Executive Summary
This study aims to analyze Amazon’s internal and external environment to introduce strategic recommendations for improving the company’s future performance. The analysis will involve a review of key performance metrics of the organization, including its mission statement, strategic direction, and objectives. From the review, a new mission statement will be proposed, including recommendations aimed at improving the future performance of the business.
The analysis of the company’s internal and external environment will be undertaken using PESTLE and SWOT models, which involves an analysis of the political, economic, social, technological, legal, and environmental aspects of the business’s operations, as well as the company’s strengths, weaknesses, opportunities, and threats. Based on an analysis of the company’s financial performance, a recommendation is made to expand its market outreach to new markets using partnerships and franchise models. These proposals need to be implemented to exploit emerging market opportunities brought by social and economic shifts attributed to the COVID-19 pandemic.
Introduction
Tracing its roots to the 1990s, Amazon grew from a small web-based bookselling company to become the world’s largest online retail shop. Based in Seattle, Washington, Amazon has taken its place among its peers as being among the big five technology companies of the world, next to other entities, including, Google, Microsoft, Apple, and Facebook (Hammet, 2019). Through its expansive outreach program in various online retail business segments, Amazon has a presence in cloud computing, e-commerce, artificial intelligence, consumer electronics, digital distributions, and self-driving services.
Although Amazon sells different types of products through its online distribution platform, it boasts of having originally developed the Kindle, Amazon Prime, Amazon Prime Videos, Amazon Web services, Amazon Appstore, Amazon Music, and Amazon Alexa as its main products (Moretti, 2018). As of 2020, the firm’s annual revenue was more than $386 billion. Comparatively, its operating income is $22 billion, while its total assets are $321.2 billion (Macrotrend LLC, 2020). Given its presence in multiple continents around the world, Amazon employs 1,296,000 people who mostly work in the US.
Today, Amazon is listed as a public limited company with its shares traded at the London and New York Stock exchanges. The company’s main competitors include Alibaba, Home Depot, Wal-Mart, eBay, and Target, just to mention a few. Its record in dominating the competition has seen it attract a subscription base of about 310 million users who have active accounts with the company (Gassmann, 2017). These customers are spread across different markets around the world because the firm operates in more than 185 countries (Potter, 2021).
This case study will evaluate Amazon’s environment using the SWOT analysis framework to understand its strengths, weaknesses, opportunities, and threats. At the same time, the PESTLE analysis will be used to examine political, economic, social, technological, legal, and environmental forces impacting the business. There will also be a financial segment of the analysis, which will involve an examination of the company’s financial performance, including a ratio analysis of its key financial indicators.
Existing Mission, Objectives, and Strategies
Existing Mission Statement
A company’s mission statement helps investors to understand its future direction and reasons for its existence in the first place. The process of developing a mission statement is a key part of strategic planning and management. This statement is important not only for the normal functioning of a business but also for its long-term viability because, without it, a company would not be able to know whether it is making progress, or not. Amazon’s mission statement is based on three pillars: convenience, customer focus, and affordable pricing (MSA, 2020). Therefore, it strives to provide its customers with the best available selection of products at the most affordable prices and conveniently.
Objectives and Strategies
Amazon’s objectives are to develop products and services that specifically appeal to their customers, as proposed to outsmart the competition. It also promotes and nurtures a passion for innovation as a central theme of its business operations (Welch & Lamphier, 2019). The company also has a strong commitment to personal excellence and has a long-term orientation of its strategic plans. The main differentiating attribute of its objectives is that it is not as focused on outwitting the competition as much as it is thrilled to develop products and services that meet customer specifications. Overall, these four objectives are intertwined with each other to support the broader mission of the company, which is to provide its customers with an array of collectibles, affordably and conveniently.
New Mission Statement
The current mission statement of Amazon is too simplistic in conveying the impact that the company has on the retail market. Therefore, it needs to have a broader statement that checks the nine key tenets of a mission statement, which include philosophy, markets, concern for survival, self-concept, concern for public image, technology, services, products, and purpose (Maheshwari & Agarwal, 2020). Since Amazon strives to provide its customers with the best available selection of products at the most affordable prices and customer’s convenience, a new mission statement would be to provide its clients with a wide array of products from diverse suppliers to support a community-centered retail business.
This new mission statement addresses the multiplicity of factors affecting the business, including the desire to contribute to social change by echoing the importance of diversity and sustainability in the management of the organization’s affairs.
