Amazon Audit: How to Conduct an Amazon Audit

Amazon Company is still expanding to international markets. It has around 566, 000 employees. The corporation has attained 43.5 % of online retail spending of the United States market. The company introduced Amazon Go store in January. The online store detects the buyers’ items using cameras and sensors. Amazon has improved their employee satisfaction by increasing the wages and benefits. The company’s sales have increased by 39% during the second quarter. Amazon Corporation has earned $ 2.9 billion in profits in the second quarter of the year. The company’s stocks were selling at $ 65.83 (Wolverton, 2018). The performance of the company is increasing as compared to the past few years. 

Amazon Audit 

Current Situation 

Current Performance 

A decrease in the company’s profits, reduction in shipping revenue, and an increase in shipping expenses 

The company’s profits reduced to $ 631 million in 2011 

The shipping revenue decreased to $ 360 million 

The shipping costs increased to $ 918 million 

Strategic Posture 

Mission -seeks to offer their clients the lowest prices, high-quality goods, and convenience 

Objectives 

To attain sustainable growth and profitability in the long-run 

To offer high-quality goods to the consumers at low prices 

To enhance the convenience of their goods to the consumers 

Strategies 

Diversified product offerings which led to the emergence of the difference in customer mix 

Partnerships with Timex Corporation, Target, Bebe Stores, Sears Canada, and Mark & Spencer 

Global growth through acquisition of Living Social, Lovefilm, Quidsi, and Zappos 

Product development such as web services 

Policies 

Cost reduction 

Promotion within and outside the corporation 

Slow product development 

Corporate Governance 

Board of Directors 

Jeffrey Bezos is the Chairman of the board of directors 

The board of directors has three committees which include audit, governance, and leadership & compensation 

It does not have active and retired chief executive officers 

Most of the members are venture capitalists, representatives from the non-profit industry, reputable scientists, and senior managers from different sectors 

Board members have served since 1994 

Have experience in the industry 

Top Management 

Consists of the chief executive officer, chief financial officer, assistant directors, and heads of different departments 

Promoted from Amazon Corporation 

Have experience in the industry 

Accountable for the current performance of the company 

Have the potential of venturing in international markets 

Strategic decisions are created to promote ethic and environmental protection 

Some of the executives own a significant amount of shares. For instance, Bezos owns 19.40% of the corporation 

Have sufficient skills to overcome future challenges 

External Environment: Opportunities and Threats (EFAS Table; See Exhibit 1) 

Natural Physical Environment: Sustainability issues 

Increase in plastic and paper waste 

Excess packaging materials 

Deliveries can delay due to weather conditions 

Societal Environment 

Economic 

Economic stability and increase in the consumer spending rates (O) 

Economies are establishing connections with the global economy (O) 

Technology 

An increase in the demand for software and other computer devices (O) 

Application of technology on developing websites and products (O) 

Political-Legal 

European Union, NAFTA, and other regional trade agreements are creating opportunities to industries in Europe, the United States, and Asia that offer great potential (O) 

Political stability-there are low chances of war between the countries (O) 

There is a rise in improving proper disposal of waste such as plastic and paper. Some laws support the use of recyclable materials to reduce waste. (T) 

Socio-cultural 

Emerging economies desire software, e-books, and web services (O) 

The college students and young professionals want e-books, software, or web services (O) 

Task Environment 

The North American market has developed, and the competition has increased. The customers demand high-quality products at low prices. The products must be environmentally friendly. (T) 

Presence of an online platform which can cover a wide geographical area for the market (O) 

The rivalry is high. Amazon is facing competition from Apple, eBay, Priceline, MediaBay, Overstock, Barnes & Noble, and PCMall. (T) 

Bargaining power of the suppliers is low. Amazon Corporation can get suppliers of technology items from different parts of the world (O) 

The bargaining power of buyers or clients is high. The market has various companies with online retail stores. Therefore, the customers’ power is high, and they can demand high-quality products at low prices. (T) 

The threat of new substitutes is high. Amazon’s competitors specialize in online retail stores and customers can purchase the substitute products in case they are unsatisfied. (T) 

The threat of new entrants in the market is low.(T) 

1V. Internal Environment (IFAS Table; See Exhibit 2) 

Corporate Structure 

Divided and networked structure-the departments of the company are managed separately (S) 

Integration of the main decisions. The decisions are made by the board members and top management (S) 

