The second and third components of the strategic planning process include performing an internal and external analysis in determining organizations strengths and weaknesses, as well as their opportunities and threats; these link to the next section of strategic planning and is commonly referred to as a SWOT analysis. As illustrated by Hill, Jones, & Schilling (2014), to assist organizations in choosing future strategies, they can perform a SWOT analysis to determine its strengths; weaknesses, opportunities and threats (p. 17). Hill, Jones, & Schilling (2014) not that, in order to determine future strategies, it is important an organization perform this analysis to “build on and protect company strengths, and eradicate weaknesses (p. 17). Amazon’s awareness of their strengths and weaknesses, opportunities and threats are especially important considering its size. “With revenues of $88,988 million in FY2014, Amazon is much bigger in size than its close competitor eBay (revenues of $17,902 million in FY2014), and Barnes & Noble (revenues of $6,069.5 million in the financial year ended April 2015)” (Amazon.com, Inc., 2015, p. 4). This determination is especially important with a large and growing organization such as Amazon, where a continuous flow of resources have been allocated to its coopetition strategy.
To determine the strengths and weaknesses in an organization’s internal operating environment, an internal analysis may be completed. “Internal analysis, the third component of the strategic planning process, focuses on reviewing the resources, capabilities, and competencies of a company” (Hill, et al., 2014, p. 17). The internal analysis is a three step process which identifies the o...
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...WOT analysis as
increasing pressure to collect sales tax on merchandise sold through online websites;
intense competition in the e-reader market; and
risk of foreign exchange fluctuation (Amazon.com, Inc., 2015, p. 4).
This pressure to collect sales tax may be seen as a threat to Amazon, although being so well established; I see it more as an opportunity. Government regulation can create a barrier for entry with those trying to enter their market. This can be to Amazon’s advantage. “In summary, if established companies have built brand loyalty for their products, have an absolute cost advantage over potential competitors, have significant scale economies, are the beneficiaries of high switching costs, or enjoy regulatory protection, the risk of entry by potential competitors is greatly diminished; it is a weak competitive force” (Hill et al., 2014, p. 50).
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