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Business Analysis of Amazon: SWOT and PESTEL

4105 words (16 pages) Business Assignment

30th Nov 2020 Business Assignment Reference this

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Table of Contents

Introduction

Company Overview

Company Vision and Mission

Amazon’s Cooperate Social Responsibility

Assessment from an Virtue Ethic Point of View

Carroll`s Four-Part Definition of CSR

Management Strategy Process of Amazon.Com

Innovation Management

Diversification

Human Resource Strategy Management

Acquisitions

PESTEL analysis

Political

Economic

Social

Technological

Environmental

Legal

PESTEL Summary

Industry & Competitor Analysis (PORTER’s Model)

Power of suppliers

Power of Buyer

Threat of New Entrants

Threat of Substitutes

Competitive Rivalry

Porter’s Five Forces Summary

Analysis of Competitors

Financial Analysis

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

Conclusion

Amazon Business Analysis

Introduction

Analysis of Business is a method of identifying the needs and problems of the business and creating answers to these questions. These solutions should aim at the same time to update, consolidate material changes, take measures and make improvements to establish a sequence of activities that is determined and feasible based on the outcome. Different devices and strategies are used, depending on the circumstances and need; some of these are PESTEL, PORTER model, SWOT research, and these devices are used as often as possible in basic research in the basic stages (Bowman et al., 2012).

Company Overview

Founded in 1994 by Jeff Bezos, Amazon.com, based in Washington, is a world leader in online business. It was the first organization to put the idea of ​​selling products on the Internet. First, Amazon.com began as an online bookshop, and guided its Amazon prosperity to expand various articles, such as foundations, music, hardware, commodities, toys and more (Cowles, 2016). Today, Amazon sells all the items on the planet. Amazon.com has created various regional configurations for web entries for different nations, for example: Canada, Great Britain, Germany, France, China and Japan.

Amazon.com is named after the world's largest transmission, Amazon, which is marked from start to finish with bolt logo. Customer loyalty is considered the most important requirement and all items in the set of cards are filled with shops (Correll et al., 2016). In the early days, Amazon.com was not effective and did not bring any benefits, enabling financial specialists to reconsider their portfolio. Business processes and procedures required significant reform. They had to reduce their costs to increase their profits and no longer had to limit themselves to some items.

Company Vision and Mission

Amazon vision is:

 “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

It also shows that amazon.com must be a global electronic retailer that gives value to quality products and by using the latest innovations to build the customer database and increase brand reliability (Bowman et al., 2012). To guarantee the benefits of the partners to the organization grows and takes a virtual mall in which customers can buy from the comfort of their home.

 Amazon’s Cooperate Social Responsibility

A sharp look at CSR samples on Amazon.com, the world's largest online retailer. With some problems and evaluation of these problems based on CSR opinion, the report has provided an alternative perspective on the business practices of the organization (Ipeirotis, 2010).

Surprisingly, despite the size and size of its business, Amazon does not produce an annual management capacity report or CSR. The organisation's main source of data on the range of projects and maintenance activities of the organization remains the official website of the organization (Farache and Perks, 2010).

Assessment from an Virtue Ethic Point of View

To consider the open appropriations in Amazon, the ethical moral view is used. This hypothesis highlights the nature of the work and the attitudes shown. One view is that these benefits are different in terms of profit and damages. In both cases, Amazon's behaviour, as in working conditions, showed that the qualities demonstrated by the organization are of benefit and harm to the people in them (Correll et al., 2016).

Because of the expenditure of the funds, the organization demonstrated its terrible qualities by deliberately using the escape clause in the regulation. While the basic progress in employing people and applying for sponsorship of excellent transport would be considered, bad behaviour would be bad behaviour.

Carroll`s Four-Part Definition of CSR

The four-part hypothesis was created in 1979 and then became a pyramid model. The pyramid is shown below and should be decoded from the base up to its importance.

  • Economic responsibilities
  • Ethical responsibilities
  • Legal responsibilities
  • Philanthropic responsibilities

The Amazon evaluation showed that the organisation's approach should be as productive as possible for its investors. Bezos (2000) says, "Amazon strive for the benefit of all the companies amazon work with," the organization has been shown to be productivity focused (Onyusheva and Seenalasataporn, 2018). Working conditions and labour efforts, Amazon employs more than 51,000 specialists worldwide at present. A similar section dealt with some terrible problems relating to working conditions and trade union efforts. Regardless of this, it is essential to have a significant level of professions practiced by the youth organization. Amazon's moral behaviour has addressed many minor problems over the past decade (Ipeirotis, 2010). Old costs to online retailers used during the first decade and reintroduced by certain organizations relate to different costs, depending on the particular job department or nation.