Corporate Culture 

Quality is the key driver-the company is committed to providing high-quality products and services to the customers (S) 

The corporate culture is attributed to the philosophies of Bezos (S) 

The line of business is an online store and PC development (S) 

The culture is competitive because decisions are based on a win-lose situation (T) 

The focus of the company is in different dimensions (T) 

Corporate Resources 

Marketing 

Face-to-face marketing of the website (W) 

The presence of distribution sites in different regions in the world (S) 

Finance 

A decline in the total profits (W) 

A decline in shipping revenue (W) 

Increase in shipping expenses (W) 

Research and Development 

Encourages new ideas to enhance creativity and innovation (S) 

Amazon Corporation focuses on product innovation (S) 

Operations 

It can expand swiftly in the market (W) 

Offers cloud storage services and distributes products around the world (S) 

Human Resources 

Untrustworthy employees and high turnover (W) 

Hired new staff with no strain of paying salaries (S) 

Information Systems 

The website is easy to use (S) 

Management decisions are made during meetings (S) 

V. Analysis of Strategic Factors 

1. Situational Analysis SWOT (SFAS Matrix; See Exhibit 3) 

1. Strengths 

Customer-oriented business model 

Employees ideas are implemented 

Innovation such as Kindle e-reader 

Various product offerings 

Efficient distribution and delivery company 

Weaknesses 

A decline in the margins over the past few years 2011, 2012 

The CEO does not focus on profits 

The company is expanding at a high rate than the margins 

High turnover rates due to untrustworthy employees 

The marketing system is based on the competition in the industry 

Opportunities 

Expanding to other sectors through acquisitions 

Physical locations of stores 

The new contract with UPS can facilitate daily deliveries 

An aerial done structure has been released 

Threats 

Safety issues 

The old aged individual prefer printed publications 

High competition from eBay, Google, Apple, and Wal-Mart 

Increase in competition due to limited barriers to venturing the market 

Pressure from the government on sales taxes 

11. Review of Current Mission and Objective 

The current mission is appropriate for the company 

The objectives should be quantified and given timelines 

V1. Strategic Alternatives and Recommended Strategies 

Strategic Alternatives 

Pause Strategy-Amazon can focus on other aspects other than concentrating on the problem. It can also formulate new goals to mitigate the challenge (Cashman, 2012). 

The pros-the strategy focuses on the present challenges of the company 

Con-the company’s growth can reduce 

Market Development Strategy-it can increase the market share of the company in the industry. The strategy will increase traffic on the company’s website. It can develop new markets for the company (Lamb, Hair, & McDaniel, 2009) . 

Pros-attracts new customers 

Con-do does not focus on creating new items 

Growth strategy-focuses on maximizing the existing opportunities. The company can utilize the available resources to improve their performance (Cohan, 2017). 

Pros-improves the company’s efficiency 

Con-It cannot solve all the problems in the company 

Recommended Strategy 

The pause strategy can be incorporated for one year. The company can realign their goals to make profits and reduce expenses. 

Subsequently, the company can implement the market development strategy to improve their products. 

Finally, the company can implement a growth strategy 

V11. Implementation 

Firstly, the company should create new goals that can mitigate the challenges. As a result, the current difficulties will be solved. 

Amazon Company can incorporate the market development strategy to increase their market share in the industry. 

The company can implement a growth strategy to maximize their opportunities in the industry. 

V111. Evaluation and Control 

The board of directors and top management need to evaluate the financial statements of the company to monitor the progress. 

The board of directors will evaluate the performance of the CEO to make sure that he is implementing the appropriate strategies. 

The board of directors and top management will assess the goals on a quarterly basis to make adjustments. 

References 

Cashman, K. (2012). The pause principle: Step back to lead forward . San Francisco: Berrett-Koehler Publishers. 

Cohan, P. S. (2017). Disciplined growth strategies: Insights from the growth trajectories of successful and unsuccessful companies . 

Lamb, C., Hair, J. F., & McDaniel, C. D. (2009). Essentials of marketing . Cincinnati, Ohio: South-Western / Cengage Learning. 

Wolverton, T. (2018). Amazon's stock popped 3% after it blew Wall Street away by reporting a record $2.5 billion profit. Retrieved from https://www.businessinsider.com/amazon-q2-2018-earnings-report-2018-7?IR=T 

EXHIBITS 

Exhibit 1: EFAS Table for Amazon Corporation