Analysis of Existing Business Model
As highlighted in this document, Amazon is one of the most formidable tech companies in the world. This position makes e-commerce a critical component of its business model because it defines how the company reaches its customers and markets its goods. Complementing this platform are Amazon’s subscription services that are patronized by a pool of loyal customers giving the company additional revenue through subscription packages. Additionally, Amazon offers cloud computing services and is a leader in this area of business service provision with growing ambitions to compete with giants like Google in the advertising business.
Amazon’s online stores account for a greater percentage of its overall revenues (50.37%), while third-party seller services account for nearly 20% of its trading volume (Statista, 2021). Despite having a dominant market presence online, Amazon also operates physical stores in various locations. Therefore, the company’s business model is a mixture of brick-and-mortar as well as online businesses.
SWOT Analysis
The SWOT analysis will be used to assess Amazon’s strengths, weaknesses, opportunities, and threats as they relate to its internal market dynamics.
Strengths
Amazon’s strong brand name is one of its most powerful resources for the business because it is an internationally recognized brand. It is known that Amazon is one of the most valuable companies in the US and around the world (Hammet, 2019). This strong brand name maintains a steady stream of customers for the business because they trust in the legitimacy of the business and its products.
Another strength associated with the company is its customer-centric focus. This orientation allows it to develop superior products with a strong market appeal. So far, Amazon has made significant strides in developing seamless distribution systems to improve customer convenience and avail a wide array of products at affordable rates. A key part of this strategy has been improved differentiation and innovation, which has allowed the company to provide superior products. Its history as an innovative company has also helped it to become a market leader among its peers.
The wide array of product selections provided by Amazon is also another strength associated with the company because through its efforts to get quality products, customers are assured that they can get anything from the store. This is why some people refer to amazon as the “shop of everything.” This ubiquitous nature of the company’s product strategy makes it appealing to a wide variety of customers. Additionally, Amazon’s low operating costs are also another strength of the business because it does not spend money operating or running physical stores (Hammet, 2019). Therefore, it can compete favorably with other companies that operate physical stores because they have extra overheads of maintaining their physical outlets.
Amazon also has an expansive outlet and distribution system built over years to serve different customers in multiple markets around the world. This network is comprised of several types of distributors and suppliers located in different countries around the world, with vast operations spanning various product categories (Dumaine, 2021). This expansive outlet and distribution system has also been supported by infrastructural developments spearheaded by the parent company in developing warehousing services to store products. Plans may involve buying robots or automating technology to sort goods in these warehousing facilities.
Amazon’s huge capital pool is also another significant strength associated with the business. This means that it has available resources needed to finance its expansion plans and is not hesitant to use them (SAN, 2021). The company can also use the same resource to finance its operations through mergers and acquisitions by acquiring corporate entities that can complement the business’s operations. Additionally, innovation is another of the airline’s main strengths because it uses it to cement some of the gains made during international agreements as well as foreign trips. Innovation has been used to foster creativity in the management of an organization’s affairs because it offers different perspectives on how to manage perennial problems affecting an industry or firm.
For example, Amazon’s use of drones to make deliveries is considered a “first” for the industry because it eliminates the human chain of delivery needed to provide a seamless delivery of products to a customer’s doorstep. The technology has been dubbed “Amazon Prime Air” and it has the potential to allow users to get goods within thirty minutes through air packages delivered by drones (Robischon, 2017). Moreover, as part of its innovative reputation, Amazon has also introduced a new subscription service for its customers, which allows them to get products in less than 48 hours through Amazon Prime (Sevtsuk, 2020). This is a fast delivery platform for transporting goods and it is unrivaled in the market and offers a powerful marketing message to its customers and the industry that Amazon is a market leader in the delivery of products and services.
Weaknesses
The blend of the online and offline business model that characterizes Amazon’s business model is easily imitable. This means that it is easy for another entity to set up a similar business and compete for the same customers. The effect could be a potential reduction in market share through increased competition. Amazon has also had cases of tax avoidance in some countries, such as Japan, the United Kingdom, and even in its home country in the US (Dumaine, 2021). This problem has generated bad media attention for the business, thereby eroding public trust and confidence. Closely related to Amazon’s tax avoidance controversy is concerns about the unfair use of third-party data (Dumaine, 2021). For example, the online retail giant is accused of using data generated from its sellers to launch rival or competing products (Mattioli, 2020).
