Swot stands for Strengths, Weaknesses, Opportunities, and Threats

A SWOT analysis is an incredibly simple, yet powerful tool to help you develop your business strategy, whether you’re building a startup or guiding an existing company.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examples include who is on your team, your patents and intellectual property, and your location.

Opportunities and threats are external—things that are going on outside your company, in the larger market. You can take advantage of opportunities and protect against threats, but you can’t change them. Examples include competitors, prices of raw materials, and customer shopping trends.

A SWOT analysis organizes your top strengths, weaknesses, opportunities, and threats into an organized list and is usually presented in a simple two-by-two grid. Go ahead and download our free template if you just want to dive right in and get started.

Strengths

Strengths are internal, positive attributes of your company. These are things that are within your control.

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  What business processes are successful?
  
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  What assets do you have in your team, such as knowledge, education, network, skills, and reputation?
  
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  What physical assets do you have, such as customers, equipment, technology, cash, and patents?
  
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  What competitive advantages do you have over your competition?
  

Weaknesses

Weaknesses are negative factors that detract from your strengths. These are things that you might need to improve on to be competitive.

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  Are there things that your business needs to be competitive?
  
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  What business processes need improvement?
  
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  Are there tangible assets that your company needs, such as money or equipment?
  
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  Are there gaps on your team?
  
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  Is your location ideal for your success?
  

Opportunities

Opportunities are external factors in your business environment that are likely to contribute to your success.

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  Is your market growing and are there trends that will encourage people to buy more of what you are selling?
  
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  Are there upcoming events that your company may be able to take advantage of to grow the business?
  
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  Are there upcoming changes to regulations that might impact your company positively?
  
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  If your business is up and running, do customers think highly of you?
  

Threats

Threats are external factors that you have no control over. You may want to consider putting in place contingency plans for dealing them if they occur.

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  Do you have potential competitors who may enter your market?
  
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  Will suppliers always be able to supply the raw materials you need at the prices you need?
  
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  Could future developments in technology change how you do business?
  
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  Is consumer behavior changing in a way that could negatively impact your business?
  
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  Are there market trends that could become a threat?
  

The foremost strength of Amazon compared to its competitors is the low cost structure which makes the company one of the best online retailers. Principally, Amazon does not incur itself having high made costs towards its clients and instead, it tries to sell its goods in low costs as much as possible. Besides, considering Amazon as an e-commerce company, it is also potentially far away from having an increased share in marginal costs for traders who sell their own products in this online shopping company.

Amazon permanently invests huge amount of money in both extra fulfillment centers and existing centers in order to decrease waiting intervals and shipping costs. As a result of time and cost savings, prices reduce gradually each year, giving customers privilege.¹

Nevertheless, Amazon has been allocating huge concentration on innovation over the last decade which resulted in attaining positive reactions from its clients. Customer experience has been improved greatly due to the investments conducted by Amazon in all significant and major areas. Arts and entertainment, on the other hand, are considered as a key area in this regard, and despite, investment on other modern tech spheres has also helped Amazon to hold its superiority over its competitors. Nowadays, Amazon is dedicating its all strengths and attention to get the company to the next stage on its sphere. In clarification, cloud business has become a top priority in which the company allows subscribers to have at their disposal a virtual cluster of computers, available all the time, through the Internet. Furthermore, in terms of the investments on research and development, Amazon increased by 7% (from 22.6 billion to 29,1 billion) , being higher in comparision with that of 2016. Amazon is continually improving the cost investment in R&D annually, becoming the highest spender in R&D area.²

Weaknesses

Now, let’s turn the consideration towards the weaknesses of this giant company. One of the main deficiency of Amazon is ever popularity of selling no-name brand products online. In the last quarter of 2017, Amazon marketplace retailers constituted over a half of whole sales of the retail companies. Many of the products sold on Amazon were belonged to Chinese companies which manufacture products under their own but not famous brands. Majority of these products are pretty similar to what imminent branded companies produce in their categories, yet are considerably low in cost. Even though consumers making choice according to the prize probably don’t take the brand of product, they are buying, into account, in some cases, it is reasonable to expect some questions regarding the quality of product manufactured by those unknown companies.

Statistics show that taking an electronics category as an example, in 2015 many customers complained about cheap table. The problem was that the device hadn’t been fully installed with malware, and in fact, Amazon had already reached to sell more than 17000 of these tablets in 130 countries before getting noticed about the problem.³

Another weakness of Amazon is considered to be its seasonal tension when it come to selling products. Amazon makes main part of its revenue in the fourth quarter annually and during this period of time the company requires an urgent need for extra work force. This probably should result in significant oscillation of the need for the workforce during the course of year which by taking the cost of employee training and development into account it can doubtlessly supposed to be significant weakness of Amazon. Moreover, it is vital to mention that from 2015 till 2017 more than a third of Amazon’s annual profit were made in the last quarter.⁴

Opportunities

One of the main achievements of Amazon can be indicated as its introduction in Chinese market in the year of 2004 when Amazon bought China’s largest online retail company “Joyo.com”. The transaction deal was calculated to be worth approximately $75 million. In turn, as Joyo.com was specialized to retail books, videos, toys, it created new opportunities to spread its function circle throughout China⁵.

Collaborations plays very important role in the efficiency of Amazon. This is mainly because Amazon always tries to discover and share something new. For instance, in 2004, the company declared a deal with the British library, London which allows the company that its consumers are able to buy rare and antique books.

Threats

In the age of globalization, Amazon has been facing a significant number of threats in the online retail market. The biggest threat which is concerning the Amazon has become a cybercrime such as identity theft and hacking which are able to lead to the revelation of consumer info. In order not to lose its clients, Amazon needs to act as quick as possible to ensure that online privacy and security are guaranteed in the high levels and by doing so the company is likely to keep its authority in online shopping world.⁵

Secondly, it is clear that Amazon works in many of spheres e.g. media, electronics and other merchandise, and there are many companies which are huge enough to compete against. To illustrate, IBM, Oracle, eBay, Alibaba, Microsoft and Google are some of the arduous companies to look for. Apart from that, there is string competition from the physical retail brands. Companies like Costco and Walmart are the brands which made threats even more strengthened in E-retail area.⁶

It can be concluded that as Jeff Bezos – the founder and CEO of Amazon, the richest person in the world – was organizing the company, he expected all the difficulties he might come across during his career ranging from competing with opponents such as Alibaba Group, eBay Inc., Walmart Inc., Apple Inc., and other giant companies to cyberthreaths concerning revelation of customers info. Althought, initially, these issues were seemed too difficult to tackle, representitives of Amazon not only solved them intelligently but also created new ways to develop its field scale on their basis as well.

1^ www.strategicmanagementinsight.com/swot-analyses/amazon-swot-analysis.html

2^ www.notesmatic.com/2018/07/amazon-swot-analysis-2018/

3^ www.econsultancy.com

4^ www.research-methodology.net

5^ www.managementstudyguide.com

6^ www.howandwhat.net