Amazon Case

Order Details;

the paper should have 5 pages (Double spaced) of text and 2 pages of exhibits ( 1 for a SWOT matrix of the industry relevant to your problem statement and 1 for the strategic map for the internal analysis “low strength, high strength, low importance, high importance” )

Do NOT spend any time doing research outside of the case

 

You MUST have Subheadings as follows:

 

  • Strategic problem (1 or 2 sentences)

Clearly and succinctly identified the most important strategic issue and gave a clear explanation of why that problem was chosen.

NOTE: If you choose a problem that you believe has corporate-level strategy solutions, do not try to address the whole portfolio So rather than choosing a problem, such as “how might Amazon optimize their business portfolio?” (which requires a SWOT for every business they are in), you could instead do something like “what is the best corporate strategy for the X business unit in Amazon which is currently in the BCG framework?” (which requires only one SWOT and offers solutions such as divest or grow market share through horizontal integration) or should we allocate more resources to growth in the X business or the Y business (which requires 2 SWOT analyses).

This is just an EXAMPLE do NOT use it in the paper

 

  • External strategic analysis for the relevant industry (2 paragraphs)

use PESTOL analysis and five forces:

 

  • PESTEL analysis is completed correctly and thoroughly for the (mobile device business or the mobile device content) Industry. Strong logical arguments are made to support assessment of industry profit potential. Results of the PESTEL analysis are appropriately allocated in a SWOT analysis as traits of the external environment, NOT alternative strategies.

 

  • Five forces analyses are completed correctly and thoroughly for the (mobile device business or the mobile device content) Industry. All five forces are addressed. Driving forces are used to justify the strength of each force. Implications of these analyses for industry profitability are clearly identified. Strong logical arguments are made to support assessment of industry profit potential. Results of the 5 forces analyses are appropriately allocated in a SWOT analysis as traits of the external environment, not alternative strategies.

NOTE: The case provides the most information for an analysis of either the mobile device business or the mobile device content industries. So you might want to choose one of those after carefully reading the case

 

 

  • Internal strategic analysis for Amazon (2 paragraphs)
  • use VRIO and strategic map table
  • Every listed strength or weakness in the SWOT analysis is internal, is a resource or a capability, and is described relative to the comparable resource or capability of the firm’s rivals. Analysis is very thorough in that it identifies all of the key resources and capabilities that contribute to competitive advantage/disadvantage. Implications are drawn from the results of the analysis to clearly identify the impact on competitive advantage in the relevant industry.

 

  • Strategic alternatives (2 different solutions to the problem, addressing
    1. Pros (upsides in favor of that alternative)
    2. Cons (downsides that argue against that alternative)
    3. Financial implications

For each alternative calculated financial implications and provided documentation to support assumptions and estimates. (ideally including:

  • NPV
  • how much upfront funding is required to implement
  • source of that funding
  • impact to income statement and balance sheet
  • Justification for recommendation. (Choose one the 2 alternatives strategies you recommended)

 

Presents a clear recommendation that one of the alternative strategies is better than the other(s). Justifies this recommendation with strong logical arguments based on comparative analysis of the two options, emphasizing integration with SWOT analysis. Identifies the risks or limitations of the recommendation presents ideas on how to mitigate these challenges.

 

NOTE: in this part, you are comparing NOT restating what you already wrote.

 

LOOK at the guideline file for a very detail instructions and examples.

FOLLOW the INSTRUICTIONS ON BOTH FILES.

Within the paper, please answer each of the questions below.  Do NOT waste space in the paper repeating the questions or providing subheadings.

Just write the number of each question at the beginning of your answer.

