Value Creation of Amazon Essay

1788 Words Oct 9th, 2012 8 Pages
Value Creation of Amazon

1 Introduction
With the development of technology and economic globalization, the lives of people have been enriched and online shopping is becoming the first choice of the majority. Amazon Company is an online retailer which has the most varieties of goods in the world. This report would introduce the Amazon’s background first, following with the discussion and analysis of Amazon’s strengths and weaknesses as well as its opportunities and threats. At last, this paper would propose and defend one of the most appropriate strategic directions of Amazon Company in different aspects to take over in the next three to five years.

2 Introduction and analysis of Amazon

2.1 Amazon’s background
Amazon is a Fortune
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The weaknesses of Amazon include the number of customers and its limited ability to pay as well as small profits but quick turnover economic model (2011). Amazon has a huge customer base of more than 20 million, but a large part of them from the lower-income class. This situation makes the profit created by every single service is minimal. Amazon has to rely on massive orders or multiple services to generate income. On the other hand, the network advertising cost is increasing, Amazon faces greater competitive pressure. In order to compete with the rivals, Amazon took a substantial price reduction strategy, which despite an increase in sales, but it led to the decline in net profit.

3 Conclusions
Amazon in one of the world’s largest online retailers, the corporation has its own unique business philosophy. Based on the analysis of Amazon above, it can be seen that online retail business breaks the traditional commerce obstacles. It has great attraction and influence to both consumers and enterprises. Amazon as a leader of this industry has its own strengths and opportunities. At the same time, Amazon also faces various threats such as powerful competitors, network hackers, increasing advertising cost. The strategic team of Amazon is supposed to learn from the current advantages and compensate for the disadvantages in order to favor the customers and achieve an invincible position in fierce

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