Request for Pricing: Case Study on Strategic

Management for "Amazon"

Forest David: Francis Marion University

A. Case Abstract

Amazon, a global e-commerce juggernaut, has ascended to the top of the

industry, largely due to its well-defined strategic management approach. The
company's meteoric rise can be attributed to its unwavering commitment to its
vision, a set of meticulously crafted strategies, and the visionary leadership of its
founder, Jeff Bezos.
This in-depth case study takes a comprehensive look at the intricacies of
Amazon's strategic management, unraveling its vision, strategies, and
performance. It also highlights the challenges that Amazon faces and examines
the company's proactive responses to these obstacles.

The case study addresses key questions that encapsulate Amazon's strategic
management journey:
1. What is Amazon's overarching vision?
2. What strategies has Amazon implemented to achieve its goals?
3. How has Amazon's performance been shaped by its current strategic management
approach?
4. What challenges does Amazon face in the ever-changing business landscape?
5. How is Amazon adapting its strategies to effectively address these challenges?
Amazon's strategic journey is characterized by continuous evolution, demanding
an ongoing process of refinement and adaptation to ensure its continued success.
This case study not only provides insights into Amazon's past strategic
management decisions but also offers suggestions for navigating future challenges
and maintaining its competitive edge.

Key Players in Amazon's Strategic Management

Jeff Bezos, Amazon's founder and former CEO, played a pivotal role in
shaping the company's strategic direction. His vision, leadership, and decision-
making have been instrumental in Amazon's rise to prominence.
Andy Jassy, Amazon's current CEO, has inherited a legacy of strategic
brilliance and is tasked with carrying forward Amazon's growth trajectory. His
leadership will be crucial in navigating the company's strategic development in
the years to come.
 Amazon's strategic management team, comprising experienced executives,
provides guidance and expertise in formulating and implementing the
company's strategic plans. Their collective insights and decision-making
power contribute to Amazon's strategic success.

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  Amazon's Strategic Management Structure
 Amazon's strategic management structure is characterized by a centralized
decision-making process, with the CEO and the senior leadership team
playing a central role in formulating and implementing strategic plans.
The company also utilizes a decentralized operational structure,
empowering individual business units to make decisions tailored to their
specific markets and customer needs.
This hybrid approach, combining centralized strategic planning with decentralized
operational execution, has proven effective in enabling Amazon to maintain a
clear vision while adapting to diverse market conditions and customer
preferences.

Case Study Organization

This case study is organized into three main sections:
1. Amazon's Vision and Strategies: This section delves into Amazon's overarching
vision, examining how it has guided the company's strategic direction and
decision-making. It also explores the specific strategies that Amazon has
implemented to achieve its goals.
2. Amazon's Performance and Challenges: This section evaluates Amazon's
performance under its current strategic management, analyzing its financial
results, market share, and overall growth trajectory. It also identifies the
challenges that Amazon faces in the competitive e-commerce landscape.
3. Amazon's Strategic Responses and Future Outlook: This section examines how
Amazon is responding to the challenges it faces, highlighting its strategic
initiatives and adaptation strategies. It also offers insights into the company's
potential future direction and the prospects for continued success.
In conclusion, Amazon's strategic management has been a key driver of its
success, enabling the company to achieve remarkable growth and establish itself
as a dominant force in the e-commerce industry. As Amazon continues to evolve
and face new challenges, its strategic management will play a crucial role in
ensuring its continued success and leadership in the ever-changing business
landscape

B. Vision Statement (proposed)

“Our vision is to be earth's most customer-centric company; to build a place

where people can come to find and discover anything they might want to buy
online.”

Proposed: “To be the world's most customer-centric company, providing the

widest selection of products, the best prices, and the most convenient shopping
experience.”

Explanation of why there is a need for the proposed vision statement:

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  Clarity: The proposed vision statement is more clear and concise than the original
statement. It is easier to understand and remember, which will help to
communicate the company's vision to its employees, customers, and other
stakeholders.
 Focus: The proposed vision statement is more focused than the original statement.
It clearly identifies the company's three main goals: to provide the widest
selection of products, the best prices, and the most convenient shopping
experience. This will help the company to prioritize its efforts and make sure that
it is moving in the right direction.
 Measurability: The proposed vision statement is more measurable than the
original statement. The three goals that it identifies are all quantifiable, which will
help the company to track its progress and make sure that it is achieving its vision.
 Inspiration: The proposed vision statement is more inspiring than the original
statement. It paints a more vivid picture of what the company hopes to achieve,
which will help to motivate its employees and customers.

Overall, the proposed vision statement is a more effective way to communicate the
company's vision to its stakeholders. It is clearer, more focused, more measurable, and
more inspiring. This will help the company to achieve its goals and become the world's
most customer-centric company.

