Your group assignment is composed of 2 parts (A & B). Part A is an Industry Analysis and Profile and Part B is a complete Strategic Audit. See respective deadlines for each part in your weekly schedule.
Part A: This part of the project consists of conducting an analysis of an industry of your group’s choosing. If possible I would like each group to examine a different industry, so please obtain approval from me of your industry choice before doing extensive work on the project. You can email me directly at ………………with your group number and choice of industry and I will reply confirming that it is ok to proceed.
I will assign you to a group by the end of the second or third week of class.
Your industry analysis / profile should include an industry outlook and suggestions for how a firm in this industry could reverse or capitalize on the forces in its industry to its advantage.
Industry Analysis / Profile Report: I want you to prepare an industry profile. The format for this industry profile is free but it is important that you use as much as possible the tools and techniques you learned in your text book such as Porter Five Force analysis, STEEP Analysis, SWOT, Industry Matrix, etc.
Part B: Following Part A that focused on industry analysis / profile, this project will require you to take the next step and do a complete strategic management plan of a public trade company. In choosing this company, remember that you need to be able to collect enough information about the company to do a meaningful analysis. Sticking to a firm within the industry that you analyzed in Part A might make your task easier. Also send me an email to request approval of the company you plan to analyze.
A strategic management plan typically include: i) some description of the company of interest identifying a problem/issue a company may be currently facing, ii) an evaluation of company’s current strategy and possibly major recent corporate initiatives, iii) an assessment of company’s performance, iv) brief company’s industry analysis, v) company’s resource analysis, vi) assessment and evaluation of a set of proposed alternative strategies and course of actions, vii) recommendations based on issues/opportunities identified.
The actual Strategic Management Plan for the company of your choice.
1-Porters 5 forces
2-STEEP or PESTLE Analysis
2- current strategy
3- company’s performance
4- industry analysis
5- resource analysis
6- assessment and evaluation of proposed alternative
7- recommendations based on issues/opportunities
PART A: Industry Analysis/Profile Report
Porter’s Five Forces
STEEP or PESTLE Analysis
❖ Largest merchandise selection
❖ Large number of acquisitions
❖ Customer oriented
❖ Strong brand name
❖ Large number of third party sellers
❖ Differentiation and innovation
❖ Highest revenues in the industry
❖ Superior logistics and distribution systems
❖ Tax avoidance controversy
❖ Losing margins in a couple of areas
❖ Product flops and failures
❖ Easily imitable business model
❖ Limited brick-and-mortar presence
❖ More acquisitions
❖ Expand its operations
❖ Expand physical online stores
❖ Backward integration
❖ Can improve technological measures and organizational policies
❖ Aggressive competition
❖ Employee treatment and workplace conditions
PART B: Strategic Management Plan
A big corporation like Amazon faces many issues on a day to day basis. One of those issues that Amazon recently admitted to is counterfeit products. Counterfeit products are made to look exactly like real products, but with the intent to deceive the customer. Controlling the sale of counterfeit products online is a huge issue due to the fact that Amazon and other e-commerce sites have little to no physical control of third-party sellers. Amazon recently acknowledged for the first time ever that they had a counterfeit issue under the “risk factors” section in their annual report. Under Section Item 1A “We Could Be Liable for Fraudulent or Unlawful Activities of Sellers” on Amazon’s Annual Report it states “We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies.
Under our A2Z Guarantee, we reimburse buyers for payments up to certain limits in these situations, and as our third-party seller sales grow, the cost of this program will increase and could negatively affect our operating results. In addition, to the extent any of this occurs, it could harm our business or damage our reputation and we could face civil or criminal liability for unlawful activities by our sellers.”
