 of the new plan.
The expected results of these new strategies is a profit of at least 5% of revenues after 2 years.

Monitoring Progress
Financial reports should be used to monitor growth, revenues, and a high emphasis on profits.
Evaluation of CEO Jeff Bezos should be conducted by the board to insure he is taking the company in the right direction
Goals will need to be evaluated quarterly to allow for necessary changes and addition of new goals
Communicating Results
Financial reports should be used to monitor growth, revenues, and a high emphasis on profits.
Evaluation of CEO Jeff Bezos should be conducted by the board to insure he is taking the company in the right direction
Goals will need to be evaluated quarterly to allow for necessary changes and addition of new goals
Natural Environment
Internet based company, so should be minimal
But, weather is major factor
Deliveries may be delayed
Societal Environment
Society is attached to electronic devices
A good thing for Amazon - people shop around the clock
Social classes and circles not a factor - people don't know who is who online
Task/Market Factors
Market Trends/Segments
76 million customers in 200 countries
Target market is any online consumer
Google and Walmart are biggest competitors
Strict supply chain characteristics
Performance Perspective
Company of 88,400 employees
Net income decreased from $631,000,000 to $-39,000 (2011-2012)
Earnings per share projected to drop from .02 to .09
Current Strategic Posture
Slow to react
No "knee-jerk" reactions used as damage control
Look multiple steps ahead
Summary of Major Strategic Issues
Occasional outages of major products
Website not working properly
Expenses outweigh all else
Pause Strategy
Focus on other aspects
Create new goals
"Timeout"
Incremental movements
Pro : focus on current happenings
Con : growth declines
No-Change Strategy
Continue to do what they are doing
No new things
Not concerned with competitors entering market
Pro : focus and improve upon problems
Con : future plans pushed aside; unprepared for future
Market Development Strategy
Capture larger share of existing market
Already are industry leader
Can develop new uses and/or markets for existing products
Improve website and advertising
Pro : acquire new customers
Con : not focused on creating new products
Current Strategy:
Growth Strategy
Focus on growing current lines
Concentrating their resources
Acquiring new warehouses and distribution centers
An in-depth look at the current strategy and outlook of Amazon.com with recommendations for the future.
The End
Thank you for viewing our presentation.
Full transcript