Discuss about the Environment Analysis of Amazon.
The report talks about the importance of the external and internal environment analysis for the company. The analysis helps the company identifying the opportunities for the company in the market in which the company operates its business. The SWOT analysis is used by the company, the analysis consists of the four components strength, weakness, opportunity, and threat. Strength and weakness is the part of the internal analysis and the weakness and opportunity is the part of the external analysis. The analysis helps the company is identifying the weakness to convert it into the strength and helps the company to grab the opportunity (Ghaffari, Delgosha, and Abdolvand, 2014).
The company selected for this task is amazon.com and the country selected is India, though there are many countries in which the company is operating the business. India is considering the best market for the company s the company is the well-known company.
Overview of company
Amazon.com, Inc. is an American electronic commerce and cloud computing company which is established in Seattle, Washington and was founded by Jeff Bezos on 5th July 1994. The company is well known as the largest Internet Retailer in the world. The company believes in four principles that include customer obsession rather than competitors focus, passion for invention, long-term thinking and the commitment to the operational excellence. The company is present in India and consist of 17,500 stores across the 225 cities. The company produces customer electronics such as Kindle e-readers, Fire tables, Echo and the Fire TV. The company is also a provider of cloud infrastructure services (Dolata, 2017).
· Strong background and deep pockets
· Awareness about brand
· Efficient delivery system
· Cost leadership
· Shrinking margins
· High Debt
· Expansion of the products
· Opening of physical outlets
· Entry Barriers
· Local competition
The SWOT table shows the analysis based on Amazon operation in India; the primary strength of the company is strong background and the awareness of the brand. The rest of the strengths are considered as the secondary strength, similarly, the primary weakness of the company is shrinking margins (Smith, Rupp, and Offodile, 2017). The major opportunity of the company is an expansion of the products and the expansion of the business. Local competition in the Indian market is becoming a primary threat to the company.
The Indian consumer electronics industry is growing from the past few decades. There is a change in the pattern of buying the products because of the higher disposable income, increase product awareness, a lifestyle of the customers and the affordable pricing. According to the booming consumer electronics market in India, the Indian market will grow at a CAGR of around 18% during 2011-2014. As per the Euromonitor International’s Economies and Consumers data, the GDP of the country slowed down to 7.1% in 2017 as compared to 8.0% in 2016. This slowdown in GDP brought the slowdown in the replacement of the goods. The implementation of the GST (Goods and central tax) created the negative and the positive impact on the Indian market of the electronics. The GST tax came into the existence in the year 1st July 2017 (Euromonitor International, 2017).
The manufacture and the customers were expecting the positive effect on the prices of the products due to cut down on taxes on many products. The products like mobile phones and digital cameras broke the record of the prices and the prices of product decreased, on the other hand, the rise in the prices of products like television, laptops, desktops, monitor, and printers (IANS, 2017). The local retailers get affected by the changes in the prices. The customers shifted towards the online retailers like Amazon, flip kart, e-bay and many others, this happened due to lack of cash in hand because of demonetization (Euromonitor International, 2017). The Indian electronics industry is expected to get recover during the forecasted period.
The Analysis of the market shows that the Amazon is a best online portal that is frequently used by the Indian customers.
Explanation of the SWOT analysis
(Source: Pandit, and Poojari, 2014)
The Amazon company is the leading online retailer in the world along with it is the well-known and leading retailer in India. The company has different product categories such as Electronics, toys, games, home and kitchen, software and many others. In order to maintain the competitive advantage, the company has created several strategies, out of which the cost leadership strategy helps the company to form alliances with the different companies who can offer the superior customer services (Pandit, and Poojari, 2014). The customers of the Indian market are aware of the brand and they have trust in a company, this is the reason they prefer Amazon over other brands. The delivery network of the company is efficient because the company has created a deep and the structured distribution network in order to make the product available at the remote locations (Khan, et.al, 2016). At certain geographic areas in India, the company provides the free delivery facility to the customers.