The main pieces of information they collect from this process relate to the identification of new and emerging markets and how to price products effectively. This action has the potential of negatively impact its relationship with suppliers, regulators, and other stakeholders. Relative to this statement, Amazon’s unfair workplace policies have also emerged as a key weakness for the organization because they have caused employees to protest unfair working conditions. For example, its employees working at a German plant recently started a strike protesting unsafe working conditions (Dumaine, 2021).
Low levels of internet penetration in various markets around the world also outline another significant weakness of the organization because it limits the company’s market outreach. This is because Amazon is mainly an online retail company and its services are offered on the same platform. The lack of proper internet access in many markets around the world, especially in developing countries, limits the company’s ability to reach a large pool of customers (World Bank, 2020). Additionally, customers who experience weak or unstable internet connections are likely to be discouraged from using the company’s services, thereby undermining its potential to have a strong impact on the market (World Bank, 2020).
The low levels of internet penetration in some markets are also closely associated with low levels of education among some developing markets about the use of e-commerce and its role in fostering trade in international business (World Bank, 2020). This lack of education breeds mistrust about online products because some people may be skeptical about the ability to get quality products without experiencing physical face-to-face interactions with a shopkeeper (Al-Emran & Shaalan, 2021). The problem is notably profound in rural areas where people are not accustomed to e-commerce. This problem creates a psychological barrier to the adoption of the company’s products and services (Al-Emran & Shaalan, 2021). Therefore, there is a need for an attitude change to realize better results.
Theft and pilferage are other attributes associated with Amazon’s operations that undermine its growth and development. The company’s delivery and distribution system has been largely unmanned because goods can be delivered to one’s doorstep without having to physically interact with the person. Incidents of pilferage and theft have been reported in such circumstances, especially when strangers access goods left for customers on their doorstep and disappear with them (Security Organisation Team, 2019). On certain occasions, the goods delivered have been damaged during transportation or other processes, thereby leading to low levels of customer satisfaction and a surge in customer complaints. These incidences affect the uptake of the company’s products in affected markets.
Alternatively, product failures have also undermined Amazon’s growth trajectory because of its history of market failures, which erode customer confidence in the company’s ability to develop reliable products and services. For example, Amazon’s Kindle was a new product developed by the American company but failed to take off because of its limited market adoption. The same outcome is true for its fire sale phones, which failed to make a significant impact in the market. This series of product failures means that Amazon has failed to successfully introduce new and novel products that can rival those offered by its main suppliers. Consequently, the series of failed product launches have dented the company’s record in the market.
Opportunities
Amazon has an opportunity to leverage backward integration by developing its products in-house. For example, Amazon Basics was introduced under such a type of plan (Dumaine, 2021). Backward integration offers an opportunity for the company to differentiate itself from its competitors by identifying and nurturing unique competencies to improve profitability. More opportunities also exist through the expansion of physical stores because some of its customers are still reliant on its brick-and-mortar business. Therefore, undertaking a keen market research analysis would help in identifying select markets where brick-and-mortar businesses could be established.
Another opportunity characterizing Amazon’s operations is to focus on emerging markets, which are growing steadily due to increased internet penetration and the growth of the global economy. These developing markets could be found in some parts of Asia, the Middle East, and Africa (Schipke, 2016).
They are characterized by an increase in purchasing power parity and a renewed interest in online retail. Alternatively, the COVID-19 pandemic also offers new opportunities for catalyzing Amazon’s market expansion strategy because it has brought a renewed interest in the distribution of products and services digitally due to restrictions on physical trade and free movement of people. Amazon stands a unique opportunity of linking businesses and households this way through e-commerce, thereby improving the potential for realizing increased profitability.
Another opportunity that exists in the market resist in the pursuit of an aggressive acquisition strategy that may see the company absorb some of its competitors through partnerships or backward integration of businesses. So far, Amazon has pursued this strategy through the purchase of several companies that would complement its core business. For example, in 1998, during the formative stages of the company’s growth, it acquired Book pages, a company based in the United Kingdom, to support its book-selling business (Dumaine, 2021). The same strategy can be adopted currently to expand its market.
For example, an acquisition strategy can help it to minimize barriers to entry in new markets and improve its market power in new business segments. At the same time, the plan can increase Amazon’s access to expertise and new capital that could be further used to enhance its operations.
