Running Head: STRATEGY REPORT ABOUT 1

AMAZON

Programme BSc Business Management with Finance

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Table of Contents
Introduction 4
External environment analysis of Amazon.com 5
PESTEL Analysis 5
STRATEGY REPORT ABOUT 2
AMAZON
5-Forces Analysis 7
Internal environment analysis of Amazon.com 7
VRIO Model 8

Value chain 9

CSR and Sustainability 11

Evaluation of Analysis 12
SWOT Analysis 12

Recommendations for global development 13

Recommendations for sustainability 15

References 17

INTRODUCTION
 Amazon is a global innovation company located in Seattle, Washington, the US,

which concentrates on online business, digital streaming, cloud computing, and AI. It is

regarded as one of the Big Five companies in the US IT industry, alongside Facebook, Apple,

Google, Apple, and Microsoft.

Jeff Bezos launched Amazon in Bellevue, Washington, on 5th July 1994 (Amazon,

2006). The company began as an online market center for books but developed to sell

computer games, gadgets, toys, food, clothing, software, furniture, and gems.

Amazon is acknowledged for its commotion of grounded ventures through high-tech

development and mass-scale. It is the largest online market center globally, AI collaborator

dealer, cloud computing, and live-streaming platform as projected by revenue and

capitalization of the market.

Amazon, being the largest internet company by revenue globally; it is the second-

largest private corporation in the US and among the most valued companies globally.

Fundamentally, by 2005, Amazon had operated through more than a decade and a huge

number of dollars constructing and handling the vast scope, solid, and prolific IT framework

that controlled one of the largest online retail platforms globally.

However, it does not mean Amazon faces no confront traps. The absolute greatest

potential difficulties that Amazon is encountering are:

a. Development concerns

b. Antitrust issues

c. Bolstering trust

EXTERNAL ENVIRONMENT ANALYSIS OF AMAZON.COM

1. PESTEL analysis
 A PESTEL analysis for Amazon Company deliberates macroeconomic environmental

aspects that influence the organization's development and benefits.

a. Political Factors

Since the organization works around the world, it should maintain each area's political

and law requirements. Variety in political and necessities intrude online purchases. It suggests

that the online business retailer should depend on governments' help in the different areas for

fruitful executions and appropriation. Except if governments build up web protection rules

and guidelines, Amazon cannot grow their market-base into such territories.

b. Economic Factors

Amazon Company is not an exemption for economic principles (DONICI et al.,

2012). Notwithstanding, it has been demonstrated to support fiscal thrashings and stay

productive. Vulnerability in the economy adds to fears of consumption. However, regions

with expanding purchasing powers such as Pakistan, India, and China, give possible business

sectors an extension of Amazon markets.

c. Social Factors

The development and advancement of Amazon could be influenced by social factors,

for example, internet use and client buying propensities. Despite that internet use is

developing quickly globally, making transactions and purchases via the internet have not

become part of the way of life (Amazon Inc., 2019). Individuals that can purchase and

transact via the internet frequently evade partaking because of security and welfare concerns.

d. Technological Factors

Amazon broadly depends on innovation to provide services. The organization has

built up its own Amazon Website Services for better customer service support. The move has
seen the organization grow its client base since a larger part has internet access (Amazon Inc.,

2019). However, there is a need that the frameworks are updated consistently, and that

customer worries about identity fraud and hacking are addressed.

e. Environmental Factors

Amazon Company should guarantee that its items are friendly to the climate

(Lasserre, 2017). Likewise, the organization could take a strong move to prompt clients about

various approaches worth guaranteeing that products have little effect on the environment.

f. Legal Factors

Amazon is utilized to work in open-business sectors in the US, and lawful subjects

about running the business in various countries moderate the organization's development

(Amazon Inc., 2019). A violation of the organization's law will probably be expensive, and

gaffes could prompt huge fines and a loss of reputation.