The weakness of the company is that their margins are decreasing gradually. The reason behind the decrease in the margins of the company is that the company is expending the huge amount in extensive delivery network and price wars. In India, the company faced the loss of $359 crs in the year 2013-2014. In developing nations the company is struggling to make profit similarly in India the company is struggling to make the business profitable because a failure of this increases the debt of the company (Gupta, 2015).
The Amazon company is having the opportunity to expand the products in the Indian market for that the company needs to come with the innovative idea so that the company will be able to grab the attention of the customers and to make the profit out of it. The Indian market is one of the developing markets where the company should bring the innovative product (Kryvinska, Bauer, Strauss, and Gregus, 2014). The company can expand more and more outlets in India so that they can lead the market.
The entry barriers of the industry are decreasing, in the Indian market, there is a low entry of the company which leads to the competition in the existing companies. The less number of companies will be there in the market, the more competition will be there in the market and every company wants to become the leading company. Indian market consists of Snapdeal and Flipkart who are the e-commerce companies and these companies are giving tough competition to the Amazon company (Seth, 2016).
The company follows different types of marketing segmentation that consist of geographic, demographic, behavioral, and Psychographic.
The company recommended target consists of people who like to purchase the products from the online platforms. The age group that the company mainly target consists of the 18+ both male and females. The company provide the wide range of the products that provide the convenience to the buyers, as customer can buy different product from single portal they don’t have to switch, so the company is looking to target the people so the people who are looking to buy products collectively are the primary target of company (Smith, Rupp, and Offodile, 2017). The customer believes that the prices kept by the company are quite competitive this behavior of customers towards the Amazon is beneficial for the company.
New product design
It is recommended to a company to come up with new product considering the demand of the customers in the Indian market. Online hosting auction software can be used by the company in the Indian market. The company needs to host the auction of the product on the site. This attracts the customers towards the company. Companies like e-bay and e-bid are also using this software in the market. This software provides the opportunity to the customers to select the merchant and the price they want to pay for the product. They can buy the product from the online auction according to their demand. The Indian customers have to believe that they are good at the negotiation and this interest attracts the customers towards the online auction facility.
The product designed by the company is available for the people who have the knowledge of buying the products from the online platforms and knows about the auction. The prices of the product are kept considering the value-based strategy, the company makes use of the value-based strategy which shows that the price of the product is based on the value of the product. The platform Amazon is making use of is e-commerce, so that place of the product is considered an e-commerce (Baker, and Saren, 2016). The promotion can be done by a company by providing an extra pop up facility on the site; the company can make use of the advertisement to generate the awareness about the new product that is designed by the company. The use of advertisement will help the company to communicate the message to the target audience.
Customer value proposition
The company is putting efforts to provide the value to the customer as the company knows it very well that the customers play a vital role. The Amazon company ensures the customer by providing them the trust on the products and services (Osterwalder, Pigneur, Bernarda, and Smith, 2014). The company should focus towards the after sales services of the company as these services help the company to bring the improvement in the goodwill and the brand value.
The new product online hosting auction software fits with the SWOT analysis conducted by the Amazon company. The company is making use of the opportunity; this is clear with the design of the new products. The company is expanding the product in the market, which enhances the opening of the outlets in the country and the company can give the competition to the local companies as well.
S-O strategy, this is a strategy which shows the strength and opportunities of the company. The company makes use of their strength to take the advantage of the opportunities (Grant, 2016). The company is having the strong recognition in the market so the company don't have to put efforts to creating the awareness in the India; this is the reason company brought new product in the market which is going to helps the company to invest the amount in the product designing instead of promotional activities (Slack, 2015). This proves that the strength of the company provides a benefit to the company to grab the opportunity of the company.
The report talks about the value of the SWOT analysis in the company. This analysis helps the company to remove their strength by adopting new opportunity. The expansion of the product in the market is important to enhance the profit of the company. Launching the product in the Indian market is one of the big achievement for the company because by doing so a company can maintain the no.1 position in the market. The company can give the competition to the other companies like e-bay, snapdeal, and Flipkart. The report includes the SWOT analysis of the company along with this it includes the recommendation in regards to the target market, marketing mix, and the customer value proposition. The use of the strategy S-O helps in analyzing that the new product fits the new product.
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