Amazon also has an opportunity to indulge in the manufacture of self-driving cars, which would be an additional segment of its business. This interest and opportunity stem from the revamped interest in green technology in the automotive industry, spearheaded by companies such as Tesla and Apple which either have an existing interest in the business or are starting. The growing market for self-driving cars could offer Amazon an opportunity to lead its peers in innovation and development by developing reliable self-driving cars in the industry because they have the technology and capability to do so.
Embracing diversity and inclusivity in its operations is also another opportunity that Amazon can adopt to improve its overall position in the market and standing among its peers as a progressive organization that is sensitive to contemporary societal and corporate needs. This opportunity can be pursued through its human resource management practices, whereby equal opportunities could be given to people from different backgrounds to be part of the company. Additionally, the company can rethink the makeup of its suppliers to be more inclusive and representative of community or market dynamics to get a stronger customer-buy-in for its operations. Pursuing this strategy means that the company would be improving its image in the eyes of its shareholders by adopting inclusive policies of recruitment and operations management.
Amazon also has a chance to engage in new product development processes to come up with unique goods. In other words, the company still has an opportunity of coming up with unique products that will stand out from the competition. However, it needs to engage in an elaborate research and development strategy to find out the unique product or service features that could be integrated into the new development plan. Doing so would help it to align its product development plan with its innovative and customer-centric model of operations.
Threats
Given that Amazon uses a digital business model to carry out its activities, it has an unrivaled market presence globally that rakes in billions of dollars annually. Governments around the world have been looking to tax the business for purposes of making them tax-compliant in their respective jurisdictions (Dumaine, 2021). This problem has led to the development of unnecessary government regulation, which has slowed the pace of market expansion. Increased cases of cyber-crime also pose a threat to Amazon’s business model because it makes customers wary about using virtual payment information systems for fear of losing their money to fraudsters.
Product imitation is also another challenge faced by Amazon because some of the items sold on its platform have been flagged as being counterfeit products. Given the similarities between fake and new products, customers have found it increasingly difficult to differentiate the two (Dumaine, 2021). In turn, there has been hesitancy and skepticism among customers to purchase goods online without verification. This attitudinal problem has been further complicated by the negative attitudes that some customers have towards online purchases, thereby affirming the view that the proliferation of counterfeit products is a significant challenge for the business’s growth.
Additionally, the emergence of fake reviews in some of Amazon’s online platforms has discouraged buyers from choosing the company for their online purchases. These reviews could be initiated by disgruntled customers or even a company’s enemies who could be waiting to exploit emerging opportunities. These cases have generated negative press in the public and made it difficult to convince genuine buyers that they are misleading (Dumaine, 2021). Thus, fake reviews pose a threat to the credibility of the company’s business model.
Aggressive competition from peers also emerges as a significant challenge for Amazon because it limits the business’s ability to sell its products to a wide array of customers. Particularly, competition from companies that offer similar products, such as eBay and Wal-Mart portends significant challenges for the business because they have near similar models of operation.
An uncertain global economic environment also emerges as a threat to Amazon’s business model because it affects consumer purchasing power and willingness to spend money. For example, during times of uncertainty, behavioral economists suggest that people are likely to postpone their purchasing decisions, thereby impacting the performance of companies, such as Amazon, whose profitability is dependent on the willingness of customers to purchase their products in sustained sales (Dumaine, 2021). This variation in income gaps implies the need to launch products promptly.
Declining consumer safety standards in e-commerce also pose a similar threat to the uncertain global economic environment because it erodes customer confidence when making online purchases. However, unlike other challenges of e-commerce highlighted in this study, this problem has the potential to create a significant psychological barrier to the adoption of e-commerce, which is the lifeline of Amazon (Al-Emran & Shaalan, 2021). Indeed, when customers feel unsafe shopping in the online environment, they may never feel safe enough to give their credit card information or private data because of phishing threats, identity thefts, and other forms of cybercrimes.
Product specification mismatch is also another threat to the sustainability of Amazon because many customers are frustrated by the fact that they cannot get the products they ordered for in the right quality and specification. This problem emerges from the difficulty in verifying the quality of online purchased goods at the time of sale. Therefore, issues of wrong fit and poor quality products have been reported in some markets served by Amazon (Dumaine, 2021). The problem could be potentially detrimental to the sustainability of the business, especially in new markets where people are skeptical about online purchases. Therefore, if left unaddressed, negative word-of-mouth communication could create another psychological hurdle for Amazon to overcome, especially in new markets where people have not had prior experience with virtual transactions.