  1. What is the problem you are going to solve?
  2. Describe the industry related to that problem and assess it/their profitability.
  3. Describe the Amazon’s competitive position in that industry and justify that assessment with an analysis of strengths and weaknesses.
  4. Identify one possible solution to the stated problem, describe it, assess its pros and cons, and calculate the NPV of the changes in cashflow caused by the solution. (this is just an estimate)
  5. Identify a second possible solution to the stated problem, describe it, assess its pros and cons, and calculate the NPV of the changes in cashflow caused by the solution. (this is just an estimate)
  6. Recommend one of the two solutions and justify why it is better than the other

 

 

 

Guidelines for Final Exam (Case
Analysis Paper)
General
• The maximum length of the text of this paper is 2 pages for one industry and 3 pages for 2
industries. In addition you can have appendices for a SWOT matrix, supporting exhibits, and
financial analyses spreadsheets.
• Assignment files may be submitted in either Microsoft format (.docx, .pptx, .xclx) or Apple
format (.pages, .key, .numbers) or PDF format. No other options are acceptable.
• Format: 1″ margins on all 4 sides (not Microsoft default of 1.25″), 11 font, Times New Roman,
single spacing (not Microsoft default of 1.1 or other), one blank line between paragraphs, and
no indent for new paragraphs. References not needed for case and not required, but if used
must be completely identified using any standard method, such as APA.
• Writing quality is assessed on the entire paper:
– Perfect grammar and spelling
– Demonstrates excellent business literacy by correct use of terms and theoretical concepts
from multiple business disciplines.
– Paper flows smoothly and follows logical organizing structure, e.g.paragraphs have topic
sentences and the body supports the topic sentence.
– Professional writing style (such as described in Strunk & White or APA Handbook).
– Required format is followed.
• Critical reasoning skills are assessed on the entire paper
– All conclusions are strongly supported with both factual data and logical analysis.
– Internally consistent, rational, logical arguments are presented that are easy for the reader
to follow.
– highly successful in balancing multiple objectives or problem dimensions and addressing
trade-offs. Indicates that the relative weight or importance of various dimensions was
evaluated. Considers both pros and cons of alternatives and both benefits and risks of
recommended strategy in a comparative manner.
Cover Page
• No cover page
• No names on paper
Problem Statement
• In one sentence clearly and succinctly state the problem you plan to solve in this paper.
• Clarity and focus are essential, because you need to be able to connect this problem first to
the root causes of the problem that you identify in your analysis section and then to the
alternative solutions to the problem that you propose and evaluate. If you choose and overly
broad or vague problem, it will be very difficult to make a strong case that your proposed
solution solves that problem.
• In a second (and possibly third) sentence explain why you considered this problem to be an
important problem for the firm to solve.
• Example: How can Facebook best monetize the value of its user base? Developing a
business model that enables the firm to generate a competitive earnings stream from its user
base is critical to justifying its $100 B market capitalization.
External Strategic Analysis
• The purpose of this section is to make two determinations: (1) how profitable is/are the
industry or industries involved in your proposed solutions and (2) what traits or characteristics
of the industry is making it more or less profitable. Therefore:
– you must include a clear definition of the industry. Example (McDonalds). The industry is
the U.S. quick service restaurant industry (QSR) and McDonald’s strategic group is firms
that predominantly sell burgers nationwide, which includes Burger King and Wendy’s as
key rivals.
– you must come to a clear conclusion of profitability, e.g. this industry is highly/moderately
profitable/unprofitable, primarily because … (usually in the first or last sentence). Example:
The U.S. passenger airline industry is highly unprofitable, primarily due to intense rivalry
and powerful suppliers.
• This assessment should be based both on factors in the macro-environment and the industry
structure, therefore complete and thorough PESTEL and 5 Forces analyses should be done
on separate worksheets before beginning to write this section. Of the two, the conclusions
from the 5 Forces are more important because they have a more immediate, stronger impact
on industry profitability.
• You need to demonstrate competence in the 5 Forces and PESTEL models.
– PESTEL analysis and 5 forces analysis are completed correctly and thoroughly for each
relevant industry.
– Strong logical arguments are made to support assessment of industry profit potential.
– Results of the PESTEL analysis and 5 forces analysis are appropriately allocated in a
SWOT analysis as traits of the external environment, not alternative strategies.
