Case Analysis: Amazon in 2020

This article covers Case Analysis: Amazon in 2020.

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Case Analysis: Amazon in 2020

Over the years, Amazon has had to contend with numerous challenges while taking emanating opportunities along the way. Most of these opportunities are business-oriented, and this gradually changed Amazon’s focus from being solely an eCommerce business to diversifying extensively into unrelated businesses. As Amazon established its formidable presence in the business sphere, it received stiff competition from other eCommerce market players. Diversification into other markets meant that Amazon focused resources to other product segments, paving the way for competitors to set firm footing in the eCommerce business. I contend that it was not time for Amazon to start diversifying but rather to focus on its core e-commerce business as this would allow it to face-off competition, maximize profits, and a global presence.

Analysis

Amazon has positioned itself as the leading company in the eCommerce business industry.  The company exhibits strengths that it uses to overcome its weaknesses and counter operational threats, both internal and external while exploiting global market opportunities. Considering the global scope of eCommerce, Amazon strives to achieve a long-term competitive advantage over competitors and remain relevant in the market (Gupta, & Rodriguez, 2013). Amazon’s primary strength is that of a strong brand image. The online market is characterized as an everchanging environment; hence Amazon invests heavily in bolstering technological products, online retail operations, and online service markets. Studies reveal that Amazon has the strongest brand and presence in the online market. During the early years, this attribute was and continues to be a significant contributor to success, recognition, and confidence among consumers.

Another strength is moderate business diversification. Amazon operates different complementary businesses globally, including information technology services, online retail services, private-label goods, brick-and-mortar, and consumer electronics. The rapid technological innovations build on the company’s portfolio, strengthening its customer base as a formidable competitor capable of responding to trends in the eCommerce market.

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In contrast, amazon’s weaknesses hinder its ability to exploit new opportunities that improve business growth and expansion. Most companies in the eCommerce market have almost similar business models; hence it is easy to copy. For example, as Amazon diversified into other markets, Walmart established a business model that operated closely as Amazon, attracting many consumers. This allowed Walmart to achieve a market share of 14.5% in the grocery market, while Amazon’s Whole Foods had a 1.2% market share (Gupta, & Rodriguez, 2013). Another weakness is limited penetration in new and developing markets. Amazon is present in many market spheres, but the major challenge arises in penetrating markets to benefit from respective markets’ high economic growth rates. For example, Amazon has had challenges penetrating the Chinese market, resulting in unrewarding efforts and investments.

Actionable Recommendations

Although Amazon has been successful in its diversification efforts, many still question whether it was a wise idea at first, given Sear’s scenario, which filed for bankruptcy after rapidly diversifying into many businesses. Nevertheless, that has not been the case. I would recommend that Amazon expand into new eCommerce markets, rapidly growing economies like those in highly developing countries. Also, I recommend Amazon revive some of its strategies to address some of its weaknesses. This is because, notwithstanding the external conditions, its business is strong, occupying a large market share globally. Moreover, it is recommendable that the company continues to develop new partnerships to extend market reach and reinforce Amazon’s presence.