External & Internal Analysis Of Amazon During 1997. Example Of A Strategic Management In The New Economy.

2445 words - 10 pages

"External & Internal Analysis of Amazon during 1997"Strategic Management in the New Economy24/09/02What are the opportunities and threats that Amazon.com faced in 1997?In all the proceeding cases, we analyzed the various levels of the external environment, moving through the remote, to the industry and finally to the operating environment. Through doing this we saw where Amazon's potential opportunities and threats lay. We also applied Porter's Five Forces to asses the threats in the industry environment.Opportunity:The size, speed and growth rate of the Internet. The technology aspects of the remote external environment played a large role in opportunities for Amazon.com at the time of the case study. Firstly, the projections for internet growth, 700 million users by the year 2000 (Pearce, 2000), showed a large potential for more customers for Amazon.com. As the target market increases, so does the number of potential customers. The Internet also provided an opportunity in the form of communication, getting the word of new books to lots readers could be done efficiently and cheaply.The size of the local book industry and the span of the world wide industry. Economically speaking, since Amazon's first focus was the American where market sales were about $26 billion/year and retailers had accounted for about 40% of the pie, there was ample opportunity for the startup. At the same time, the Internet would give Amazon a global presence and therefore in addition, they could sell to anywhere in the world.The education of the average internet user and the number of books available. In relation to the internet user, social factors in the remote environment also were a large opportunity for Amazon. Internet users were well-educated, therefore more likely to be interested in literature. There was also ample opportunity in the product Amazon was selling, with 1.5 million English books and 3 million books in languages world wide there was potential for Amazon to offer a large selection.Lack of existing booksellers online. The online industry Amazon was getting into was new and therefore, there was little competition. Little competition led to little rivalry between established firms as there were no established firms online at the time.Threat:Threat of Entry. Amazon wasn't the only firm that could start an online business, other firms could jump online just as easily as Amazon could. There was also the threat that already well known firms with recognized names could move online as well. Another threat that comes along with this is the chance that one of these well established firms using their resources to adjust prices until they put Amazon out of business.Threat of Substitute Products. Just as Amazon wasn't the only firm that could move online, they also weren't the only firm that could sell books and music. As with the previously mentioned example, another more well-established firm could move in and take Amazon's place as they too, could also sell...

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