INTERNAL ANALYSISThe internal analysis identifies the different limitations in the value chain and provides a overview of the relationship between Amazons internal strengths, capabilities and resources that are used to create value for the company and customers. VALUE CHAINThe value chain examines Amazons operative effectiveness it employs to hold a higher position over its competitors.

SWOT ANALYSISBased on the study of internal and external analysis, SWOT analysis was done to identify various strengths, weakness, opportunities and threats.

COMPETITOR ANALYSIS AND COMPETITIVE ADVANTAGEAmazon forecasted declining income and revenues as it entered a weaker international and competitive market, overshadowing increasing profitability and improving economic conditions in the US. Amazon and other online retail corporations like Ebay are being pressured by a degrading European economy that is resulting in decrease of consumer spending across the economy. While North American revenue increased thirty percent in the 2nd quarter, its international part did not earn a profit and revenue increased by only thirteen percent.Amazons cloud business (IAAS Information As A Service; SAAS Software As A Service; PAAS Platform As A Service), AWS - Amazon Web Services, grew strongly. The retail company included results from these units in its retail segment for reporting purposes and revenue from this sector increased 61% to $892 million in the 2nd quarter. AWS continued to increase its power, driven by wider adoption from larger enterprises which helps the gross marginAmazon does not disclose AWS profits, but Wall Street reckons the business has higher profit margins than the company's main retail business. So as AWS grows, Amazon's margins expand. Its gross profit margin was 28.6% in the 2nd quarter, increasing from 26.1 percent. According to a study conducted, Amazon makes up for more than 19% of all e-commerce revenue in the United States, compared to a meagre 9% in 2001. According to Forrester, after a 12.6% increase to $174.2 billion in 2011, United States online retail sales are expected to reach $271.9 billion by 2015. Online shopping has a huge role in cannibalising in-store shopping as consumers prefer online experience and become more familiar and prefer the wide portfolio and convenience of e-shopping.Amazon is continuously innovating in new other ways that could hamper its diminishing profit margins and price advantage. For example, it is testing and experimenting with an innovative service that allows customers to buy/pick up merchandise or items from Amazon Lockers. Amazon lockers are situated in grocery stores, small warehouses, convenience and drugstores, enabling customers to pick up their orders while addressing delivering concerns that home deliveries may have or if it will be missed or products will be stolen.Another growing trend displaying traditional retail fighting back is redesigning physical stores and brands around the customer experience.For example, Apple, attracts casual shoppers with a refined and user-friendly store experience through the environment and technical service it offers.Amazon Competitive and Cost Advantages: Wider SKU assortment, varied portfolio with immediate availability Overall lower inventory costs( in case of CPG items) Reduced warehousing and inventory for bulky items like diapers Just in time(JIT) supply, which matches buy/sell through dynamics Reducing the overhead time of constructing and maintaining new warehousing space Use of prime locations to supply to consumers directly Competitive advantage over price and advantage of shipping vs. traditional retailers

Amazon, a known brand, has main core competency through its unique resource and also byemploying services and building positive relationships with its suppliers, retailers and acquisitions which no/less other competitor can duplicate/imitate. The companies that Amazon has either done acquisition with or that belongs to Amazon areLoveFilm, zappos.com, IMDB, audible.com, fabric.com, pets.com, etc along with AWS (Amazons web services) driving companies such as Unilever, Netflix, Reddit, The Guardian, Ticketmaster, Zynga, Uni Credit bank, Schneider Electric etc. Amazon also built partnerships with companies such as Christian Publishers and Simon &Schuster Inc. Its most valuable product is Kindle in which it has released 3 versions along with e-book reader and tablets with varying configurations to suit the needs of all customers.

Amazon isalso known for its vertical integration, which lies under related vertical integration where the strategy is to create a consistent as well as an enriching and appealing customer experience for the customers. For a vertical integration to happen, companies may need to develop in R&D and develop theirown product which is Kindle Fire in Amazons case.