This document analyzes Amazon's competitive position and strategic direction. It conducts an external PESTEL analysis noting opportunities in expanding globally and growing markets like India. An internal analysis finds Amazon has valuable resources like its brand and infrastructure. While growth has been strong, profitability remains elusive. The recommendation is to retain the profitable AWS, continue innovating, expand internationally, and focus on turning a profit long-term while diversifying operations.

1. Furthering its Competitive Advantage
and Achieving Optimal Performance
Team 1: Buchanan, Caldwell, Detsch, Hardy,
Ramanathan, Young

2. Approach
Current Assessment
External Analysis
Internal Analysis
Achieving Competitive Edge
Strategic Direction/Next Steps
Questions and Answers

3. Current Assessment
 Amazon had a razor sharp
focus on growth and
expansion for years; it had
yet to turn a profit
 Leadership was concerned
about mounting pressure
regarding the spinoff of Amazon Web Services
 High aggressive industry segment;
Marketplace leaders regularly disrupt
business and vice versa

4. External Analysis-PESTEL
 Demographic
o Broad customer base (books, devices, professional services, gaming)
o The convenience of Amazon is not limited to one group
o Depth of products and broad appeal (financial implications)
o Prime customer is higher household income bracket
 Political
o Lawsuits re. lower profits for authors and publishers
o Accused of violating Toys “R” Us contract
o Loss of pricing advantage re. sales tax
 Economic
o Counterfeit items
o Broad range of products protects company from economic factors
o Fluctuation in shipping charges

5. External Analysis-PESTEL
 Sociocultural
o Packaging, wind farms, solar energy, recycled
energy
o Environmentally friendly on-line shopping
 Global
o Growing in Europe; India presents strong
opportunity
o Owns Joyco.com in China; now called Amazon
China
 Technological
o Products with high functioning batteries, “Point
and shoot” shopping
o Video gaming capabilities
o Exclusive content
o Storage capabilities
o Kiva

6. External Analysis-Five Forces
Significant
 Intensity of Rivalry
Moderate
 Bargaining Power of Buyers
Low
 Threat of Entrants
 Threat of Substitutes
 Bargaining Power of Suppliers

7. Internal Analysis –
Competitive Advantage
Resources
 Tangible – Technology Offerings
 Intangible
Capabilities
Core Competencies

8. Internal Analysis - VRIO
Are Amazon services…….
 Valuable Resource?
 Rare Resource?
 Imitatively Expensive?
 Organized to capture Value?

9. S.W.O.T.
STRENGTHS
• Brand
Awareness
• Reputation
• Infrastructure
• Customer-
Centric
• Diversified
Operations
• Low Cost
Structure
• Third Party
network
WEAKNESSES
• Financial
Performance/Low
profit margins
• Legal Issues
• Logistic
dependency on
FedEx and
UPS
OPPORTUNITIES
• Continue to
expand globally
• Strategic
acquisitions
• Increase
customers within
AWS, Prime,
Cloud Services
and Storage
THREATS
• Fierce
Competition
• Vendor
Dependency

10. Strategic Plan
Current Approach
Focus on the “long run” and continue to diversify
and build out services and hardware provided by
Amazon.

11. Strategic Plan
Areas of Improvement
Profitability - still eluded Amazon. In 2014, with
annual sales of $88.9B, the company still lost
$241MM

12. Strategic Plan
Achieving Competitive Edge
One-click shopping, expansive retail, cloud
computing, music & video streaming

13. Strategic Plan
Recommendation and Key Benefits
Retain AWS within Amazon
Continue to innovate (internally, externally)
International expansion
Turn a profit

14. In Summary
Bezos Reflection of the year ending for 2014
Internal & External Analysis – strengths
outweigh weaknesses
Achieving Competitive Edge – it’s all about the
“long run”
Strategic Direction – where do they go from
here

15. QUESTIONS?