Management Strategy Process of Amazon.Com

Looking at relatively good sources, Amazon realized that doing business not only makes a plan and a fruitful application of a particular technique, but also how aggressive jobs are done or retained (Cowles, 2016).

Innovation Management

Amazon's main method is customer-oriented development. As they say (Onyusheva and Seenalasataporn, 2018), "Some companies consider it is productive to do an incredible methodology development." This is why it has brought an incredible focus to non-stop development by updating innovations to update the customer experience.

Diversification

Another system provider used for Amazon is expanding. They used both the expansion of the articles and the improvement of the business. From time to time, they became aware of new products to meet the needs and requirements of customers (PLAYER, 2014). That is the explanation for the reason that many customers at Amazon today are visiting the site and serving their needs.

Human Resource Strategy Management

Human resource undertakes important tasks to achieve a company. As (Ritala et al., 2014) says, "There is a company's ability to attract talented people and keep it vital for their prosperity." Amazon has an incredible focus on strengthening the supervisory group; From time to time, they delegate many directors and leaders. From the business methodology and the human resources department, the system has had a significant impact on the presentation of the club to the elite. These two methods need to be linked.

Acquisitions

Another system used by Amazon for business development is acquisitions. As indicated on (Stone, 2013), one company’s acquisitions will give its competitors one and give the buyer access to new markets.

PESTEL analysis

PESTEL research is designed to identify current and future patterns in political, financial, social, legitimate, environmental and mechanical situations, to influence the company's representation and to take steps to avoid shortfalls (Stone, 2013).

Political

  • Government strategies combine competition and progress by changing how telecommunications and online businesses are implemented
  • Moderation and incremental use of the network
  • Provision of resources for national government framework conditions by government (Euro screen)
  • Use reliable, faster and better Internet for national customers
  • Reduce industry competitiveness strategies compared to large companies in the EU and North American areas.
  • Expansion of business areas was increased through mergers and acquisition.

Economic

  • In order to control the expansion, loan charges have changed, thus affecting the cost of UK customers.
  • Subsequent editions in the US have been destroyed and increased in Asian markets, with financial developments mainly due to the credit crunch and the progression of progress
  • It paves the way for other global markets, such as India and China
  • Somewhere in the range of 2006 and 2011, online commerce is developing significantly, with agreements increasing by more than 100%. An increase in the number of web clients in the US supports this development. Which has increased by about 85% since 2000.
  • Reinforce potential customers to Amazon.com
  • The annual discretionary cash flow exceeds £ 5,000. By 2011, there will be approximately 620 million family units, the majority of which are in the family-owned Asia-Pacific region near Western Europe. (Euro international screen of national measures)
  • Increase the number of potential customers for Amazon.com so that the globalization idea ends

Social

  • Inclusivity and extensive use of long-term interpersonal communication online
  • A margin was added to promote the article and website
  • Reducing online purchases will result in an accessible interface for customers and increase the number of items.
  • A response to reduce security and financial risks for customers should be considered.
  • Web development from 2002 to 2011 is 288.7%. The Internet (Ritala et al., 2014) is used by 28.9% of the total population.
  • Massive abuse market and accessible institutions

Technological

  • With the development of the latest advances, telecommunications, web access at a cheaper cost were expanded
  • The increase in the number of specialized equipment customers, as miscellaneous devices, iPods and televisions, web access for web-based purchases has increased.
  • The development and enhancement of “fast” (broadband) Internet service providers has widened the use of rich media.
  • Rich Media applications are efficiently available to customers on the Web.

Environmental

  • Careful about pollution and temperature rise on Earth
  • Less trips and more purchases on the Internet
  • Corporate social responsibility and global effort to practice environmental awareness
  • Company can blend the idea of ​​green within mailing techniques and grouping

Legal

  • There are no common policies for e-commerce covering the world, for example: the US Government Exchange Commission and the UK Information Security Act.
  • They need to know the right of residence and the law that applies in the world.
  • European electronic sales order
  • It may affect the development of e-commerce across the continent, if precise guidelines are included
  • The law of creating an electronic trademark
  • Typical legal practices arise and create safer and simpler legal relationships.