– All five forces are addressed. Driving factors are used to justify the strength of each force.
Example: Rivalry in the U.S. passenger airline industry is intense because the industry has
excess capacity, demand is flat to declining, the industry has high fixed costs for airplanes,
airport gates, and baggage handling, economies of scale are critical, and price wars occur
frequently because every empty seat is lost potential revenue. These negative factors are
only partially offset by the recent consolidation trend in the industry that has reduced
fragmentation and diversity. If you don’t have room to write your analysis of all driving
factors for every force, then do a thorough job on one force and show enough of a
summary on each of the others to demonstrate that you have thought all of them through.
– Implications of these analyses for industry profitability are clearly identified.
• This is an area where we expect to see strong demonstrations of critical reasoning skills in
that your conclusions about industry profitability should be strongly supported with both
theoretical logical arguments and relevant supporting data from your research. The multiple
driving factors for each force and mixture of strong and weak forces offer excellent
opportunities to demonstrate your skills in weighing multiple dimensions and contrasting
different factors.
Internal Strategic Analysis
• The purpose of this section is to make two determinations: (1) what is the competitive
advantage position of this firm relative to its key rivals (these are generally the most important
players in the strategic group of the focal firm within the industry as you defined it in the
previous section) and (2) the resources and capabilities of this firm relative to its rivals that led
to that conclusion. Example: Google has a strong sustainable competitive advantage in the
search-based digital advertising industry primarily due to its strong brand recognition and
powerful intellectual property in search engine technology, both of which are difficult to imitate
due to path dependence and patent and trademark protection.
• This assessment should be based on a detailed assessment of which resources and
capabilities are important to success in the industry as you defined it, how the focal firm
compares (better or worse) to its key rivals on this these competencies, and (for the strengths
only) whether each of these competencies gives the focal firm competitive parity/temporary
advantage/sustainable advantage, based on a VRIO analysis.
• Every listed strength or weakness in the SWOT analysis is internal, is a resource or a
capability, and is described relative to the comparable resource or capability of the firm’s
rivals.
• Each key strength is supported by a separate VRIO analysis. Example: Southwest Airlines
People Management Capability: This capability is valuable because it allows Southwest to get
higher levels of employee productivity than most of its US passenger airline industry rivals.
This higher productivity is reflected in faster turnarounds on the ground, reducing Southwest’s
expenses and increasing its revenues per plane (more flights per day). It is rare as evidenced
by extensive record of labor strife, stalled contract negotiations, and strikes across the
industry rivals over a long period of time. It is difficult to imitate because relationships between
a firm and its employees are built over a long period of time and are path-dependent, so
airlines with difficult labor relations today cannot quickly imitate Southwest’s people
management capability and achieve similar results. Southwest is organized to appropriate the
value of the capability through labor contracts, a deeply embedded culture of harmonious
labor relations and teamwork, a leadership model that views it as a central requirement, and
processes that make the most of the employee positive attitudes and flexibility.Thus,
Southwest Airlines’ people management capability provides it with a sustainable competitive
advantage versus its rivals.1
• Analysis is very thorough in that it identifies all of the key resources and capabilities that
contribute to competitive advantage/disadvantage.
• Implications are drawn from the results of the analysis to clearly identify the impact on
competitive advantage in the relevant industry.
• This is an area where we expect to see strong demonstrations of critical reasoning skills in
that your conclusions about the focal firm’s competitive position should be strongly supported
with both theoretical logical arguments and relevant supporting data from your research. The
mix of strengths and weaknesses and assessment of how important competencies are to
success in the industry offer excellent opportunities to demonstrate your skills in weighing
multiple dimensions and contrasting different factors.
Alternative Solutions
• The primary purpose of this section is to describe and evaluate the two very best solutions to
the problem that you identified.
• You should have two sections: Solution 1 and Solution 2.
• Each solution section should have 4 parts:
– a clear description of the solution that explain how/why it solves the problem Example:
Shell should acquire BG group (solves the problem of being at an economies of scale