Group Map
This group map will be developed from a competitive analysis perspective to explain Amazon’s position, relative to its competitors as shown in figure 1 below.
Based on the findings highlighted above, Amazon’s cash reserves put it in a unique position to undertake rigorous research and development initiatives to come up with new products and services that would upstage its main rivals – eBay and Wal-Mart.
PESTLE Analysis
This PESTLE analysis below is concerned with the identification of the political, social, economic, technological, and environmental forces affecting Amazon. They are outlined as follows:
- Political: Bureaucracies associated with government procedures hinder Amazon’s market expansion strategy and operations. Its profitability is also affected by the tax regimes imposed by various governments where the company operates.
- Social: Shifts in the retail and online environment, brought by the COVID-19 pandemic, are set to bring a resurgence in the demand for Amazon’s products. Additionally, growing awareness for wellness in food products and sustainability for home appliance products will shift consumer trends (Dumaine, 2021).
- Economic: There is a growing middle class in most emerging markets, which has been occasioned by rising wages and standards in living overseas markets. This growing population is an emerging opportunity for Amazon to increase its market share.
- Technological: Big data analytics, robotics, and artificial intelligence are changing how customer feedback can be used to improve products and services and other superficial aspects of the company’s performance (Dumaine, 2021).
- Legal: Regulations on data protection and privacy exist in various markets, thereby creating unevenness in the application of business practices.
- Environmental: Growing concerns about the environmental impact of company operations are likely to cause shifts in Amazon’s business practices (Dumaine, 2021).
Internal Factor Evaluation (IFE) Matrix
This internal factor evaluation matrix is instrumental in ranking the strengths, weaknesses, opportunities, and threats outlined above.
- Strengths: Amazon’s most important strengths are its strong brand name and customer-centric focus. The item has a weighted score of 0.51. Linking the company’s history with its founder and the impact it has had on customers in the 21st century demonstrates that the brand can be trusted. This is the value brought by a strong brand name, which is herein described as the company’s brand value.
- Weaknesses: The most dominant weakness affecting Amazon is its easily imitable business model. This weakness had a weighted score of 0.24, which means that if a rival entity succeeded in setting up a similar business and applied the same business model in its operations, it could potentially affect the company’s future.
External Factor Evaluation (EFE) Matrix
- Opportunities: The most important opportunity for Amazon to advance its operations is the focus on developing markets. It has a weighted score of 0.44, meaning that the company could significantly improve its performance by venturing into new markets.
- Threats: The most important threat affecting Amazon is unnecessary government regulation. This item had a weighted average score of 0.27. Government regulation inhibits the company’s ability to operate freely or repatriate profits. Additionally, an unfair tax regime also affects its profitability because differences in law and free movement of goods across borders complicate how the company operates overseas.
SWOT Bivariate Strategy Matrix
To take advantage of the opportunities that exist in the market, while avoiding potential threats affecting Amazon’s operations, the company needs to seek partnerships with existing companies in host markets. Doing so will help it to overcome the legal hurdles associated with overseas operations and give it free access to market information because its local partners have a good understanding of current market dynamics.
Another important strategy to pursue in the bivariate strategy matrix is to focus on developing markets in the Middle East and Africa. These regions have a rapidly expanding middle-class population with increased levels of internet penetration. The conditions are right for entry and the company could benefit from enjoying “first mover” advantages because these markets are still underexplored. Thus, focusing on developing markets will provide the impetus needed to propel the organization to the next level of success, which is having a strong global footprint not only in the US, Canada, and other major western markets.
Analysis of Historical Financial Statements
For purposes of this study, the analysis of Amazon’s financial performance will be undertaken through a review of its income statement, balance sheet, and cash flow statements. The company’s performance will be assessed within the framework of the last three years (2018-2020). Based on an assessment of the company’s income during this period, its revenues increased from $9 billion in 2018 to $22 billion in 2020 (Macrotrend LLC, 2020).
This change within the years shows a positive financial performance. Comparatively, Amazon’s balance sheet statement supports the same trajectory of growth because its total assets increased from $225 billion to $321 billion during the same period (Macrotrend LLC, 2020). The cash flow statement also hints at the same pattern of development because it increased from 32 billion in 2018 to 42 billion in 2020 (Macrotrend LLC, 2020). These findings suggest that the company has registered a positive financial performance during the period under analysis.
