Case Study Description of Amazon.com, Inc. Buys Whole Foods Market
After Amazon.com announced it would acquire Whole Foods, shares of supermarkets in the United States were hit hard; the same was true for grocers in Europe, as investors there worried about the possibility of Amazon moving beyond US borders in the grocery space. Because little had been said regarding the motivation behind the acquisition, the CEO of a large organic-foods supermarket group in Europe decided that the potential impact of this acquisition might warrant some reflection. He wanted to start by looking at the implications of the acquisition on Amazon's consolidated financial statements.
Swot Analysis of "Amazon.com, Inc. Buys Whole Foods Market" written by Luann J. Lynch, Mark E. Haskins includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Foods Amazon.com facing as an external strategic factors. Some of the topics covered in Amazon.com, Inc. Buys Whole Foods Market case study are - Strategic Management Strategies, Budgeting, Costs, Sales and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Amazon.com, Inc. Buys Whole Foods Market casestudy better are - – central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, technology disruption, increasing household debt because of falling income levels,
competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Amazon.com, Inc. Buys Whole Foods Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Amazon.com, Inc. Buys Whole Foods Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Foods Amazon.com, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Foods Amazon.com 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 Amazon.com, Inc. Buys Whole Foods Market can be done for the following purposes –
1. Strategic planning using facts provided in Amazon.com, Inc. Buys Whole Foods Market case study
2. Improving business portfolio management of Foods Amazon.com
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Foods Amazon.com
Strengths Amazon.com, Inc. Buys Whole Foods Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Foods Amazon.com in Amazon.com, Inc. Buys Whole Foods Market Harvard Business Review case study are -
Diverse revenue streams
– Foods Amazon.com is present in almost all the verticals within the industry. This has provided firm in Amazon.com, Inc. Buys Whole Foods Market case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Foods Amazon.com 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.
Successful track record of launching new products
– Foods Amazon.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Foods Amazon.com 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.
Organizational Resilience of Foods Amazon.com
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Foods Amazon.com does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Foods Amazon.com is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Foods Amazon.com is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Amazon.com, Inc. Buys Whole Foods Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Foods Amazon.com has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Foods Amazon.com to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Foods Amazon.com 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 Foods Amazon.com in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Foods Amazon.com is one of the leading recruiters in the industry. Managers in the Amazon.com, Inc. Buys Whole Foods Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Amazon.com, Inc. Buys Whole Foods Market 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.
Low bargaining power of suppliers
– Suppliers of Foods Amazon.com in the sector have low bargaining power. Amazon.com, Inc. Buys Whole Foods Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Foods Amazon.com to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Finance & Accounting industry
– Amazon.com, Inc. Buys Whole Foods Market firm has clearly differentiated products in the market place. This has enabled Foods Amazon.com to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Foods Amazon.com to invest into research and development (R&D) and innovation.
Innovation driven organization
– Foods Amazon.com is one of the most innovative firm in sector. Manager in Amazon.com, Inc. Buys Whole Foods Market Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Amazon.com, Inc. Buys Whole Foods Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Amazon.com, Inc. Buys Whole Foods Market are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Amazon.com, Inc. Buys Whole Foods Market, is just above the industry average. Foods Amazon.com 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 Amazon.com, Inc. Buys Whole Foods Market, it seems that the employees of Foods Amazon.com 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.
Capital Spending Reduction
– Even during the low interest decade, Foods Amazon.com has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Foods Amazon.com has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Foods Amazon.com even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Foods Amazon.com is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Amazon.com, Inc. Buys Whole Foods Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Amazon.com, Inc. Buys Whole Foods Market, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Skills based hiring
– The stress on hiring functional specialists at Foods Amazon.com has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Amazon.com, Inc. Buys Whole Foods Market HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Foods Amazon.com has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Foods Amazon.com, firm in the HBR case study Amazon.com, Inc. Buys Whole Foods Market needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Luann J. Lynch, Mark E. Haskins suggests that, Foods Amazon.com is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Amazon.com, Inc. Buys Whole Foods Market, in the dynamic environment Foods Amazon.com has struggled to respond to the nimble upstart competition. Foods Amazon.com has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Amazon.com, Inc. Buys Whole Foods Market | 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 Amazon.com, Inc. Buys Whole Foods Market are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Foods Amazon.com can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Foods Amazon.com to increase its market reach. Foods Amazon.com will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Manufacturing automation
– Foods Amazon.com can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Using analytics as competitive advantage
– Foods Amazon.com 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 Amazon.com, Inc. Buys Whole Foods Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Foods Amazon.com to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Foods Amazon.com 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, Amazon.com, Inc. Buys Whole Foods Market, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Foods Amazon.com has opened avenues for new revenue streams for the organization in the industry. This can help Foods Amazon.com to build a more holistic ecosystem as suggested in the Amazon.com, Inc. Buys Whole Foods Market case study. Foods Amazon.com can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Foods Amazon.com to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Foods Amazon.com can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Foods Amazon.com 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.
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 Foods Amazon.com in the consumer business. Now Foods Amazon.com can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Foods Amazon.com in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Foods Amazon.com to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Foods Amazon.com to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Foods Amazon.com 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 Finance & Accounting segment.
Threats Amazon.com, Inc. Buys Whole Foods Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Amazon.com, Inc. Buys Whole Foods Market are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Foods Amazon.com 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 Amazon.com, Inc. Buys Whole Foods Market .
Stagnating economy with rate increase
– Foods Amazon.com 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.
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 Foods Amazon.com in the Finance & Accounting sector and impact the bottomline of the organization.
Consumer confidence and its impact on Foods Amazon.com 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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Foods Amazon.com will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Foods Amazon.com.
Increasing wage structure of Foods Amazon.com
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Foods Amazon.com.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Foods Amazon.com in the Finance & Accounting industry. The Finance & Accounting 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.
Regulatory challenges
– Foods Amazon.com needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
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.
High dependence on third party suppliers
– Foods Amazon.com 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.
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. Foods Amazon.com needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Environmental challenges
– Foods Amazon.com 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. Foods Amazon.com can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Amazon.com, Inc. Buys Whole Foods Market 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 Amazon.com, Inc. Buys Whole Foods Market 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 Amazon.com, Inc. Buys Whole Foods Market 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 Amazon.com, Inc. Buys Whole Foods Market 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 Amazon.com, Inc. Buys Whole Foods Market 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 Foods Amazon.com needs to make to build a sustainable competitive advantage.
