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 - – technology disruption, geopolitical disruptions, increasing energy prices, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, 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 -
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.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Foods Amazon.com digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Foods Amazon.com 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.
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.
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.
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.
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.
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.
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.
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.
High switching costs
– The high switching costs that Foods Amazon.com 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.
Superior customer experience
– The customer experience strategy of Foods Amazon.com in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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 -
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.
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.
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.
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.
Lack of clear differentiation of Foods Amazon.com products
– To increase the profitability and margins on the products, Foods Amazon.com needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Foods Amazon.com 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.
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.
Products dominated business model
– Even though Foods Amazon.com has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Amazon.com, Inc. Buys Whole Foods Market should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Foods Amazon.com has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
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.
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 -
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.
Loyalty marketing
– Foods Amazon.com 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.
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.
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.
Developing new processes and practices
– Foods Amazon.com can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Foods Amazon.com is facing challenges because of the dominance of functional experts in the organization. Amazon.com, Inc. Buys Whole Foods Market case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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, Foods Amazon.com can use these opportunities to build new business models that can help the communities that Foods Amazon.com operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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.
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.
Buying journey improvements
– Foods Amazon.com can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Amazon.com, Inc. Buys Whole Foods Market 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Foods Amazon.com can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
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.
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 -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Foods Amazon.com with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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.
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 .
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.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Foods Amazon.com business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
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.