Amazon's Business Model Analysis

This assignment requires you to delve into the intricacies of Amazon's business model. Examine its historical development, identifying key stages and turning points. Analyze the core elements that contribute to its success, such as its customer-centric approach, vast product selection, logistics network, and technological innovations. Furthermore, discuss the impact of Amazon's business model on the global marketplace, considering its competitive advantage, influence on consumer behavior, and implications for other businesses.

Running head: INTERNATIONAL BUSINESS STRATEGY
Amazon’s approach towards international business strategy
Name of the student:
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An insight into Amazon’s strategy, culture and resources
Amazon has achieved accolades and glory by catering to the specific needs and demands
of the customers across the globe. Making effective use of the social media has enabled Amazon
to expand the scope and arena of its business. At the end of the third quarter in 2015 in
September, Amazon’s revenue achieved a leap by 20% (Amazon.com.sg 2017). Numerically, the
revenue of Amazon at this time was 23.2 US billion dollars. The net income of Amazon was 79
US million dollars, which was a make up for the loss of 437 US billion dollars. The major drive
behind this was the vision of the personnel towards taking Amazon towards every corner of the
world. For this, the personnel made constructive plans, which emphasized on the judicious
utilization of the resources (Amazon.com.sg 2017). Typical example of this was the plan of
launching an online bookstore in 1995. This launch was a meager part of the resources planned
for expanding the arena of the business. The result of this planning was emerging successful in
aligning with the specific tastes and preferences of the customers apart from books such as
electronics, apparel, jewellery, home decor among others. In view of these items, it can be said
that Amazon has enough in its store for fulfilling the needs, demands and requirements of the
customers (Amazon.com.sg 2017).
The major drive behind this is the presence of skilled and efficient professionals, who toil
hard to increase the efficiency in the business activities. Exposing strategic vision towards the
execution of the business activities assists the personnel to achieve the identified and the
specified goals. Within the prepared strategy, emphasis is laid on the creation of goals, which are
achievable and realistic. Evaluation is carried out consistently in order to ensure the
appropriateness, effectiveness and feasibility of the goals in terms of the identified and the

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specified goals and objectives (Amazon.com.sg 2017). Meetings are an integral part of the
Amazon business. Members of the board panel are involved in these meetings for providing
approvals to the plans and proposals. One of an innovative concept of this strategic vision is the
utilization of survey and the feedback forms. These forms reflect the direct interaction between
the customers and the Amazon personnel. Even in the websites, there is a provision of customer
feedback.
Dealing with these feedbacks reflect the culture of the Amazon personnel. After the
personnel receive the contents produced by the customers, they preserve it in folders. As a matter
of specification, privacy cookies are implemented as soon as the customers initiate the process of
sending feedbacks (Amazon.com.sg 2017). These cookies reflect the adherence and compliance
with the standards and protocols of marketing legislations. Along with this, the Amazon
personnel ensure that while advertising the newly launched products, the individual sentiments
of the customers do not get affected. Behavioral approach of the personnel is also an important
part of the organizational culture of Amazon. Displaying cooperative approach towards the
customers enhances the personality of the Amazon personnel. This includes effective handling of
their complaints, changing defective goods among others (Amazon.com.sg 2017). Patience is an
integral part of handling the complaints and queries of the customers in case of the Amazon
personnel. The behavior exposed by the personnel is evaluated in the performance appraisals
conducted by the managers. The major drive behind this is to remember the fact that the business
revolves around the customers.

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Microenvironment of Amazon
Microenvironment of Amazon relates with the SWOT analysis, which is described in
detail in following:
Strengths  Cost leadership
 Thirst to do something innovative
 Focusing on strategic growth
Weakness  Diversion from the focus area
 Dangers in cost optimization in terms of shipping the items
 Focus on online retailing- an obstacle in business expansion
 Zero margin shipping cost nullify the profitability achieved through the
use of business models
Opportunities  Innovation in online payment system
 Advertising products under own brand
 Escalation in the portfolio offerings
 Launching more websites
Threats  Cyber crimes
 Financial crisis resulting to illegal scandals and issues
 Tough competition from the online retailers
Table 1: SWOT analysis of Amazon