2. 5-Forces Analysis

Amazon competes with many firms, comprising more modest online retail stores and

enormous firms like Walmart. The online business's global scope also exposes Amazon to

several external influences (Sastry et al., 2019). The forces of the external aspects influencing

Amazon, according to Porter's 5-Forces Analysis model, are discussed below:

a. Amazon’s Competitors (Strong Force)

Amazon straightforwardly contends against hulks which have a huge and developing

e-commerce internet site; such as Walmart.

b. Amazon’s Clients’ Bargaining Power (Strong Force)

alternatives contrary to the organization’s online marketing service. In connection, the low

switching expenses make it simple for clients to leave Amazon for other companies like

Walmart.

c. Amazon’s Suppliers’ Bargaining Power (Moderate Force)

A small supplier populace empowers them to impose a strong force on the online

business of Amazon. For example, variations in equipment costs from a few huge suppliers

may perhaps straightforwardly influence the company's online retail operational expenses.

d. Threat of Substitutes (Strong Force)

Amazon persistently faces the risk of substitutes, which is a strong force, which

undermines its online business performance. The low switching expenses depict that clients

can undoubtedly move from the organization to different retailers.

e. Threat of New Entrants (Weak Force)

New companies perhaps lessen the market share of Amazon. Thus, Amazon's clients

can easily leave it for the new companies, thus empowering them to enforce a strong force

counter to the Amazon Company. This situation results from little switching costs or the

common adverse effects of moving from one provider to another.

INTERNAL ENVIRONMENT ANALYSIS OF AMAZON

1. VRIO Model

Amazon's core competencies are discussed below.

a. Brand name
 Amazon is the largest online business brand globally, whose growth has been

motivated by a few aspects, and one of them is trustworthy that the company has prolifically

assembled. Despite being an overwhelmingly believed online business brand, the company is

acknowledged for its emphasis on client support, which has helped the organization fortify its

brand image. Consequently, this core competency is Amazon's wellspring of sustainable

competitive advantage.

b. Client Experience

Amazon has recently acquired a great deal of market growth. One of the fundamental

motivators of its evolving brand awareness and prevalence in the US and international

business sectors is its emphasis on user experience. Overall, client experience brings forth a

momentary competitive advantage for Amazon.

c. Research and Development

Innovative work at Amazon is a motivator of demand and sales just as prominent.

Amazon is the highest investor in pioneering work in the entire business (Onyusheva &

Seenalasataporn, 2018). This way, the innovative work capacities of Amazon and its

inventiveness drive the brand’s sustainable competitive advantage.

d. Distribution network

Amazon has one of the biggest distribution networks globally. In the retail business,

including online and physical retail, no other brand has similar assets and abilities as far as

distribution is concerned. Overall, this core competency of Amazon is the main wellspring of

its brand’s sustainable competitive advantage.

e. Product variety
 The enormous product varieties sold on Amazon's online business platform are also

drivers of the brand’s competitive advantage. No other online business or retail brand sells

quite an immense grouping of items as Amazon. As of 2019, Amazon’s platform had 2.5

million vendors. This is a sustainable competitive advantage that some other on the physical

or online retail brand would not have the option to coordinate easily.

2. Value chain

The primary activities of the Amazon company are discussed below:

a. Inbound Logistics

Overall, Amazon has no lasting contracts with its sellers to ensure the convenience of

products, explicit installment policies. FBA (Fulfilment by Amazon) is the basis of the

marketing corporation’s logistics of the business. Besides, the economies of scale are a

significant wellspring of value creation for inbound logistics of Amazon (Schreiber, 2016).

Amazon employs logistics to oblige Amazon Market, and commencing from lately; the

business has been providing logistics services to other persons.

b. Operations

Amazon’s activities are coordinated into three segments:

i. North America. This segment deals with sites centered in North America. Sales in

this section augmented by 33 percent in 2017 and 2018, contrasted with the past

years (Annual Report, 2018).

ii. International. This section runs globally centered sites. Worldwide sales

augmented by 23 percent and 21 percent in 2017 and 2018 correspondingly

(Annual Report, 2018).

processing, storing, and other support contributions for new companies. AWS

sales augmented by 43 percent and 47 percent in 2017 and 2018, contrasted with

earlier years (Annual Report, 2018).

c. Outbound Logistics

Overall, Amazon outbound logistics incorporates the following:

i. Fulfillment centers. The online business giant runs 109 fulfillment centers

globally, and the company fully uses automated innovation to supervise product

receipt, storage, selection, and consignment.

ii. Digital distribution. This deals with services and products that can be accessed

from the Amazon site.