Here is a table that summarizes the key differences between the original and proposed
vision statements:

Feature Original Vision Statement Proposed Vision Statement

Clarity Unclear Clear

Focus Unfocused Focused

Measurability Unmeasurable Measurable

Inspiration Uninspiring Inspiring

C. Mission Statement (actual)

“to be Earth's most customer-centric company”

Proposed: “To provide the world's most convenient and enjoyable shopping
experience, while making a positive impact on the world.”

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Explanation of why there is a need for the proposed mission statement:

 The proposed mission statement is more clear, concise, and focused than the
original statement. It clearly articulates the company's two main objectives: to
provide an exceptional customer experience and to make a positive impact on the
world. This will help to ensure that the company's employees are aligned on its
goals and that it is making progress towards achieving them.
 The proposed mission statement is more actionable than the original statement. It
provides specific guidance on how the company can achieve its objectives. For
example, the statement refers to providing the "world's most convenient and
enjoyable shopping experience," which gives the company a clear target to aim
for.
 The proposed mission statement is more inspiring than the original statement. It
paints a more vivid picture of what the company hopes to achieve, which will
help to motivate its employees and customers. The statement highlights the
company's commitment to making a positive impact on the world, which is a
cause that many people are passionate about.

Overall, the proposed change to the mission statement is a positive one that will help the
company to achieve its goals. The broader mission statement is more relevant to the
current business environment and will help the company to attract and retain customers
who are passionate about making a positive impact.

D. External Audit

Opportunities

1. Expansion in Emerging Markets

2. Physical Stores
3. Counterfeit Products
4. Backward Integration
5. Self-Driving Technology
6. Launch of Electric Rickshaws in India
7. Personalized Shopper Service Hits Big
8. Plans to Enter the Crypto Stratosphere
9. Launch of Electric Delivery Vans Across The US
10. Amazon Luna – Game Anywhere on Devices You Own
11. Launch of Amazon Clinic – A Virtual Healthcare Service
12. Amazon’s Biggest Acquisitions
13. Amazon Dominates Cloud Market

Threats

1. Few controversies.
2. Government regulations
3. Links to exploitative labor

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 4. Cybercrime
5. Aggressive competition
6. New Entrants
7. Fake Products
8. Economic Recession
9. Fake reviews
10. Lawmakers Seek Answers after Tornado Kills Amazon Workers
11. Federal Trade Commission (FTC) complaint

Competitive Profile Matrix

Barnes &
Factor Weight (%) Amazon.com eBay Alibris Wal-Mart
Noble.com

4 3 3
Price 30% 4 (1.20) 5 (1.50)
(1.20) (0.90) (0.90)

3 5 2
Quality 25% 4 (1.00) 5 (1.25)
(0.75) (1.25) (0.50)

Unique 3 3 4
20% 5 (1.00) 4 (0.80)
Features (0.60) (0.60) (0.80)

Product 4 3 4
15% 4 (0.60) 4 (0.60)
Delivery (0.60) (0.45) (0.60)

Product 3 2 3
10% 5 (0.50) 4 (0.40)
Inventory (0.30) (0.20) (0.30)

Totals 100% 22.80 22.55 16.80 16.00 15.60

* Company ratings in the book market online.

Total scores have been calculated by multiplying individual ratings with their respective
weight percentages.

Note: Due to the rounded total scores, there is a slight discrepancy in the final sum.

External Factor Evaluation (EFE) Matrix

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 Factor Weight (%) Rating Weighted Score

Opportunities

Expansion into Emerging Markets 30% 4 1.20

Physical Stores 20% 3 0.60

Counterfeit Products 20% 3 0.60

Backward Integration 20% 3 0.60

Self-Driving Technology 30% 4 1.20

Launch of Electric Rickshaws in India 20% 2 0.40

Personalized Shopper Service Hits Big 20% 4 0.80

Plans to Enter the Crypto Stratosphere 20% 3 0.60

Launch of Electric Delivery Vans Across The US 20% 3 0.60

Amazon Luna – Game Anywhere on Devices You Own 20% 3 0.60

Launch of Amazon Clinic – A Virtual Healthcare Service 20% 2 0.40

Amazon’s Biggest Acquisitions 20% 3 0.60

Amazon Dominates Cloud Market 30% 4 1.20

Total Opportunities 100% 36 8.80

Threats

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 Few Controversies 20% 2 0.40

Government Regulations 30% 3 0.90

Links to Exploitative Labor 20% 2 0.40

Cybercrime 30% 4 1.20

Aggressive Competition 30% 3 0.90

New Entrants 30% 3 0.90

Fake Products 20% 3 0.60

Economic Recession 30% 4 1.20

Fake Reviews 20% 2 0.40

Lawmakers Seek Answers after Tornado Kills Amazon

20% 2 0.40
Workers

Federal Trade Commission (FTC) Complaint 20% 2 0.40

Total Threats 100% 34 7.40

Total Weighted Score 16.20

As you can see, the overall weighted score for Amazon is 16.20. This indicates that
Amazon has a favorable external environment, with more opportunities than threats.
However, the company does face some challenges, such as government regulations,
cybersecurity threats, and aggressive competition.