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Focusing on the strategic growth helps the Amazon personnel to come out with
something innovative for the customers. Motivating and encouraging the customers for making
strategies enhances the leadership of the managers in Amazon (Amazon.com.sg 2017). Delving
deep into the business of Amazon, it aims towards the achievement of large-scale profit margin.
However, serving the customers faithfully enhances the personality of the personnel in the minds
of the customers. Because of this, the customers get enough scope towards exercising their
buying power. In view of this, strategic vision towards fulfilling the needs, demands and
requirements of the customers is one of the greatest strengths of Amazon.
Diverting from the focus area nullifies the plans of the personnel towards catering to the
needs of the customers. This is irrespective of the fact that the plans created are strategic. As an
example, launching online bookstores narrowed down the vision of business expansion, limiting
the avenues for penetrating into the foreign markets (Amazon.com.sg 2017). Consistency in this
process would compel the Amazon personnel to lose the competitive advantage from the other
brands. Irrational approach towards shipping the orders have compelled the personnel to lose
profit margins. This leads to the obstacle of optimizing the costs, depriving the customers from
possessing quality and branded products. Threat of substitute online retailers hampers the
expansion plans of Amazon. As per the business critics, misutilization of the business models
have made Amazon’s profitability seem insignificant (Amazon.com.sg 2017). Herein, the
strategic vision of Bezos is nullified, compelling him to put on his thinking cap for re-thinking
the process of executing the business activities.
Innovating the online payment system acts as an opportunity for Amazon in terms of
stabilizing the financial parameter. If Amazon personnel advertise the newly launched products
under their own brand, the stock of customers would increase. Escalation in the portfolio

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offerings would reduce the queries of the customers in terms of the product specifications. This
is applicable for the apparels, tinned and canned food items. Apart from this, launching more
websites would connect the Amazon personnel to customers across the globe (Amazon.com.sg
2017).
Cyber crimes pose as a threat for the Amazon personnel in terms of advertising the
products to the customers. Hacker interventions, viruses and malfunctions in the systems stall the
business activities of Amazon. This stalling deprives the yearning of the customers regarding the
possession of quality and branded products. Along with this, the cyber crimes detach the
customers from the personnel. This is because the personnel cannot operate the systems due to
virus attacks. Negligence towards the adoption of security software compels the personnel to
encounter illegal scandals, which spoils the reputation of Amazon as a brand (Amazon.com.sg
2017).
One of the other threats for Amazon is tough competition from the emerging online
retailers. Tagging this as a threat reflects the non-compliance towards the competitive policies,
blurring the transparency in the business activities. This is a main deviation from the business
policies and procedures.
Internal control of Amazon
The managers internally control the operations of Amazon. As a matter of specification,
quality tests are conducted by hiring the quality experts. Consistency is maintained in these
quality tests, which helps the personnel to determine the specific tastes and preference of the
customers. As a matter of specification, the identity of these experts is verified prior to their
admission in the Amazon workplace. This verification is important in terms of maintaining the

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security and safety of the organizational data as well as the employees. In view of these aspects,
it can be said that quality control is an integral part of the Amazon business (Amazon.com.sg
2017). This control helps the personnel to avert the instances of adulteration, resulting in
customer and employee turnover.
Macro environment of Amazon
Macro-environment of Amazon is its PESTLE analysis.
Political  Political instabilities
 Harsh governmental policies
 Governmental support for cyber
security
Economical  Inflation
 Fluctuation in the prices of the raw
materials
 High exchange rates
Social  Alteration in the lifestyle of the
customers
Technological  Technological innovations-adoption of
latest and modern software
Legal  Product legislation
 Regulations regarding the import and
the export activities

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Environmental  Environmental laws and directives
 Reducing carbon footprints
Table 2: PESTLE analysis of Amazon
Harsh policies make it difficult for the Amazon personnel to execute the import and
export activities. On the contrary, governmental support helps the personnel to increase the
efficiency in the business activities (Amazon.com.sg 2017). Within this, focus on mitigation the
cyber crimes is an innovative initiative in terms of enhancing the stability in the bondage
between the customers and the personnel. Delving deep into this context, Governmental support
has positive as well as negative connotation towards the import and export activities of Amazon.
Plans for mitigating the cyber crimes relates with the positive contribution of government. On
the contrary, introducing harsh trade tariffs on the exports is a negative example, which deprives
the foreign customers from possessing branded products.
Along with this, political unrests act as obstacle in the launch of innovative and quality
products. This is because of the loss in the property and lives. Aspects like inflation; fluctuation
in the prices of the raw materials and high exchange rates is an addition to these instabilities
(Amazon.com.sg 2017). It is the urge of the personnel in terms of fulfilling the needs, demands
and requirements of the personnel. Exposing rational and conscious approach in carrying out the
marketing activities enhances the bondage between the customers and the personnel, helping
them to achieve success.
However, the needs of the customers are ever changing. Adoption of social media has
enabled the personnel to increase the trafficking of the audience towards the brand. Uploading