disadvantage over Exxon)
– pros (or advantages or benefits) arguing in favor of the solution. (These are NOT the
revenues from the solution). Example: Political and societal pressures are growing
worldwide for reduced carbon emissions. With this acquisition, Shell’s portfolio will be the
global leader in production of LNG, the cleanest burning fossil fuel.
Adapted from 2015. “Strategic Management and Competitive Advantage”. 1 5th ed. Barney and
Hesterly. Pearson: Boston.
– cons (or disadvantages or risks) arguing against the solution. (These are NOT the costs or
expenses to implement the solution). Example: The BG group acquisition will make Shell
the leading oil company in Brazil, which leaves them more exposed than their rivals to the
highly volatile Brazilian currency and at greater political risk of nationalization in that
country.
– financial implications of the solution. This should include:
– the NPV of the net cashflow change caused by the solution
– the upfront one-time investment or other costs to implement the solution.
– some thoughts on the sources of funds for the upfront costs and possibly how risk might
be limited.
– the appendix should include a spreadsheet for your NPV calculation showing all
cashflow statement line items that are changed by the proposed solution and providing
footnotes explaining the basis for each assumption that you made in the calculation.
• This is an area where we expect to see strong demonstrations of critical reasoning skills in
that your pros and cons for each solution should be strongly supported with both theoretical
logical arguments and relevant supporting data from your research. Weighing the relative
importance of different pros and cons in your evaluation is an excellent way to demonstrate
your ability to consider multiple dimensions of a situation. Example (McDonalds’ strategic
alternative to sell breakfast products all day): Pro: This strategy takes advantage of
McDonalds VRIO strength that its breakfast products are recognized by consumers as relying
on fresher ingredients (“cracking fresh eggs”) than those of rivals. Supply chain
improvements, investment in new equipment, and major advertising commitments to change
consumer perception will deter/delay rivals from imitating this resource. Con: Fast service and
low operating costs are essential elements of McDonalds overall competitive advantage that
could be compromised by having two many menu items available at the same time, competing
for grill space and for employee attention.
• The theoretical grounding for your arguments should go beyond elements of SWOT analysis
to include other relevant theories from strategic management, marketing, organizational
behavior, etc. For example a diversification strategy might include use of Porter’s three tests
for diversification, a differentiation strategy might include marketing theory on brand value, a
cost leadership strategy might include a value chain analysis, and a vertical integration
strategy might include a make vs. buy analysis of transaction cost economics. Example:
Shell’s acquisition of BG group meets Porter’s 3 tests in that LNG is a profitable and growing
industry, temporarily low gas prices due to a supply gut makes the cost to buy into the industry
now less than the expected NPV of future cash flows, and the gas industry relies heavily upon
resources and capabilities shared in common with Shell’s other business units.
Recommendation
• The purpose of this section is to explain why one of the proposed solutions is better than the
other. Therefore, the topic sentence of this paragraph should be something like: Solution 1 is
better than Solution 2 because … Example (Facebook): The alternative of charging fees for
business pages is better than the alternative of charging access fees to individual users
because it is more compatible with the firms ethical shared values and it runs less risk of
pushing users to other social media sites.
• As a result, all statements in this section should be comparative. They should not explain why
one solution is good or why one is bad, they should focus on the differences between the two.
These arguments should not focus solely on why the upsides of solution 1 are better than the
upsides of solution 2, but also address why the downsides of solution 1 are not as harmful as
the downsides of solution 2. Example (Facebook): Charging fees for business pages has the
downside of pricing some smaller businesses out of the network, which may push some users
to rivals with strong small business presence, liked LinkedIn, but the loss of user base is likely
to be much larger if fees are charged to users.
• This is another area we were are assessing critical reasoning skills. The recommendation
should be justified with strong logical arguments based on comparative analysis of the two
options, emphasizing elements of the SWOT analysis and other theoretical arguments.
• Identify how the risks or limitations of the recommendation might be mitigated. Example
(Facebook): One way to mitigate the risk of losing small business pages would be to make
the fee scales graduated based upon the number of employees of the firm or its net income.