E. Internal Audit

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 Strengths

1. Strong Brand Image

2. Brand Valuation
3. Customer Oriented
4. Differentiation and Innovation
5. Cost Leadership
6. Largest Merchandise Selection
7. Large Number of Third-Party Sellers
8. Go Global and Act Local strategy
9. Large Number of Acquisitions
10. Key Business Segments
11. Market Leader
12. Superior Logistics and Distribution Systems
13. Minimum Pay Raise to $15 Per Hour

Weaknesses

1. Easily Imitable Business Model

2. Losing Margins in Few Areas
3. Product Flops and Failures
4. Tax Avoidance Controversy
5. Limited Brick-and-Mortar Presence
6. Poor Workplace Conditions
7. Declining Consumer Safety
8. Unfair Use of Third Party Data
9. Over-Dependence on Distributors
10. Employees Strike
11. Amazon Drivers Allege Inhumane Work Conditions

Financial ratio analysis for Amazon in 2023, comparing the company to the industry
and the S&P 500 (2023)

Growth Rates
Ratio Amazon Industry S&P 500
Sales Growth Rate (5-Year Avg.) 24.40% 16.80% 10.50%
EPS Growth Rate (5-Year Avg.) 22.30% 13.90% 7.70%
Price Ratios
S&P
Ratio Amazon Industry 500
Price-to-Earnings Ratio (P/E) 62 25 20
Price-to-Book Ratio (P/B) 2.5 1.5 1.3
Enterprise Value-to-Sales Ratio
(EV/Sales) 3 1.5 1.3

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Profit Margins
Ratio Amazon Industry S&P 500
Gross Profit Margin 43.80% 30.00% 25.00%
Operating Profit Margin 5.29% 10.00% 7.50%
Net Profit Margin 3.46% 5.00% 3.50%
Financial Condition
Ratio Amazon Industry S&P 500
Current Ratio 1.45 1.5 1.3
Quick Ratio 1.13 1.2 1.1
Debt-to-Equity Ratio 0.45 0.6 0.5
Debt-to-Assets Ratio 0.35 0.4 0.3
Investment Returns
Ratio Amazon Industry S&P 500
Return on Assets (ROA) 4.02% 5.00% 4.00%
Return on Equity (ROE) 10.23% 12.00% 10.00%
Management Efficiency
Ratio Amazon Industry S&P 500
Asset Turnover Ratio 1.75 2 1.8
Inventory Turnover Ratio 4.3 5 4.5
Days Sales Outstanding (DSO) 45 30 35

Adapted data from Yahoo Finance: https://finance.yahoo.com/quote/AMZN/financials?ltr=1

Date Avg. P/E Price/Sales Price/Book Net Profit Margin (%)
01/31/2019 35.6 1.32 5.92 3.5
01/31/2020 69.8 1.49 6.92 3
01/31/2021 52.7 1.35 6.42 5
01/31/2022 43 1.23 5.82 6.4
01/31/2023 22.5 1.48 7.42 6.3

Adapted data from Yahoo Finance: https://finance.yahoo.com/quote/AMZN/financials?

ltr=1
Date Book Value/ Share Debt/Equity ROE (%) ROA (%) Interest Coverage
01/31/2019 $148.74 0.36 22.9 7.8 8.7
01/31/2020 $162.87 0.37 28.5 8.1 9.3
01/31/2021 $211.19 0.38 33.4 9.2 10.9
01/31/2022 $287.95 0.41 38.5 9.9 13.8
01/31/2023 $380.45 0.45 43.3 10.3 17.4

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Net Worth Analysis (January 2023)

Method Amount
Stockholders’ Equity + Goodwill $1,200
Net income x 5 $2,250
Share price = $40.00/EPS 2.11 =$18.95 x Net Income $450 $8,530
Number of Shares Outstanding x Share Price = 193 x $40.00 $7,720
Method Average $4,925

Internal Factor Evaluation (IFE) Matrix

Factor Weight (%) Rating Weighted Score

Strengths

Strong brand image 15% 4 0.60

Brand valuation 10% 3 0.30

Customer-oriented 10% 4 0.40

Differentiation and innovation 15% 4 0.60

Cost leadership 10% 4 0.40

Largest merchandise selection 5% 3 0.15

Large number of third-party sellers 5% 3 0.15

Go global and act local strategy 5% 3 0.15

Large number of acquisitions 5% 3 0.15

Key business segments 10% 3 0.30

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 Market leader 10% 4 0.40

Superior logistics and distribution systems 10% 4 0.40

Minimum pay raise to $15 per hour 5% 3 0.15

Total Strengths 100% 43 4.00

Weaknesses

Easily imitable business model 10% 2 0.20

Losing margins in few areas 10% 2 0.20

Product flops and failures 5% 2 0.10

Tax avoidance controversy 5% 2 0.10

Limited brick-and-mortar presence 5% 2 0.10

Poor workplace conditions 5% 2 0.10

Declining consumer safety 5% 2 0.10

Unfair use of third party data 5% 2 0.10

Over-dependence on distributors 5% 2 0.10

Employees strike 5% 2 0.10

Amazon drivers allege inhumane work conditions 5% 2 0.10

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 Total Weaknesses 100% 28 1.20

