Amazon and Netflix Swot Analysis

9 September 2016

Amazon is the largest online retailer and Netflix is an industry giant in the movie streaming or DVD rental business. Both began as small companies with fewer than 100 employees and now are multi-billion dollar corporations as a result of their innovation and their desire to be elite. Amazon’s mission statement is “to be earth’s most customer-centric company where people can find and discover anything they want to buy online.

Amazon is now the world’s largest online retailer selling just about any product, even when they do not make a profit from them. Jeff Bezos (Amazon’s CEO) uses a cost leadership strategy to produce products and services with a lower cost than the competitors do. By offering the lowest prices he gains market share and brand recognition. For this strategy to succeed Amazon has to provide the widest range of products to achieve the economies of scale and benefit from the low costs of displaying those products online. Customer service is “first class” in Amazon.

Amazon and Netflix Swot Analysis Essay Example

They have a reputation for being reliable, convenient, offers one of the lowest and fastest shipping, and once again the lowest prices. Strategic acquisitions by Amazon have also helped them thrive. They have acquired many small e-books companies to software companies and even Zappos, and Audible. com. When determining a weakness one must look at the competition and see what they are excelling in compared to one. Amazon’s major competition is Wal-Mart and Target, and they too are industry giants which one can learn a lot from.

One major difference is that Wal-Mart and Target have physical presence with thousands of stores worldwide. Jeff Bezos did toy with the idea of opening stores to allow consumers to have a place where they can shop and interact with the products, but he stated that until he can provide a different experience than that of his competition he would not do it. I understand his opinion, but I do see it as a weakness being that Amazon is only online and customers have to wait upon arrival of their products.

One of Amazon’s strengths is their acquisitions but I also believe that this strength can lead to their downfall. The different industries in which they have invested in are very competitive ones. They have penetrated the tablet industry combating Apple and Google which just with the names presents a challenge. Amazon should continue penetrating different markets as competition is always good for business. To compete against Netflix they have Amazon Prime and the “KINDLE” is their tablet which is selling at an all-time high because of its competitive pricing and partnership with Android technology.

Amazon should extend their web-site for emerging markets or for other countries to conduct business there and increase market share. Being that the major threat to Amazon is online security, they should consider opening warehouses in major markets to gain physical presence. Netflix has successfully managed to maintain their competitive advantage against others in the internet-TV industry. They have approximately 33. 3 million subscribers for their streaming alone. Compared to their competition Hulu Plus and Amazon Prime which combined have less than 15 million subscribers, Netflix is an industry leader.

They were pretty much the first ones to start the business on online movie viewing for a fee. Netflix has exclusive content deals with many major producing firms like Disney creating another competitive advantage. With these deals in place other similar companies like Amazon Prime and Redbox Instant will have to buy rights from Netflix directly in order to play the shows or movies in their websites. Netflix has an estimated 60,000+ titles compared to 38,000+ by Amazon Prime making them the largest library in movies and show series. As the industry continues to grow, so does Netflix’s competition.

Because you have major players entering the industry such as “Amazon Prime” and “Verizon Redbox” and even Time Warner Cable with “On Demand” channels Netflix is forced to keep competitive prices and prevents them from raising prices in the future. Netflix also has a DVD segment which has dropped substantially, losing about 3 million customers last year. Their opportunities lie in other countries where they can bundle different packages for new customers. More exclusive deals with big studios also present opportunities being that progressively more people are in tune with watching show series and may only be able to view them from Netflix.

With the growth of internet TV’s and internet connected devices Netflix can gain market recognition with their “icon” in smart TV’s or applications in other devices. This only makes their product or service more accessible. Though Netflix is undeniably the industry leader, more and more competition will continue to spur out of the ground. Though no exact plans have been determined by Reed Hastings (Netflix CEO) penetrating foreign markets seems like the obvious route to take.

Amazon’s CEO is Jeff Bezos which I see as a very smart man. He knows exactly what he’s talking about and has a stern idea for the company but also is open to suggestions from others. Acquisitions have led them to having the biggest library of e-books not to add that they sell them for the lowest prices available. Aside from maintaining Amazon. com, they continue to penetrate different markets like with the KINDLE and now there are rumors that they will soon produce a mobile device to compete with the iPhone.

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