Read Amazon\'s Annual Report 2017: (https://www.sec.gov/Archives/edgar/data/1018
ID: 395270 • Letter: R
Question
Read Amazon's Annual Report 2017:
(https://www.sec.gov/Archives/edgar/data/1018724/000101872417000011/amzn-20161231x10k.htm)
Question 1: Based on information in the report, what specific segments and the associated key trends and events in the macro-environment have great impacts on the firm’s growth and profitability? How do they affect the firm’s growth and profitability? Explain.
Question 2: Based on the information in the report, briefly discuss the nature and strength of each of the five competitive forces. Specifically, place the industry (not the firm) at the center of the five forces diagram and identify the suppliers, buyers, competitors, and substitutes of the industry (not the firm). In this industry, what are the key structural determinants that affect each force of competition? Using bullet point, explain how these determinants affect the strengths of each force. Draw the information from 10-K or Annual Report to support your argument. Conclude the strength of each force (e.g., “…Based on these factors, I conclude that the threat of entry is very high/low”). What would you say about the attractiveness of the industry?
Question 3: Draw a strategic group map and identify any strategic groups that might exist in the industry. According to the map, which firms are your chosen firm’s closest competitors? With which strategic group does your chosen firm compete the least? How does the intensity of competi tion differ across the strategic groups you have identified?
Explanation / Answer
Answer 1: macro environment factors that can affect the profitability are-
Answer 2:
E-commerce is highly competitive. Amazon has a very diversified product portfolio which covers various industries. Many competitors have a very long and prosperous history specially at the newly launch segments. Mergers and acquisitions between the competitors can give an edge over amazon. Whereas, offline retail industry provides major competition by providing services like immediate sell of products.
Potential of new entrant is moderate. New e-commerce company must be highly funded, this makes the entry difficult. But e-commerce is a high value market, mergers and acquisitions can easily make one a potential competitor. Product uniqueness can affect the competitive scenario.
Suppliers have high power. Suppliers can readily provide their products on any other e-commerce platform like ebay, snapdeal etc. or any offline store.
High power to customers. A consumer can always choose a discounted same brand product from any other platform. Any unique product can help Amazon stand out in the segment.
High threat of substitute Industry. Offline retailers and wholesalers provide a major competition in pricing and services. They provide services like immediate sell of good and has power of persuade consumers to buy their product.
Answer 3: Structural; determinants that can affect the competition are
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