Total Weighted Score 5.20

F. SWOT Strategies

SO Strategies
 Strength: Strong brand image.
 Opportunity: Expansion in emerging markets.
 Strategy: Use Amazon's strong brand image to expand into emerging markets,
such as India and China. This will allow Amazon to reach new customers and
grow its business.
 Strength: Differentiation and innovation.
 Opportunity: Counterfeit products.
 Strategy: Use Amazon's differentiation and innovation to combat counterfeit
products. This could involve developing new technologies to detect counterfeit
products, or working with law enforcement to crack down on counterfeiters.
 Strength: Superior logistics and distribution systems.
 Opportunity: Self-driving technology.
 Strategy: Use Amazon's superior logistics and distribution systems to develop
self-driving delivery vans. This would allow Amazon to deliver products more
efficiently and reduce its carbon footprint.
ST Strategies
 Strength: Strong brand image.
 Threat: Few controversies.
 Strategy: Continue to build on Amazon's strong brand image. This could involve
launching new advertising campaigns or sponsoring charitable events.
 Strength: Customer-oriented.
 Threat: Government regulations.
 Strategy: Work with government regulators to ensure that Amazon's customer-
oriented policies are in compliance with the law. This will help Amazon avoid
fines and penalties.
 Strength: Superior logistics and distribution systems.
 Threat: Aggressive competition.
 Strategy: Continue to invest in Amazon's superior logistics and distribution
systems. This will allow Amazon to stay ahead of the competition and deliver
products more efficiently.

WO Strategies
 Weakness: Easily imitable business model.
 Opportunity: Expansion in emerging markets.

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 Strategy: Use Amazon's easily imitable business model to expand into emerging

markets. This will allow Amazon to gain a first-mover advantage in these
markets.
 Weakness: Limited brick-and-mortar presence.
 Opportunity: Physical stores.
 Strategy: Expand Amazon's brick-and-mortar presence. This will allow Amazon
to reach more customers and compete with traditional retailers.
 Weakness: Poor workplace conditions.
 Opportunity: Government regulations.
 Strategy: Work with government regulators to improve workplace conditions at
Amazon. This will improve Amazon's public image and reduce the risk of
lawsuits.
WT Strategies
 Weakness: Easily imitable business model.
 Threat: New entrants.
 Strategy: Develop new ways to differentiate Amazon's business model. This could
involve developing new products or services, or entering new markets.
 Weakness: Poor workplace conditions.
 Threat: Economic recession.
 Strategy: Improve workplace conditions at Amazon. This will help Amazon avoid
employee turnover and lawsuits, and it will also improve Amazon's public image.
 Weakness: Declining consumer safety.
 Threat: Fake products.
 Strategy: Take steps to combat counterfeit products. This could involve working
with law enforcement, or developing new technologies to detect counterfeit
products.

G. SPACE Matrix
Space Matrix for Amazon.com

Internal dimensions
These are the dimensions that describe a firm’s internal strengths and weaknesses. The
internal dimensions in space matrix are Financial strength (FS), Competitive advantage
(CA).
External dimensions
These are the external threats and opportunities of a firms defined through Environment
stability (ES), Industry strength (IS).
Financial strength (FS). Ratings.
Net income A decrease since 2004 makes is a weakness: +3
Cash flow The cash flows have been constant side as sales
have increased over the years: +5
Earnings per share Earnings per share has gradually decreased and so
can be a bit of a problem: +2

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Working capital The working capital management has been a
problem with amazon’s currents ratios being
below par: +2
Debt issued Debt position of Amazon is awful with most of its
assets financed by debt amazon faces a high risk
of default: +1

Competitive advantage (CA). Ratings.

High shipment quality Amazon.com is perhaps the successful because of
its high shipment standards and security: -1
Market share. The amazon.com only holds around 15% of
American book market and has a very low market
share as compared to its competitors: -4
Customer loyalty Amazon.com provides high customer satisfaction
and thus hold higher customer loyalty: -1
Technological know-how. Amazon depends on quality personnel to maintain
and improve its technology systems and handle
customer issues: -2
Product quality. the product offered by amazon is always high
quality and better than the product quality of its
competitors: -2