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the image and the other specifications of the product mitigates the queries of the customers
regarding its quality (Amazon.com.sg 2017). Keeping contests for the customers such as sending
selfies with the purchased products increases their interest towards making Amazon as the first
choice while doing online shopping. Rating the products helps the customers to exercise their
purchasing power. Accordingly, Amazon utilizes its staffs for producing customer centric goods.
The result of this utilization is the escalation in the revenue and profit margin. Legal compliance
reflects the transparency in the business activities. Typical evidence of this is the product
portfolios, which informs the customers regarding the specific processes, which the item has
undergone (Amazon.com.sg 2017). This compliance acts as an agent in averting the illegal
instances, provided the personnel expose conscious attitude towards preserving the ecological
biodiversity. Herein lays the appropriateness of the environmental directives while producing the
goods. Within this, reducing carbon footprints acts as a wise step for Amazon in terms of
emitting less smoke, resulting in the preservation of biodiversity.
Management of value chain by Amazon
Amazon inbound logistics
Value chain analysis includes analysis of the values, which helps Amazon personnel to
achieve competitive advantage over the other brands. Possession of a wider supply chain
network helps in the efficient execution of the logistics operations. Registering with the
government helps the personnel in the shipping activities. Customer obsession, innovation,
invention, simplification and thinking big are the values, which defines the business of Amazon.
The web services have altered the business scenario of Amazon both internally and externally.
The board of Directors monitors the operations executed by the Amazon through the evaluation

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of the annual reports and data (Amazon.com.sg 2017). The network chain of Amazon includes
cloud computing through Pinterest, Dropbox and Airbnb, which are the major clients. The
position of the web services is such that it has enough in stock for the stakeholders and
shareholders.
Amazon outbound logistics
Usage of social media is a gradual progression from the internal environment to the
external environment. Introduction of robotics is an innovative concept in terms of altering the
technological parameter. This usage has resulted in renovating the products and lowering the
costs of the products. Reliance on the services of UPS, FedEx and TNT assists the personnel to
run their operations even in night (Amazon.com.sg 2017). Plans are in full process regarding the
launch of air services. However, the costs of these services are sky rising, which needs flexibility
in the financial parameter. Evaluation of the current financial resources adds value to the
estimations regarding the cost of the products and services. Moreover, it also provides time to the
personnel to purchase additional stock for manufacturing the products. In order to gain
independence from the third parties, Amazon personnel introduced Amazon Prime Air, a drone
delivery system and Amazon Flex services, delivery system through metros (Amazon.com.sg
2017).
Amazon marketing and sales
Utilization of business model efficiently and effectively has helped the Amazon
personnel to increase efficiency in the business activities. Expansion from the plan of online
bookstore to toys, electronics, apparels, home décor and other items reversed the strategy of “sell
all, carry few”. Effective and judicious utilization of social media expanded the scope and arena
of the Amazon business. As a matter of specification, the market expenses of Amazon in 2016

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encountered an escalation in the past 6 years (Amazon.com.sg 2017). Numerically, it was 7.2
billion US dollars. Social media promotes the products and services to the customers, helping the
personnel to select the targets and increase the sales revenue. Escalation in the sales revenue
simultaneously increases the profit margin.
Services
Amazon mainly has web services providing the opportunity to the customers to do online
shopping. Variety of products in various ranges is an agent for the customers in terms of
exercising their purchasing power. Providing coupons as gifts and appreciation is also
accounted as one of the other services of Amazon in terms of expanding their business
(Amazon.com.sg 2017). In order to be financially strong, Amazon has introduced Paytm
services, which transfers money in short time. All these services are intended towards the
achievement of large-scale customer satisfaction.
Strategic approach of Amazon towards growth
Strategies act as a central document in terms of systematizing the business activities. This
is applicable for all of the companies and organizations including online retail brand such as
Amazon. The following is a year wise projection of Amazon’s strategic vision towards the
achievement of sustainable growth.
In 1995, Amazon launched an online bookstore. Realizing that this launch is acting as an
obstacle in business expansion, the personnel adopted strategic vision towards shifting the focus
on innovating other items. Herein lays the appropriateness of the business models, which
included price selection, speedy delivery and quality customer service (Amazon.com.sg 2017).
Herein, the focus of the personnel was free movement of cash from the internal environment to