Ratio Analysis
Profitability Ratios
The profitability ratios for Amazon will be assessed by calculating the return on equity, return on assets, and profit margin ratios as shown in table 1 below.
Table 1. Profitability Ratios (Source: Adapted from Macrotrend LLC, 2020).
According to table 1 above, Amazon’s RoE has remained relatively unchanged at between 18% and 23% within the period under analysis, while the industry’s average has been 20%. This means that the company’s profitability is above its peers. Its RoA and Net Profit margin are also within the industry’s average, meaning that its shareholders are getting good returns on investments.
Liquidity Ratios
Amazon’s liquidity will be assessed by calculating its current and quick ratios, as shown in Table 2 below.
Table 2. Amazon’s liquidity ratios (Source: Adapted from Macrotrend LLC, 2020).
The desired current ratio is “1,” meaning that Amazon has registered a positive current ratio performance throughout the three years under review, which implies a strong liquidity position. However, its quick ratio moderately undermines this performance because it is lower than the desired 1:1. However, compared to the industry average, Amazon continues to register a positive performance. This implies that the company can meet its financial obligations easily.
Leverage Ratios
For purposes of this investigation, Amazon’s leverage ratios will be analyzed in terms of its debt/equity ratio, as described in table 3 below.
Table 3. Leverage Ratios (Source: Adapted from Macrotrend LLC, 2020).
Due to debt repayments, Amazon has been able to improve its leverage ratios throughout the three years under review from 0.53 to 0.34, while the industry’s average has remained steady at 1.07, meaning that the firm manages its debts well.
Activity Ratios
The activity ratios for Amazon for the three years under review will be examined by calculating inventory and receivable turnover ratios as highlighted in table 4 below.
Table 4. Activity Ratios (Source: Adapted from Macrotrend LLC, 2020).
The industry inventory turnover is between 4 and 6, while one below 4 is an indication that a company may be overstocking. Amazon’s inventory turnover is between the range of eight and nine, which is a high inventory turnover that indicates good management skills.
Price-to-Earnings (P/E) Ratio
Throughout the three years of analysis, Amazon’s P/E ratio has oscillated between 74.58 and 77.86, while the industry average has been 32.87, as shown in Table 5 below.
Table 5. P/E Ratio (Source: Adapted from Macrotrend LLC, 2020).
The above findings suggest that Amazon’s investors are getting more returns from their investments compared to those who have invested in other companies.
Conclusion and Recommendations
Conclusion
In this study, the analysis of Amazon’s financial performance was undertaken through a review of its income statement, balance sheet, and cash flow statements. The company’s performance was assessed within the framework of the last three years spanning the years 2018, 2019, and 2020. Additionally, the analysis of the company’s internal and external environment was undertaken through the adoption of PESTLE and SWOT models, which involved a review of the political, economic, social, technological, legal, and environmental aspects of the business’s operations, as well as the company’s strengths, weaknesses, opportunities, and threats, respectively.
The findings of this investigation show that Amazon has maintained a leadership position in the online retail space because it has been able to operate more efficiently than its peers. Its low net income and a rise in liability could concern investors but this may be caused by its high debt level. Its numerous obligations and responsibilities could be attributed to its current expansion strategy but the full benefits of these investments may be realized in the future. This means that its stock is undervalued as there is more opportunity for growth in the future. Therefore, investors should buy this stock.
Recommendations (Alternative Strategies)
Although Amazon has marinated a robust digital marketing strategy, it should, first, consider franchising its business in new market segments to replicate its model in overseas markets. This opportunity is emerging from the current rapid phase of globalization, which has seen the emergence of new markets in different parts of the world, including Asia, the Middle East, and Africa (Schipke, 2016). The main advantage of this strategy is to allow the company to focus on improving its core business model while leaving the daily operation of the business to other parties. Secondly, Amazon may consider partnering with other companies that are involved in the same line of business to reduce competition in developing markets. The main advantage associated with this strategic plan is the gains made from the local knowledge held by these enterprises.
The main disadvantage associated with both proposals is the loss of business control. However, they should be initiated immediately by management because they involve lengthy periods of negotiations. Overall, based on an analysis of the company’s financial performance, recommendations are hereby made to expand its market outreach to new markets using partnerships and franchise models. These proposals need to be implemented to exploit emerging market opportunities brought by social and economic shifts attributed to the COVID-19 pandemic.
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