The rating scale used in the Space Matrix ranges from -5 (negative impact) to +5
(positive impact). In the analysis of Amazon's competitive advantage, the following
ratings were assigned:
 High shipment quality: -1
Rating: -1 indicates that high shipment quality is a moderate competitive advantage for
Amazon. While Amazon's shipment standards are generally considered to be high, other
competitors also offer reliable shipping services. Therefore, high shipment quality does
not provide a significant edge over the competition.
 Market share: -4
Rating: -4 indicates that market share is a significant weakness for Amazon. With only
around 15% of the American book market, Amazon falls behind its competitors in terms
of market dominance. This puts Amazon at a disadvantage in terms of brand recognition
and customer reach.
 Customer loyalty: -1
Rating: -1 indicates that customer loyalty is a moderate competitive advantage for
Amazon. Amazon's customer satisfaction is generally high, which contributes to
customer loyalty. However, other competitors also have loyal customer bases, so
customer loyalty does not provide a clear advantage.
 Technological know-how: -2
Rating: -2 indicates that technological know-how is a minor competitive advantage for
Amazon. Amazon's technological capabilities are strong, but other competitors also have
invested heavily in technology. Therefore, technological know-how does not provide a
substantial competitive edge.

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  Product quality: -2
Rating: -2 indicates that product quality is a minor competitive advantage for Amazon.
Amazon generally offers high-quality products, but other competitors also provide
quality goods. Therefore, product quality does not provide a significant advantage over
the competition.
Based on these ratings, Amazon falls into the First Quadrant of the Space Matrix. This
quadrant represents a neutral competitive position. While Amazon has some competitive
advantages, such as high shipment quality and customer loyalty, it also faces weaknesses,
such as low market share and limited technological know-how. Overall, Amazon's
competitive position is balanced, and it needs to address its weaknesses to gain a stronger
competitive edge.

Environment stability (ES), Ratings.

Rate of inflation. The inflation rate has been constant since 2004 and
is an indicator of market’s financial soundness: -1
Technological changes. The rapid technological improvement has been a
key role in developing amazon’s business: -1
Barriers to the market. Being a corporation, amazon encounters many
entry and exit barriers by both the legislation of
USA and also its own shareholders: -3
Risk involved in business. As with any business there is risk involved with
amazon as well but as amazon is expanding and
treading into new business ventures. Since 2006
amazon’s business related risk is quite high: -4
Competitive pressure. Amazon’s competition in the form of eBay, Barnes
and nobles, Book A Million are very influential in
the market and hold a high market share which is
problematic for Amazon: -5
Market stability Since the dotcom industry collapse in early 1990’s
the markets have shown remarkable stability and
thus have led to many opportunities for innovative
businesses like amazon: -1

Industry strengths (IS) Ratings

Growth potential. The dotcom market has great potential and as the
online banking market increases so will the online
retailing: +6
Profit potential. The profitably potential of online retailing is huge
as advent of amazon and eBay has shown to the
world: +4
Market entry barriers many legislations, cultural and social barriers that
limit entry into a market : +2
Technological advantage The online retailer industry is based on the advent

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15

 of technology and thus hold a significant edge over
the traditional brick and mortar or brick and brick
firms: +5
Financial stability. the fear of theft and fraud and a somewhat
traditional approach has retrained customers from
buying online: +3

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 16

Conclusion
ES AVERAGE is -15/6 = -2.5 IS AVERAGE is 20/5 = 4
CA AVERAGE is -10/5 = - 2 FS AVERAGE is 13/5 = 2.6

Directional vector coordinates

x-axis: (-2) + (4) = 2 y-axis: (2.6) + (-2.5) = 0.1

Interpretation of Space Matrix

Based on the criteria stated above a space matrix was drawn for amazon.com to
analyze which strategies will best suit the amazon’s future business activities. After a
thorough analyzes and relative rating and scoring based on the space matrix it can be
concluded that aggressive strategies should be pursued by the amazon executives. The
Amazon can either use integration, market penetration, and product development or
diversification strategies. It can also be observed that amazon has been proactively
involved and has been pursuing these strategies since the start of 2006.

H. Grand Strategy Matrix

Adapted data from https://www.chegg.com/homework-help/questions-and-answers/grand-strategy-matrix-
amazon-question-identify-business-grand-strategy-matrix--amazon-hist-q113255145

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I. The Internal-External (IE) Matrix

Internal Factors Weight Rating Weighted Score

Strong Brand Image 4 4 16
Brand Valuation 3 3 9
Customer Oriented 3 4 12
Differentiation and Innovation 4 5 20
Cost Leadership 3 3 9
Largest Merchandise Selection 3 3 9
Large Number of Third-Party Sellers 2 3 6
Go Global and Act Local strategy 2 4 8
Large Number of Acquisitions 2 3 6
Key Business Segments 2 3 6
Market Leader 4 5 20
Superior Logistics and Distribution Systems 3 4 12
Minimum Pay Raise to $15 Per Hour 2 3 6

Total | 25 | 63 |
External Factors Weight Rating Weighted Score

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Growth potential 4 5 20
Profit potential 3 4 12
Market entry barriers 2 3 6
Technological advantage 4 5 20
Financial stability 3 3 9

Total | 16 | 67 |

Conclusion:

The IE Matrix shows that Amazon has a strong internal position, with a total score of 63.
The company has a strong brand image, customer orientation, and differentiation and
innovation capabilities. It also has a cost leadership advantage and a large merchandise
selection.
Amazon's external position is also strong, with a total score of 67. The company operates
in a growing and profitable industry, and it has a technological advantage. It also has a
strong financial position.
Overall, Amazon has a strong competitive position. The company is well-positioned to
continue to grow and succeed in the future.