Even though Amazon sells their own products there are more than 2.5 million independent sellers in which they almost have no control of. According to Louise Mataski, a writer for Wired, he states that “Many third-party sellers aren’t peddling their own goods on Amazon—they hawk wholesale items they buy from other retailers or suppliers. A reseller might first buy products at a brick-and-mortar store, for instance, and then turn around and put them up for sale on Amazon at a markup. These merchants are taking advantage of what’s known as the “first-sale doctrine,” says CJ Rosenbaum, a lawyer who caters to Amazon sellers. It’s the part of copyright law that makes it legal to resell things like CDs and books.”
Even though Amazon has not released a number of how many counterfeit products they have discovered they can confirm that it is a big problem. The Counterfeit Report (TCR), an advocacy group that works with brands to detect fake goods, has found around 58,000 counterfeit products on Amazon since May 2016.
Along with Amazon pointing out finally that they have a counterfeit issue, they recently announced a plan for action to combat it. The name of the new initiative is “Project Zero”. According to Amazon Project Zero will provide Automated Protection, Self-service counterfeit removal, and product serialization. In a recent interview with CBS News and Dharmesh Mehta, Amazon’s vice president of customer trust and partner support they went more into detail about what Project Zero will actually do. Overall Amazon will be inviting companies to directly move fake counterfeit products from their stores. ”
The company said part of that vetting process is keeping the program “by invite.” Only 500 brands are currently participating, but Mehta said that number will grow significantly. Amazon is also using artificial intelligence to search for fakes and offering sellers an option to add a special code to each product that buyers can scan with Amazon’s app to make sure it’s real.” According to Amazon, Project Zero will be free of charge to get access to the automated protections and use the self-service counterfeit removal tool. If a brand chooses to use the product serialization service incur a cost between $0.01 and $0.05 per unit, based on volume.
Previously, Amazon was getting a lot of heat for not addressing or acting more against counterfeit product sellers. Before brands would just report to Amazon about the issues through the Brand registry and they would investigate and act within 8 hours then on most occasion the brand would sue the seller. For example, Apple filed a lawsuit against a company called Mobile Star for allegedly selling counterfeit lightning cables through Amazon.
In the past year, the e-commerce company Amazon has fostered net sales worth almost $232 billion in the United States alone. This was a 156% increase in from one year to the next making this region the most profitable for Amazon. The company made respectively $7.27 billion through its operating income as well as $7.30 from its cloud services.
Being in the global marketplace, Amazon is one of the most profitable companies worldwide as well as the most valuable. The company generates the majority of its money through its e-retail sales of a variety of products (approximately 61 percent). Amazon has not only dominated the internet in its sales, but its mobile app is the most popular retail app.
Amazon has been able to sustain such value because of the array of products and services they continue to offer its customers. As mentioned before, the cloud services offered by Amazon has is the leading cause of growth for the company. Revenue for those services increased by 46.9% and its operating income followed with a 68.5% increase.
An example of the product/services provided would be the subscription service of Amazon Prime. The membership gives customers preferred services such as free two-day shipping. Through Prime, Amazon has then created segments such as a streaming service which contains both original movies and TV shows, music streaming, and book rentals and downloads. The enticing benefits of Amazon Prime have resulted in the average customer spend $1,400 a year via Amazon; more than double non-Prime members.
Another reason as to why Amazon continues to excel in the e-retail market is because of the advances it is making in technology. With products such as the Kindle as well as Amazon Echo with Alexa, Amazon stays ahead of the curve in bringing its consumers engaging and innovative technology. The Kindle was said to greatly influence the sales in books. As for the Echo and Echo Dot, Alexa generates high customer satisfaction amongst its users. The Echo itself is the smart speaker market leader in the past year with respectively 21 percent of the market.
While at the beginning of 2019, Amazon’s stock slightly dipped with a growth of only 11.6% the company has still made a substantial amount of revenue and income. The results of this were most likely due to the company’s guidance. Yet, projecting the results of quarter two, revenue shall rise once again 18 percent.
Assessment and Evaluation of Proposed Alternative
Recommendations Based on Issues/Opportunities