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 - – increasing household debt because of falling income levels, there is backlash against globalization, increasing energy prices, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, technology disruption, digital marketing is dominated by two big players Facebook and Google,
talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
Effective Research and Development (R&D)
– Foods Amazon.com 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 Amazon.com, Inc. Buys Whole Foods Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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.
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.
Strong track record of project management
– Foods Amazon.com is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Highly skilled collaborators
– Foods Amazon.com has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Amazon.com, Inc. Buys Whole Foods Market HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
Aligning sales with marketing
– It come across in the case study Amazon.com, Inc. Buys Whole Foods Market 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 Amazon.com, Inc. Buys Whole Foods Market can leverage the sales team experience to cultivate customer relationships as Foods Amazon.com is planning to shift buying processes online.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Foods Amazon.com supply chain. Even after few cautionary changes mentioned in the HBR case study - Amazon.com, Inc. Buys Whole Foods Market, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Foods Amazon.com vulnerable to further global disruptions in South East Asia.
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Amazon.com, Inc. Buys Whole Foods Market has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Foods Amazon.com 's lucrative customers.
Need for greater diversity
– Foods Amazon.com 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.
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.
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.
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.
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 -
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Foods Amazon.com can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
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.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Foods Amazon.com to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Foods Amazon.com is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Foods Amazon.com has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Foods Amazon.com needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Foods Amazon.com can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.