Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery
In a December 1, 2013, interview on American television program 60 Minutes, Amazon CEO Jeff Bezos announced that Amazon would soon change the future of online shopping by enabling customers to receive items within thirty minutes of ordering. This delivery service, Bezos said, would be powered by unmanned autonomous drones and could be offered as soon as 2015. The market reaction was instantaneous and positive. Still, Amazon needed some answers before it could launch autonomous delivery services: Were customers ready to embrace and pay for this type of delivery service? Would regulators allow it? Should Amazon make or buy its drones? Would it be too risky for Amazon to wait to launch this service? If it decided to go ahead, how should it launch, and to whom?
Swot Analysis of "Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery" written by Russell Walker, Rafique Jiwani includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amazon Unmanned facing as an external strategic factors. Some of the topics covered in Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery case study are - Strategic Management Strategies, Innovation, IT, Operations management, Productivity, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery casestudy better are - – increasing energy prices, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing commodity prices, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption,
there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amazon Unmanned, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amazon Unmanned operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery can be done for the following purposes –
1. Strategic planning using facts provided in Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery case study
2. Improving business portfolio management of Amazon Unmanned
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Amazon Unmanned
Strengths Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amazon Unmanned in Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery Harvard Business Review case study are -
High switching costs
– The high switching costs that Amazon Unmanned has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Successful track record of launching new products
– Amazon Unmanned has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amazon Unmanned has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Amazon Unmanned is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Russell Walker, Rafique Jiwani can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Amazon Unmanned digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Amazon Unmanned has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Strategy & Execution field
– Amazon Unmanned is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Amazon Unmanned in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Amazon Unmanned is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Amazon Unmanned has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Amazon Unmanned has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Amazon Unmanned in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Amazon Unmanned are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery firm has clearly differentiated products in the market place. This has enabled Amazon Unmanned to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Amazon Unmanned to invest into research and development (R&D) and innovation.
Weaknesses Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery are -
Need for greater diversity
– Amazon Unmanned has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery HBR case study mentions - Amazon Unmanned takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the segment, Amazon Unmanned needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Amazon Unmanned, firm in the HBR case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Amazon Unmanned has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery can leverage the sales team experience to cultivate customer relationships as Amazon Unmanned is planning to shift buying processes online.
Lack of clear differentiation of Amazon Unmanned products
– To increase the profitability and margins on the products, Amazon Unmanned needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery, in the dynamic environment Amazon Unmanned has struggled to respond to the nimble upstart competition. Amazon Unmanned has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery, is just above the industry average. Amazon Unmanned needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery, it seems that the employees of Amazon Unmanned don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
No frontier risks strategy
– After analyzing the HBR case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amazon Unmanned can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Amazon Unmanned in the consumer business. Now Amazon Unmanned can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Amazon Unmanned has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Amazon Unmanned can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Creating value in data economy
– The success of analytics program of Amazon Unmanned has opened avenues for new revenue streams for the organization in the industry. This can help Amazon Unmanned to build a more holistic ecosystem as suggested in the Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery case study. Amazon Unmanned can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amazon Unmanned can use these opportunities to build new business models that can help the communities that Amazon Unmanned operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Leveraging digital technologies
– Amazon Unmanned can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Amazon Unmanned can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Amazon Unmanned can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Amazon Unmanned can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Amazon Unmanned can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Amazon Unmanned has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Amazon Unmanned to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Amazon Unmanned in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Amazon Unmanned can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Amazon Unmanned in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Amazon Unmanned needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Amazon Unmanned demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Amazon Unmanned high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Amazon Unmanned needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Amazon Unmanned can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Amazon Unmanned in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amazon Unmanned can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery .
Shortening product life cycle
– it is one of the major threat that Amazon Unmanned is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery, Amazon Unmanned may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Amazon Unmanned can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amazon Unmanned with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Amazon Unmanned can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Reinventing E-Commerce: Amazon's Bet on Unmanned Vehicle Delivery is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Amazon Unmanned needs to make to build a sustainable competitive advantage.