PESTEL Summary

PESTEL's factors suggest that Amazon.com attractive global market is being abused. Asian markets have recorded major openings in later history (Stone, 2013). The progress and use of the Internet for communication from person to person has created new opportunities for abuse. The air conditioning of the invited activities in Amazon.com should be strengthened, since meaning has now been extended to conditioning. Similarly, Amazon.com must be a global organization that follows one global methodology encompassing fundamental laws for all.

Industry & Competitor Analysis (PORTER’s Model)

The investigation of the five Porters forces is used to investigate the quality of the various companies and can therefore help identify sources of competition in a particular industry (Ritala et al., 2014).

Power of suppliers

  • The suppliers are in charge, as some brands and exceptional items cost little. For example, the Harry Potter book distributor, which is favourable for Amazon.com, chooses
  • E-retail sets out a case and facilitates organizations selling goods to customers without having a stranger in the middle.
  • The intensity of suppliers increases when a shared supplier controls certain types of items
  • Effective access to products provides low-ability suppliers and must be up-to-date.
  • The market, the widest of suppliers in this line, has been expanded, increasing the number of suppliers.

Power of Buyer

  • The intensity of the buyers has increased by the extensive competition in the market. The increasing number of online stores and the areas of correlation are becoming increasingly difficult for electronic retail business (Stone, 2013).

Threat of New Entrants

  • The initial capital required for such a company is very low, as it does not include storage and resource costs and must update innovation.
  • The strong image consolidates brand relationships and good customer confidence.
  • With the challenge at the end of the day, more businesses and values focus on economies of scale and consider business income across profits.
  • Leaders in the online retail industry believe that customers are reliable and database based when managing costs.

Threat of Substitutes

  • The latest promotional variables, for example, are feeling, touching, listening to physical business; leave a good impression
  • One of the main threats to Amazon.com is online rental rather than buying at texbookflix.com, bookrenter.com, which greatly reduces the costs and the garbage pile.
  • Web is a global shopping centre where customers can access data and goods that have greatly improved their quality, free of charge and online from abroad.
  • Amazon have electronic libraries, dollar stores and pounds that are more dangerous now.
  • Postal order, advertising placement, lists despite not being prominent and powerful, but still risk buying it on the Internet

Competitive Rivalry

  • The web index plays an important role on the part of the buyer, as it acts as an interface between the buyer and the purchaser, creating openings and public relations for other electronic retailers.
  • Due to low costs of sending speculation, still a number of related online stores that reduce the challenge.

Porter’s Five Forces Summary

The challenge in electronic commerce is unusual. Some small societies do things worse from time to time. Amazon.com are the main competitors of B&W and E-Sound.

The danger of small players and new participants who can compete in a similar way to Amazon.com is very low (Correll et al., 2016). At the time buyers look at the costs of the product, they also consider the image of the brand. If they are solid, a large number of customers expect more than less valuable administration.

Analysis of Competitors

Amazon.com has a great offer and a similar number of sites that compete with Amazon.com. Most electronic retailers focus on selecting items to present in the current market or open new markets around the world, or both, to keep economies of scale that help them grow business-based speed on the web (Ipeirotis, 2010). When thinking about the breadth of the product range and what foods are offered in the agricultural market, eBay poses a direct challenge to Amazon.com. However, Amazon.com is the leader in the current pattern, and it is vital that product offerings are expanded and become pioneers.

Financial Analysis

In 2009, Amazon transactions increased by £ 9.52 billion, 42% more than last year to £ 24.51 billion, but 28% more of the cash stock. They also benefited from speculation in customer administration; in any part of the world, net income is not high because of the increase in income. In contrast to the reliable increase in tenders, the margins were changing, although their advantages are low compared to sales. The reason for this is economies of scale and competitive advantages. Amazon.com has seen a massive increase in dynamic customer numbers in the last 50% of 2009 (Farache and Perks, 2010). Normal income / customers increased by more than £ 90 in the last quarter, an insignificant 63% increase over the previous quarter.

