Question

The problem at Amazon, Inc., is how to maintain, and preferably grow, their market share worldwide with an increase in e-commerce competition.

Under the heading Strategic Analysis, describe and justify the use of three (or more) strategic tools that you could (and probably will) apply to help solve or improve the problem and why you feel each of those tools is appropriate. At least one of the three tools must consider financial data with at least one formula or ratio applied to the data. Additionally, describe at least two tools that you considered but will not use and why.?

Answer 1

The impact of the internet and rapidly emerging E-commerce environment is profound.The advent of the inernet and online networks changes everything.Hence Amazon Inc.have to maintain their market share so that growth shall be possible by implimenting various new strategies and strategic tools as follows:

SWOT ANALYSIS-SWOT stands for strength,weakness,opportunities and threats.

STRENGTH- It is an inherent capability of the organization which it can use to gain strategic advantage over its competitors.

WEAKNESS-It is an inherent limitation or constraint of the organization which creates strategic disadvantages to it.

OPPORTUNITY-It is a favourable condition in the organization's environment which enables it to strengthen its position.

THREAT-It is a unfavourable condition in the organization's environment which causes a risk for,or damage to,the organisation's position.

Amazon Inc should use these tools to maintain their market share because-

1. It provides logical framework.

2.It presents a comparative account.

3.It guides the strategist in strategy identifications.

EXAMPLE WITH HELP OF FINANCIAL DATA:-There are many ratios through which I can ascertain this but most helpful one are Profit volume ratio and Earning per share.

1.SALES=$100 , VARIABLE COST= 50% OF SALES , EARNINGS AVAILABLE=$20 ,NO. OF SHARES OUTSTANDING=50 SHARES.

Profit volume ratio = contribution/sales*100 (contribution=sales - variable cost)

($100-$50)/$100*100=50%

EARNING PER SHARE=Earnings available for shareholders/No. of shares outstanding

($20/50)=$0.4

Two tools which I consider but not use are- 1. Product life cycle(PLC) 2.strategic business unit(SBU)

These both concepts are very wide to explain and its not suitable probably to use them in the given situations.

SBU-It is a unit of the company that has separate mission and objectives and can be planned separately.

PLC-It desribes four facts that every company will face i.e Introduction,Growth,Maturity,Decline.