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the external environment. However, the personnel in this movement exposed cautious approach
towards tracking the movement of the cash. This is in terms of averting financial instabilities. As
a matter of specification, the main components of the planned strategy were long term
investment, gaining more market share and value creation. Creation of strategies proved fruitful
for Amazon in terms of accumulating a lion’s share in the e-commerce sector (Amazon.com.sg
2017). However, lack of oriental approach in abiding by the strategies compelled the personnel
to encounter loss in terms of achieving business expansion.
In order to attract more customers, Amazon introduced Associate Program in July 1996.
This was an extension from the official introduction of Amazon business in 1995. In spite of
limited stock of books, Amazon emerged successful in offering 2.5 million book titles, which
recorded the sales revenue to be 15.7 million US dollars. However, the loss of 5.7 million dollars
nullifies the strategic vision exposed by the personnel towards making the online bookstore
services a grand success. The Amazon Associate Program provided a platform to the smaller
websites to expand their business (Amazon.com.sg 2017). Operations of Amazon increased,
however, the partners found it difficult to carry out the shipping activities efficiently and
effectively. Introduction of warehouse in 1997 saw an unprecedented growth in the sales
revenue. As a matter of specification, the sales revenue escalated to 147.8 million US dollars as
compared to the previous year. Along with this, the stock of customers also increased from the
recordings of the previous year.
All these achievements compelled Bezos to rethink which business model would be
appropriate for Amazon in terms of altering the business scenario. Therefore, in 1998, Amazon
personnel expanded their vision to the goods, which can be shipped. This included electronics,
games and playthings. As a sequential step, Amazon launched Zshops, which requested the

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merchants to set up online stores through subscription at the fees of 10 US dollars
(Amazon.com.sg 2017). Along with this, they had to pay 1-5% transaction cost for the sales
value. The profit from these Zshops created new value propositions by the end of 1999. This
created escalated the sales revenue of Amazon to 1.6 billion US dollars.
In the early phases of 2000, Amazon offered technological services to the clients through
the means of Amazon Enterprise Solutions. Entering into partnerships enabled the personnel to
enhance the quality of infrastructure for selling the products to the customers. In spite of
technological upraise, the stock prices collapsed by 1.4 million US dollars, compelling the
personnel to encounter instances of bankruptcy.
In the third quarter of 2014, Amazon personnel made plans for enhancing the parameter
of technology and content. Here, strategies were made for investing 12% of the market shares
(Amazon.com.sg 2017). This was an integral part of the strategy in terms of adding to the stock
of products. As a matter of specification, licensing the services such as music and video
streaming took the strategic vision to the next level. Licensing reflects registration for the
products and services, however, absence of oriental approach towards the legal procedures
compelled Amazon to encounter utter loss in 14 years of service. Blames came on the founder in
terms of exposing indifference towards the achievement of growth. Putting blames deviates from
the components of the strategic vision. On the contrary, if the personnel indulged in meetings, it
would have proved helpful in terms of achieving positive outcomes in the business activities.
All of these achievements and losses are a result of the approach exposed by the Amazon
personnel towards the achievement of sustainable growth. Realization of the wrong business
model was a turning point in the business of Amazon. Evaluation was an integral element, which

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enhanced the awareness of the personnel towards the effectiveness, appropriateness and
feasibility of the strategies in terms of the identified and the specified goals (Amazon.com.sg
2017). Inclusion of the services, employees, resources within the arena of strategies brought to
the forefront the misutilization of the business model. Consistency in experimentation is the key,
which would enable the personnel to achieve sustainable growth amidst the competitive
ambience of the Singapore market.

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