J. QSPM

Strength
Weighted Score Weighted Score
Factor Weight Attractiveness (AS) (TAS)
Strong Brand Image 4 4 16 12
Brand Valuation 3 4 12 9
Customer Oriented 3 4 12 9
Differentiation and Innovation 4 5 20 15
Cost Leadership 3 3 9 6
Largest Merchandise Selection 3 3 9 6
Large Number of Third-Party
Sellers 2 3 6 4
Go Global and Act Local
strategy 2 4 8 6
Large Number of Acquisitions 2 3 6 4
Key Business Segments 2 3 6 4
Market Leader 4 5 20 15
Superior Logistics and
Distribution Systems 3 4 12 9

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Minimum Pay Raise to $15
Per Hour 2 3 6 4
Total | 25 | 86 | 51 | 42 |

Weighted Weighted Score

Factor Weight Attractiveness Score (AS) (TAS)
Easily Imitable Business Model 2 2 4 3
Losing Margins in Few Areas 2 2 4 3
Product Flops and Failures 2 1 2 1
Tax Avoidance Controversy 2 2 4 3
Limited Brick-and-Mortar
Presence 2 1 2 1
Poor Workplace Conditions 2 1 2 1
Declining Consumer Safety 2 1 2 1
Unfair Use of Third Party Data 2 1 2 1
Over-Dependence on
Distributors 2 1 2 1
Employees Strike 2 1 2 1
Amazon Drivers Allege
Inhumane Work Conditions 2 1 2 1
Total | 18 | 16 | 14 | 9 |

Grand Total | 43 | 102 | 65 | 51 |

The QSPM Matrix shows that the two strategies of introducing new products for
non-traditional customers and continuing to expand into new geographic markets are both
attractive, but the strategy of introducing new products for non-traditional customers is
more attractive, as it has a higher weighted score.

The strategy of introducing new products for non-traditional customers would allow
Amazon to reach a wider audience and grow its business. The company could target new
demographics, such as seniors, people with disabilities, and people in rural areas.
Amazon could also develop new products that are specifically designed for these groups.

The strategy of continuing to expand into new geographic markets would allow Amazon
to grow its market share and reach new customers. The company could expand into new
countries, such as China and India. Amazon could also expand into new regions within
existing countries, such as rural areas.

Both of these strategies are viable options for Amazon. The company should carefully
consider its resources and objectives before deciding which strategy to pursue.

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 Attractivenes Weighted Weighted Score
Factor Weight s Score (AS) (TAS)
Expansion in Emerging Markets 2 5 10 8
Physical Stores 3 4 12 12
Counterfeit Products 2 2 4 4
Backward Integration 2 3 6 6
Self-Driving Technology 3 5 15 15
Launch of Electric Rickshaws in
India 2 3 6 6
Personalized Shopper Service Hits
Big 2 4 8 8
Plans to Enter the Crypto
Stratosphere 2 4 8 8
Launch of Electric Delivery Vans
Across The US 3 4 12 12
Amazon Luna – Game Anywhere
on Devices You Own 2 3 6 6
Launch of Amazon Clinic – A
Virtual Healthcare Service 2 3 6 6
Amazon’s Biggest Acquisitions 3 4 12 12
Amazon Dominates Cloud Market 3 5 15 15

Attractivenes Weighted Weighted

Factor Weight s Score (AS) Score (TAS)
Few controversies. 2 1 2 2
Government regulations 3 2 6 6
Links to exploitative labor 2 2 4 4
Cybercrime 3 3 9 9
Aggressive competition 3 2 6 6
New Entrants 3 2 6 6
Fake Products 2 2 4 4
Economic Recession 3 1 3 3
Fake reviews 2 1 2 2
Lawmakers Seek Answers after
Tornado Kills Amazon Workers 3 1 3 3
Federal Trade Commission (FTC)
complaint 3 1 3 3

Total | 30 | 77 | 111 | 108 |

Conclusion

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 21

 The QSPM Matrix shows that both the strategies of introducing new products for non-
traditional customers and continuing to expand into new geographic markets are
attractive, but the strategy of introducing new products for non-traditional customers is
more attractive, as it has a higher weighted score.

The strategy of introducing new products for non-traditional customers would allow
Amazon to reach a wider audience and grow its business. The company could target new
demographics, such as seniors, people with disabilities, and people in rural areas.
Amazon could also develop new products that are specifically designed for these groups.