iii. Physical stores. The online business giant, Amazon, has created US$4.3 billion in

revenue in Q2, 2018 (Gallagher, 2018), for sales from physical stores.

d. Marketing and Sales

The yearly international marketing expenses of Amazon company have been steadily

augmenting in the prior seven years to over US$13.8 billion in 2018; encompassing

publicizing and other short-term expenses that summed up to US$5.0 billion; in 2016,

US$6.3 billion; in 2017, and US$8.2 billion; in 2018 (Annual Report, 2018).

e. Service

Outstanding client support is a noteworthy basis of value creation for the online

corporation and cloud computing business. Amazon.com provides extraordinary client

services such that clients can contact Amazon by telephone, social media, chat, or email.

CSR AND SUSTAINABILITY

This model is the degree to which a firm addresses issues and commitments of its

more extensive partners. The moves a business makes far beyond the minimum legally

required in addressing cultural requirements and needs (Heikkonen, 2016). This implies how

far the organization reaches its customers and clients from the baseline, otherwise called the

minimum legal necessities. The four levels of CSR responsibility are discussed below.

i. Economic Responsibility

Investigating every level for amazon, on pecuniary responsibilities, Amazon has a

market cover of US$815 billion, stated by CNN money on 6th February. It comprises a 49

percent ROI (Return on Investment) on its twentieth commemoration, which is converted into

a generally excellent gauge mark on the pecuniary responsibility segment of the Carrol

model.

ii. Legal Responsibility

In 2014, the Guardian stated that amazon.co.uk, the greatest online store, produced

over £3.3 billion however did not pay a partnership levy to UK tax authorities. In this

innovative and worldwide era, it is difficult to conform to all authorities, particularly large

partnerships with global cash accounts and various currencies, but Amazon most often

violates the law.

iii. Ethical Responsibility

This is a more idiosyncratic criterion; what can be viewed as virtuous for somebody

can be considered erroneous for another person. However, looking at the human rights

hypothesis, which includes a definition of awareness of the uncommon decency and the
correspondent and inalienable rights of all persons from the human family, is the founder of

peace, justice, and freedom globally, as UN (United Nations) recommends.

iv. Philanthropic Responsibility

Amazon offers gifts to charity partnerships; they even have a website page, "smile

amazon." Notwithstanding, this kind of gift usually gives monetary incentives, such as tax

allowance, if the organization cares about the general public or needs to pay fewer levies or

possibly both. Amazon has these sorts of gifts on their Amazon Smile page.

Summarily, Amazon, as one of the huge organizations, has had its skirmishes, good

and bad times, yet the overall point of view of this organization is to give cheap items

globally, and it is undertaking it suitably. Most organizations have had moral, good, and

legitimate burden from internal just as external sources, so it is significant not to alienate a

particular organization yet to get familiar with Amazon’s potential. This potential starts in this

worldwide organization since it is looked up by everybody and has no yearly CSR report.

EVALUATION OF ANALYSIS

SWOT Analysis

a. Strengths

Amazon flourishes with strong client relations and the executive’s frameworks that

have made a client-driven service conveyance. Keeping information on the client helps the

organization offer individual or related products or services based on the client's

predilections. The organization has made vital collusions with different organizations to help

achieve predominant customer services. Logistics suppliers control expenses and construct a

solid value chain (Amazon Inc., 2017).

b. Weaknesses
 Amid the strengths that render Amazon a giant online business organization, the

organization has different shortcomings, for example, restricted business models and

capacities to intrude developing markets, reliance on external conveyance frameworks,

product flounders, tax avoidance cases, and high obligations that influence its growth and

development. The broad conveyance organizations and value battles with contenders add to

shrinking margins for the organization (Management Study Guide, 2019), which could bring

about losses,

c. Opportunities

To remain the top online business, Amazon needs to use its opportunities to advance

its services, differentiate, and promote client relations. Amazon has the opportunity to scale-

up by refining security and protection for online clients (Management Study Guide, 2019).

d. Threats

Amazon should quickly alleviate hacking and burglary concerns and secure its site to

maintain buyer protection and security. The transition to a cost-driving industry has become

an issue of worry, with contenders getting vexed that the organization is removing business

from them. The rivalry is another threat to Amazon.

