The giant E-commerce store Amazon in June 2017 payed an amount of $13.7 million for the organic supermarket chain whole foods in shares. This move would ensure amazon’s move in acquisition of brick-and-mortar assets was a success; this is to offer transformational opportunities to the company. The merger ensured that Amazon would gain professional expertise in perishable goods especially grocery. Additionally, they would gain access to more than 30 million shoppers and more than 460 grocery stores key in the United States market. On the other hand, amazon would absorb Amazon’s technology and process expertise to modernize and cut on their costs while reducing their price for more market penetration. The merger increases the competitive advantage of the two companies and as a result more profits are yet to be realized.
1. A Separate SWOT Analysis Pre-Merger For Amazon And Whole Foods
SWOT Analysis Amazon
The company has strong brand recognition and loyalty, as Petro, (2017) indicates the company has over 30 million active customers. Amazon has an active strategy in differentiation and innovation that enables them to cut down costs and drive pricing strategies.
The company model is easily imitable as such it creates more competition within the market affecting the profit margin indexes.
The company can acquire more companies and businesses which will enable them to acquire a huge market share at the same time reduce the competition. Additionally, they have opportunities for growth through expansion of physical stores to encourage more buyers and penetrate the market.
Few controversies and social market wars damage the brand image leading to market loss. Increased cyber-crime exposes the company’s data to public viewing and loss of crucial information such as banking information.
SWOT Analysis Wholefoods
The company prides itself and has strength in its brand recognition with a positive review from its customers. The company also has strengths high-quality standards tailored for the different communities they are involved in.
The company has a strong reliance on the American market that fluctuates depending on various prevailing market conditions. This can result in a drastic failure of the company coming from economic failure. Additionally, the company’s price is overpriced based on the quality they give as such, losing a good potential market.
Whole foods have an opportunity for growth through diversification of their products and prices. Additionally, they have opportunities in market expansion across and beyond America.
Several social media backlash from their prices threatens the company’s growth strategies and loss of customers and potential market.
2. Prepare A Single SWOT After The Merge.
Strengths of Amazon and Whole Foods
Over the years, Amazon has managed to acquire a strong distribution network and can reach a lot of markets. The acquisition eventually builds a reliable distribution network that enables them to reach a wide potential market.
Amazon and whole foods over the years have had the training and learning programs in investing development of its employees resulting in a competent workforce. The two companies’ merger will enable them to share and exchange professional ideas that will give them an upper hand in meeting the marketing gap. This will lead to proper skill in identifying opportunities and the necessary changes to be made in deliveries of the product.
A strong brand portfolio has been created by the success of the two companies. This will enable them to attain more loyal customers. For instance, Amazon has loyal customers who trust their brand; this type of customers will be willing to try whole foods services as the merger has been created. The strong brand portfolio is specifically useful for new product ventures as they will be having better customer chances.
Weakness of the Merger
In as much as the two companies spend above the industry average on research and development, they still do not match up with the biggest players in the market. As such, they are not able to compete with key players in the market in terms of innovations. Additionally, the net average contribution and profitability ratio of the merger is still below the industry level.
The two companies experience a challenge in merging their smaller units. For instance, whole foods had formed partnerships with other businesses. The two companies’ merger fails to merge companies with different work cultures.
Opportunities of the Merger
The adoption of new technology standards and government free trade agreement will provide the merger with new growth opportunities to enter a new market zone. Lower inflation rates create more market stability and ensure credit at a low-interest rate thus, empowering its customers with the ability to make purchases.
Additionally, after the periods of the great depression the American market is picking up in terms of GDP and per capita income of its citizens. This guarantees the ability of the market to purchase their products. The firms’ strategy in decreasing cost through low shipping prices enables the profits to be shared by the customer bringing down their prices. This creates an opportunity of competitive advantage over the market boosting profitability while penetrating more market.
Threats of the Two Companies
As the company grows and develops through multiple countries this creates a fluctuation of currency especially given from the changing political climate. This poses a risk for the company to lose its investments in principal countries. The current booming economy has maintained stable profitability encouraging competition. This stiffens competition and as a result, it leads to price checks that might drive the merger into a loss.
3. Nature Of Amazon Relationship Marketing Strategy
The amazing deal about food and especially grocery, when compared to other e-commerce purchases, is that they are habitual (Petro, 2017). This creates a substantial amount of data that has been presented to amazon after the merger. As such, Amazon will be able to tailor the shopping experience for its customers a process used in upselling. The company will invest in the data provided and will offer its customer what he is looking forward to buying. This will enable the consumer to buy precisely at the exact time.
4. Do You Consider Amazon A Visionary Organization? Why Or Why Not
Analysts have started projecting moves about the company and more people claim they are giving in. However, I say the e-commerce giant is a visionary business making more strategies into the future. The current world patterns indicate that a person working for almost eight hours or even more a day does not have enough time for leisure and spending time with family or to go out for shopping. As such, the only option left to buy in more time will be in online trade. Amazon, therefore, has made strategies that will put them at the forefront in the coming few years. For instance, grocery, brick-and-mortar trade.
5. Describe Amazon’s Growth Strategy.
The giant commerce business which is mainly built on customer’s centricity. Focusing on every aspect of the customer has enabled them to compete against great other giants such as Walmart. Therefore, the company is built under the implementation of a competitive strategy and intensive internal strategies for growth and market penetration.
6. In My Mind, These Two Companies Seem Very Different When It Comes To Social Responsibility. What Are Your Thoughts?
The two companies follow different approaches in their marketing strategies. On one hand, amazon focuses on data-driven principles while on the other side, whole foods focuses on a strategy to empower the community and employees. Amazon has made its name on being efficient, cheap and fast enforcing strict rules and principles to cut down costs, thus saving it for the customer. Whole foods pride itself on a personal touch with the community and also individual employees to make better choices.
- Petro, G. (2017). Amazon’s Acquisition of Whole Foods Is About Two Things: Data And Product. Forbes, (August 2).