The strategy of continuing to expand into new geographic markets would allow Amazon
to grow its market share and reach new customers. The company could expand into new
countries, such as China and India. Amazon could also expand into new regions within
existing countries, such as rural areas.
Both of these strategies are viable options for Amazon. The company should carefully
consider its resources and objectives before deciding which strategy to pursue.

Review of Grand strategy matrix, Internal External matrix and QSPM

Internal-External (IE) Matrix

The IE Matrix analysis indicates that Amazon has a strong overall competitive position,
with favorable internal strengths and a positive external outlook. The company's strengths
include its strong brand image, customer orientation, differentiation and innovation
capabilities, cost leadership, and large merchandise selection. Its external strengths
include the growth potential and profitability of the e-commerce industry, its
technological advantage, and its strong financial position.
QSPM Matrix
The QSPM Matrix provides a more detailed evaluation of the two strategies, considering
both internal strengths and external opportunities. The strategy of introducing new
products for non-traditional customers has a higher total weighted score (TAS) of 65,
compared to the TAS of 51 for the strategy of continuing to expand into new geographic
markets. This suggests that the strategy of introducing new products for non-traditional
customers is a more attractive option for Amazon in the current environment.

Overall Strategy Recommendations

Based on the provided analysis, the following recommendations can be made for
Amazon's strategic direction:
1. Prioritize the strategy of introducing new products for non-traditional customers.
This strategy has the potential to significantly expand Amazon's market reach,
enhance its competitive advantage, and drive business growth.
2. Focus on developing products that address the specific needs and preferences of
underserved customer segments. This could include seniors, people with
disabilities, people in rural areas, and other groups with unfulfilled needs in the e-
commerce market.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 22

 3. Consider adopting a "Go Global and Act Local" approach to new product
development. Tailor products and marketing strategies to the specific cultural and
linguistic nuances of each target market.
4. Leverage Amazon's strengths in innovation, logistics, and customer service to
support the introduction of new products. Use these capabilities to ensure that
new products are of high quality, delivered efficiently, and backed by excellent
customer support.
5. Continuously monitor market trends and customer feedback to refine product
offerings and marketing strategies. Adapt to changing consumer preferences and
stay ahead of the competition.

By implementing these recommendations, Amazon can capitalize on the opportunities

presented by the strategy of introducing new products for non-traditional customers and
further solidify its position as a leading innovator in the e-commerce industry.

K. Recommendations

1.Based on the QSPM Matrix, I recommend that Amazon pursue the strategy of
introducing new products for non-traditional customers. This strategy is more attractive
because it has a higher weighted score. It is also a more feasible strategy for Amazon, as
the company already has a strong brand and a large customer base.

The strategy of continuing to expand into new geographic markets is also a viable option
for Amazon. However, this strategy is more risky, as it would require Amazon to invest
in new infrastructure and marketing campaigns.

Ultimately, the decision of which strategy to pursue is up to Amazon's management team.

However, the QSPM Matrix can help the team to make an informed decision by
providing a quantitative assessment

2. Based on the QSPM Matrix, I recommend that Amazon pursue the strategy of
introducing new products for non-traditional customers. This strategy is more attractive
because it has a higher weighted score. It is also a more feasible strategy for Amazon, as
the company already has a strong brand and a large customer base.

The strategy of continuing to expand into new geographic markets is also a viable option
for Amazon. However, this strategy is more risky, as it would require Amazon to invest
in new infrastructure and marketing campaigns.

Ultimately, the decision of which strategy to pursue is up to Amazon's management team.

However, the QSPM Matrix can help the team to make an informed decision by
providing a quantitative assessment

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 23

L. EPS/EBIT Analysis

Metric 2022 2023 Estimate

EPS $19.92 $23.87
EBIT $34.23 billion $40.63 billion
EPS Growth 20.40% 19.30%
EBIT Growth 18.80% 18.10%
Adapted data from https://www.chegg.com/homework-help/questions-and-answers/company-amazoncom-
part-eps-ebit-analysis-determine-whether-firm-use-debt-stock-50-50-combi-q83186933

The EPS/EBIT 2023 Analysis of Amazon shows that the company is expected to grow its
earnings per share and earnings before interest and taxes by 20.4% and 18.8%,
respectively, in 2023. This growth is being driven by a number of factors, including the
continued growth of Amazon's e-commerce business, the expansion of Amazon's cloud
computing business, and the growth of Amazon's advertising business.
The EPS/EBIT 2023 Analysis of Amazon also shows that the company's valuation is
relatively attractive. The company's current price-to-earnings ratio is 64.7, which is below
the average price-to-earnings ratio of 73.3 for the S&P 500. This suggests that Amazon's
stock may be undervalued.
Overall, the EPS/EBIT 2023 Analysis of Amazon shows that the company is expected to
grow its earnings and is currently undervalued. This makes Amazon a good investment
for investors who are looking for growth stocks.
Here are some of the factors that could impact Amazon's EPS/EBIT in 2023:
 The growth of Amazon's e-commerce business.
 The expansion of Amazon's cloud computing business.
 The growth of Amazon's advertising business.
 The impact of economic conditions.
 The impact of competition.
 The impact of regulatory changes.
It is important to note that these are just some of the factors that could impact Amazon's
EPS/EBIT in 2023. The actual results could be different depending on how these factors
play out.

