Apr 2, 2019 in Business

Table 1: Internal Factor Evaluation Matrix
Key Internal Factors

Weights

(0.0 to 1.0)

Rating

(1 to 4)

Weighted Scores

(Weights x Rating)

Strengths
Wide choice of various product categories 0.07 4 0.28
One of the largest and well-known retailers 0.15 4 0.6
Possesses dominant positions in the Internet search 0.2 4 0.8
Easy in use 0.05 3 0.15
Shipping available worldwide 0.12 4 0.48
Weaknesses
Amazon fees for selling are high 0.15 1 0.15
Selling of some items can take too long 0.06 2 0.12
Amazon.com experiences net loss in the first quarter of 2013 0.2 1 0.2
Total 2.78    

Internal factors are those factors, which can be regulated by the company. It is usually referred to as "5 M`s": machinery, man, money, management and material (Jain, Trehan & Trehan). A company can change its management and marketing strategy, product quality, costs, and so forth. These are the internal factors and are presented as strengths and weaknesses in the SWOT analysis. Knowledge of companies' existing problems helps to make changes and improve performance. Awareness of strengths helps to provide a clear vision of the company's advantages for customers, as well as differentiate it from competitors.

Strengths and Weaknesses

  • Strengths

Strengths are the company`s individual characteristics, which positively differentiate it from competitors. Companies usually emphasize them, when promoting their products. This brings a clear vision for customers as to why they have to work with this company instead of any other. Amazon.com is a very popular company nowadays, with millions of users. Such success was achieved due to the company`s strengths, which differentiated it from competitors.

The first advantage of Amazon.com is that shipping is available almost all over the world. This is very important, because this function helps the company to earn more money, increase sales and the number of customers. In comparison with the whole industry, the rate of Amazon’s sales is higher. Amazon.com keeps gaining new customers in various countries, by shipping products directly to their homes. Its weight in the table is 1.2, because it plays a significant role for the corporation. At the same time, it is rated as 4, since it is the company's major strength.

Related to the first factor is another Amazon's strength: the company is considered to be one of the largest and well-known retailers. Everyone is aware of what Amazon is and knows how to use it, especially in the USA and Canada. When students think of selling their books, Amazon usually comes to their mind. This is a valuable strength, which cannot be neglected. For this reason, it is estimated as 4 in the matrix.

Amazon is also known for being a top link in Google search. This makes access to the website easier. Consumers do not have to spend their time searching the needed book - they immediately get the solution. This marketing idea has increased the public awareness of Amazon.com. Thus, it is rated as “the major strength” and has the weight of 0.2.

Another significant internal factor is a variety of products available. Initially, Amazon was known as a book retailer; however, with the society's increasing demands, it decided to include other items, such as DVDs games, video games, toys, and so on. In addition, Amazon can be considered as one of the largest book stores in the world. Almost all existing books can be found and ordered there. This strength has a huge impact on the company's performance. Thus, it is rated as 4 in the table.

In addition to the previous strength, less but still important advantage is that Amazon.com is considered to be easy in usage. The process of ordering or selling is as simple as it can be. It does not take long to understand what should be done. This characteristic is very useful. However, it is not the main strength. Therefore, it is considered to be a minor strength in the matrix table.

  • Weaknesses

Weaknesses are the disadvantages, which differentiate the company among competitors in a negative way. Fortunately, and contrary to threats, weaknesses can be controlled by the corporation. This part of SWOT is very useful for understanding the internal problems and improving the situation. If these problems are not solved on time, customers can switch to competitors. In addition, these drawbacks usually prevent the company from flourishing.

One of them is that the fees for selling are high. Students from universities usually complain that, when they sell their books, they give too much money to Amazon in the form of fees. Thus, a great deal of them sells their books by other means, which is not good for Amazon. This is considered as a major weakness and is estimated as 1. However, the company can always find solutions. For instance, it can provide students with discounts or lower fees.

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As Amazon is mostly known for book selling, it might be challenging for people to sell other items. The initial positioning of Amazon as an online book retailer distracts customers from buying other products. This problem is rather insignificant, because, at present, it does not influence the company too much. However, in the future, it might bring difficulties to Amazon. Today, the company must provide customers with a clear vision of what exactly they sell.

An interesting fact is that Amazon is experiencing net loss (MSN Money). This drawback has an impact on the company's growth. If the situation is not improved, the company will suffer, because there is no reason to operate in the marketplace without profit. Amazon has to make changes in its economic activities, in order to maintain its well-being.

The total weighed score is 2.78, which means that Amazon.com occupies a strong internal position (MBA lectures). Compared with the whole e-commerce industry, Amazon is a leader. Various statistics show that growth rates, price ratios, profit margins, financial conditions and management efficiency for Amazon are higher than for the rest of the industry (MSN Money). However, if Amazon.com does not eliminate its mistakes, statistics are likely to change in the opposite way.

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