In any event, the number of tenders increases, and dynamic customer numbers greatly increase their costs regardless of innovation costs. £ 274 million, 84% more than in the last quarter, was spent on advertising. They helped promote paid Internet search engines, improve site design and improve content (Pandit and Poojari, 2014). Similarly, they went into war with their competitors to tie buyers together by reducing electronic product costs and convincing buyers to buy them, increase their income and customer numbers.

Annual revenues of Amazon from 2004-2018

Amazon has huge savings and can be used to build imaginative and innovative death-related work programs to consolidate a unique global methodology and create growing geographic markets to create an incentive for partners and customers (Onyusheva and Seenalasataporn, 2018).

SWOT Analysis

From detailed internal and external analysis, it can be found and summarize Amazon.com strengths, weaknesses, threats and opportunities from the following SWOT analysis (Farache and Perks, 2010).

Strengths

  • Amazon.com affiliate and merchant Program
  • Best inventory and logistics
  • Customer focussed vision
  • Diversified product line
  • Geographical presence
  • Globally recognised brand
  • Highly skilled employee base
  • Huge economies of scale
  • Incorporation of latest technology
  • Research and development programmes

Weaknesses

  • Low cash flows
  • Lower market share in countries like India and china
  • Lower profit margin due to high competition
  • No physical stores

Opportunities

  • Advancement of digital technology
  • Increase in e sales and growth of e retailing
  • Increase of online shoppers in Asian markets
  • Open options for expansion via M&A.
  • Popularity of social networking
  • Rise in consumer spending across the globe
  • Tremendous growth in digital downloads

Threats

  • Applicable Patent regulations
  • Concentrated business vision
  • Huge competition as it requires low capital
  • Piracy
  • Vastly dependent on vendors

Conclusion

The inspection found that there is an extremely favourable position at Amazon.com and that it has a strong position against its competitors. There are many opportunities for development, but it is also necessary to follow a reasonable commercial technique. Amazon.com financial health shows that there is improvement, because it is a part of the European Union and companies are developing on the planet. The largest room for Amazon's manoeuvre is based on its ease and offers an incredible choice of items to its customers. At this time, with the established framework and the cost of keeping the system low, Amazon can reduce costs among its physical friends and still achieve advantage. The customer service organization, which gives its image, speaks for its support and great thanks. Amazon's effective commercial methodology offers a solid profit result.

References

  • Bowman, M.S., Soares-Filho, B.S., Merry, F.D., Nepstad, D.C., Rodrigues, H. and Almeida, O.T., 2012. Persistence of cattle ranching in the Brazilian Amazon: A spatial analysis of the rationale for beef production. Land use policy, 29(3), pp.558-568.
  • Correll, N., Bekris, K.E., Berenson, D., Brock, O., Causo, A., Hauser, K., Okada, K., Rodriguez, A., Romano, J.M. and Wurman, P.R., 2016. Analysis and observations from the first amazon picking challenge. IEEE Transactions on Automation Science and Engineering, 15(1), pp.172-188.
  • Cowles, B., 2016. Question mark culture: how culture affects entrepreneurship at Amazon.
  • Farache, F. and Perks, K.J., 2010. CSR advertisements: a legitimacy tool?. Corporate Communications: An International Journal, 15(3), pp.235-248.
  • Ipeirotis, P.G., 2010. Analyzing the amazon mechanical turk marketplace. XRDS: Crossroads, The ACM Magazine for Students, Forthcoming.
  • Onyusheva, I. and Seenalasataporn, T., 2018. STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE AND DIVERSIFICATION TECHNOLOGY: THE CASE OF AMAZON. COM INC. The EUrASEANs: journal on global socio-economic dynamics, (1 (8)), pp.48-63.
  • Pandit, V. and Poojari, A., 2014. A study on amazon prime air for feasibility and profitability: A graphical data analysis. IOSR Journal of Business and Management, 16(11), pp.06-11.
  • PLAYER, G.T.H.T., 2014. Amazon. com, Inc. Strategic Management and Business Policy: Globalization, Innovation and Sustainability.
  • Ritala, P., Golnam, A. and Wegmann, A., 2014. Coopetition-based business models: The case of Amazon. com. Industrial Marketing Management, 43(2), pp.236-249.
  • Stone, B., 2013. The everything store: Jeff Bezos and the age of Amazon. Random House.

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