RECOMMENDATIONS FOR GLOBAL DEVELOPMENT

From the SWOT analysis, it is clear that Amazon's tasks can keep outspreading, based

on the prospects in the business environment, just as the company's potentials. For example,

the organization can grow by venturing into new online business marketplaces, mainly in

high-development emerging economies. Remarkably, to handle the issues resulting from

internal and external aspects in the SWOT examination, it is recommendable that Amazon

keeps growing its business to strengthen itself against industry-explicit threats additionally.
Another recommendation is to develop new associations to expand the market scope and

strengthen its worldwide tasks counter to competition and associated key difficulties.

Amazon ought to use its low-cost structure to improve its benefit and competitiveness.

The organization's cost administrative role will be refined by putting resources into advances

toward offering professional assistance to clients at reasonable costs contrasted with its rivals

like Walmart. Amazon's low-cost methodology will augment clients' pool and boost its share

in the overall industry and contend well with rivals. Likewise, Amazon ought to consider

expanding the economies of scale to improve overall productivity (Flamand et al., 2020). For

instance, the organization exploit its low-cost structure to keep up its market position in the

worldwide market and simultaneously utilize such occasion to augment product

diversification. Amazon will even be beneficial while offering the least prices contrasted with

rivals because of its augmented sales volume.

Amazon relishes a solid brand both locally and globally, which it can use to develop

its business sectors globally. Through an all-around set-up worldwide brand, Amazon will

produce new items and keep extending its customer base in the global arena.

As an innovative and top organization in the online business industry, Amazon can

invest in advanced inventions like AI to hold its worldwide position in the market by joining

various strategies to offer quality services. Fundamentally, expanded investment in

innovation will prompt the creation of value items that will hold the current clients and attract

others. The organization ought to make top-notch items to upgrade its competitiveness

producing a refined brand. Furthermore, Amazon should refine its brand in the worldwide

market through social media platforms.

Amazon should start methodologies to limit shortcomings. The organization ought to

improve its Delivery Service Partners to use their organization and outsider suppliers to set
up proficient cost controls. Further, Amazon ought to make new conveyance stations through

an organization with different organizations to improve net revenue. The free conveyance and

delivery framework that declines the business's benefit capability should be swapped by

connecting outsiders to clients' expenses.

RECOMMENDATIONS FOR SUSTAINABILITY

Amazon profits by arising developments and innovations to remain the top online

business organization. The organization's services and products have helped it gain a

competitive advantage independent of periods of services or products. Nonetheless, the

organization needs to improve expansion techniques to not seem unfocused by transitioning

them to become client-driven.

Moreover, Amazon ought to grow the physical business portion in the following 4 to

5 years in various areas to build its physical presence. For example, it ought to distribute 10

percent of its yearly financial plan to make physical stores globally to lessen its online advent

that faces stiff rivalry from new companies and set up internet business organizations, such as

Alibaba (Onyusheva & Seenalasataporn, 2018). The physical presence will probably place

the organization on the competitive edge in business sectors that have not completely

received internet business, for example, non-industrial nations.

`The physical stores will empower Amazon to grow its market and increment its

ubiquity in developing business sectors. Additionally, Amazon should concentrate on a

client- driven advancement to make products directed toward addressing client needs. It

should also contemplate the market and buyer patterns to give customized items that can

contend well with those of rivals. For example, Amazon ought to develop top-notch cell

phones with low odds of deformities to rival set up brands like Apple. The company's

research and
development activities should concentrate on making unique products to improve their

competitive advantage.

Fundamentally, the client-driven advancement activity will probably diminish the

threat of substitute items due to the emphasis on quality services. Product quality is required

to be passed through steady development to attract devoted clients. For example, Amazon

ought to improve the ease of use to upgrade client experience (PLAYER, 2014). Moreover,

client-driven advancement requires more monetary interest in the research and development

projects of the entity.

Amazon has market diversification opportunities in developing nations. It should

make an essential section in business sectors in developing nations that have not embraced

online shopping. The new business sectors give development potential as there is a restricted

threat to new participants and stiff competition that is knowledgeable about developed

markets, for example, Europe and the US. Amazon should gain entry into new business

sectors to make the most of the current business opportunities that have not been attempted

despite the apparent significant expenses of advancement and integration of innovation.

Nonetheless, the company ought to dispense more assets to procure physical stores in the

developing markets to refine its brand.

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