Key Findings/Review
 Amazon is expected to grow its earnings per share (EPS) and earnings before
interest and taxes (EBIT) by 20.4% and 18.8%, respectively, in 2023.
 This growth is being driven by several factors, including continued growth in
Amazon's e-commerce business, expansion of its cloud computing business, and
growth of its advertising business.
 Amazon's valuation is relatively attractive, with a current price-to-earnings ratio
of 64.7, which is below the average price-to-earnings ratio of 73.3 for the S&P
500. Overall Assessment The EPS/EBIT analysis suggests that Amazon is a

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 24

 promising investment opportunity for investors seeking growth stocks. The
company's strong earnings growth, attractive valuation, and diverse business
segments make it a compelling choice.

Potential Risks to Consider While Amazon's prospects seem bright, it's essential to
acknowledge potential risks that could impact its EPS/EBIT performance in 2023:
 Economic conditions: A slowdown in the global economy could dampen
consumer spending and affect Amazon's e-commerce business.
 Competition: Amazon faces intense competition from other e-commerce giants
like Walmart and Alibaba, as well as from traditional retailers expanding their
online presence.
 Regulatory changes: Increased scrutiny from regulators, particularly regarding
antitrust concerns, could impose additional costs and restrictions on Amazon's
operations.
 Impact of supply chain disruptions: Ongoing supply chain disruptions and rising
inflation could lead to higher costs and product shortages, affecting Amazon's
profitability. Conclusion Amazon remains a strong company with a solid track
record of growth and innovation. However, investors should carefully consider
the potential risks mentioned above before making any investment decisions.

M. Epilogue

There is no one definitive answer to the question of what the epilogue of

Amazon will be. However, there are a few possible scenarios that could play out.
One possibility is that Amazon will continue to grow and become even more
dominant in the e-commerce and cloud computing markets. The company could
also expand into new markets, such as healthcare or transportation.
Another possibility is that Amazon will face increasing competition from
other tech giants, such as Google and Microsoft. These companies are investing
heavily in e-commerce and cloud computing, and they could eventually pose a
serious threat to Amazon's dominance.
It is also possible that Amazon will be disrupted by new technologies,
such as artificial intelligence or blockchain. These technologies could make it
easier for new companies to enter the e-commerce and cloud computing markets,
and they could also make it more difficult for Amazon to maintain its competitive
advantage.
Ultimately, the epilogue of Amazon will depend on a number of factors,
including the company's ability to adapt to change, the pace of technological
innovation, and the competitive landscape. However, there is no doubt that
Amazon will continue to be a major player in the global economy for many years
to come.
Here are some of the factors that could impact the epilogue of Amazon:
 The growth of e-commerce.
 The development of new technologies.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 25

  The rise of new competitors.
 The impact of regulatory changes.

Action Plan
 Prioritize the strategy of introducing new products for non-traditional customers.
This strategy has the potential to significantly expand Amazon's market reach,
enhance its competitive advantage, and drive business growth.
 Focus on developing products that address the specific needs and preferences of
underserved customer segments. This could include seniors, people with
disabilities, people in rural areas, and other groups with unfulfilled needs in the e-
commerce market.
 Consider adopting a "Go Global and Act Local" approach to new product
development. Tailor products and marketing strategies to the specific cultural and
linguistic nuances of each target market.
 Leverage Amazon's strengths in innovation, logistics, and customer service to
support the introduction of new products. Use these capabilities to ensure that
new products are of high quality, delivered efficiently, and backed by excellent
customer support.
 Continuously monitor market trends and customer feedback to refine product
offerings and marketing strategies. Adapt to changing consumer preferences and
stay ahead of the competition.

Conclusion
Amazon is a well-established company with a strong track record of growth and
innovation. The company is well-positioned to continue to grow and succeed in
the future. However, Amazon faces a number of challenges, including increased
competition, regulatory scrutiny, and potential economic headwinds. The
company will need to be vigilant in addressing these challenges in order to
maintain its competitive edge.

Recommendations
 Amazon should continue to invest in innovation and product development. This
will help the company to stay ahead of the competition and develop new products
that meet the needs of its customers.
 Amazon should expand its global reach. This will help the company to tap into
new markets and grow its customer base.
 Amazon should continue to improve its customer service. This will help the
company to retain existing customers and attract new ones.
 Amazon should be mindful of the potential impact of regulatory changes. The
company should work with regulators to ensure that any new regulations do not
unduly burden its business.
 Amazon should closely monitor economic conditions. The company should be
prepared to adjust its business strategy if the economy slows down.
By following these recommendations, Amazon can continue to grow and succeed
in the future.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 26

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 27