Porter's Five Forces Analysis of Amazon

The provided document is a solved assignment that applies Porter's Five Forces Analysis to Amazon.com Inc. It includes references to various books and journals related to digital entrepreneurship, global marketing trends, and international market entry strategies. The assignment also provides a summary of the analysis, highlighting the importance of selecting appropriate customer segments for business success.

7755
GLOBAL MARKETING
AND DIGITAL BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
ORGANIZATIONAL PROFILE AND INDUSTRY ANALYSIS ................................................3
Background of the organization ............................................................................................3
Porters five force analysis......................................................................................................4
SITUATIONAL ANALYSIS..........................................................................................................6
PESTLE analysis ...................................................................................................................6
SWOT analyses......................................................................................................................8
ANALYSIS .....................................................................................................................................8
Internationalization Theory ...................................................................................................8
Cultural factors.......................................................................................................................9
Adapted Strategy ...................................................................................................................9
Home nation's competitive advantage ..................................................................................9
MARKETING ACTIVITIES.........................................................................................................10
Segmenting, targeting and positioning ................................................................................10
Branding ..............................................................................................................................11
Consumer trends ..................................................................................................................11
ONLINE ACTIVITIES .................................................................................................................11
Effectiveness of Online presence ........................................................................................11
RECOMMENDATIONS...............................................................................................................11
Suggestions...........................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Global marketing can be defined as the procedure of making adjustment in promotional
strategies in order to adapt to the conditions of other nations. It is mainly concerned with selling
products or services at international level. International marketing is important in context of
exploring as well as capturing different opportunities such as increase in market share as well as
sales, customer base, profitability etc. During the last few years there has been great
advancement in the technology which has provided enterprises an opportunity to mark their
online presence and it has enabled firm to promote goods at international level (Oyewole, 2018).
The digital technology will help an enterprise in reaching to the wide number of customers.
Digital marketing can be defined as advertise through digital media. In context of marketing,
digital media such as Facebook is very much useful in order to promote goods or services global
level.
Research report emphasizes on analysing the online marketing as well as online business
practices of an enterprise in context of Amazon UK. It is multinational E-commerce company.
Amazon is a world largest online retailer. Study will emphasize on highlighting the important
factors which have direct as well as significant impact on an organisation business performance.
Aim of the plan is to help an enterprise in improving marketing activities. Report will have focus
on measuring the effectiveness of online presence. Assignment will include some suggestions
that can be utilised for improving marketing activities.
ORGANISATIONAL PROFILE AND INDUSTRY ANALYSIS
Background of the organization
Amazon UK is global company which has focus on E-commerce, cloud computing and
artificial intelligence. Disruptive innovation strategy has assisted an organization in achieving
leading position in an industry. Amazon UK is among the largest E-commerce market place in
context of revenue as well as market capitalization. Amazon has its own website through which
it sells goods and share business information with customers. It is the largest internet
organization in terms of revenue (Kent, Dennis, Cano, Helberger and Brakus, 2018. ). In year
2016, Amazon through its website has attracted 130 million customers. Business entity has made
huge capital investment for increasing its server capacity for its websites. Amazon has enabled
users or their clients to submit the reviews about the products or service, this strategy has
assisted firm in developing strong relationship with people. Customer engagement or public

relation is considered to be as the good strategy as it provides organization an ease in influencing
people to buy products or services. It is very much crucial for those companies who are engaged
in digital and global business to built strong relationship with public. In addition to this, an
organization drives many of the sales through third party seller, these are those people who sells
goods on Amazon. Amazon has to pay third party a certain amount of commission for referring
customers. An organization also uses Google ads for promoting their products and services.
In addition to this, Amazon has also adopted Multi level E-commerce strategy. An
organization has focused on strengthening their relationship with consumers. An enterprise has
also adopted integrating marketing approach. Business entity utilities various marketing channel
such sponsored search, social media, online advertisement for promoting their products and
services at global level (Watson, Weaven and Palmatier, 2018.). Amazon accounted for approx.
forty-four percent E-commerce sales during year 2017.
Porters five force analysis
It is basically a business analysis model. Porters five force model is an analytical
technique which can be utilized by manager of Amazon UK for determining the intensity or level
of competition in an industry. This hypothesis can also be utilized for evaluating competitive
strength and position of an organization. The major competitors of Amazon UK are Walmart.
Threat of new entrants : It is low. Entrance of new companies in an industry can lead to decline
in market share of Amazon UK (Brown and Holt, 2018. ). There is less threat of new entrant as
the cost of brand development in online retail business is very high. In addition to this, there are
fewer chances of entrant of new companies as there are already many giants firms which has
gained customer loyalty and has captured wide market share, it would be difficult for new firm to
establish their position in e-commerce industry.
Amazon UK needs to set high standards for products and services, this will assist an
organization in creating the big barriers in context of entry of new companies in this industry.
Threats of rivalry among existing firms: It is high. Amazon UK has to compete with strong
competitors. The components which are responsible for strong competition are high
aggressiveness of companies, availability of substitutes, low switching costs etc. The different
marketing strategies such as discounting pricing or other schemes launched by Walmart as well
as other competitors has direct and significant effect on the sales of Amazon UK.

Threats of substitute: It is high. There are many financially strong organization in an industry
those firms can easily develop and launch substitute products. In addition to this, small
organization can also enter into market by introducing substitute. An Amazon UK in order to
reduce such threat can adopt product innovation strategy (Checchinato and Hu, 2018). In
addition to this, business entity needs to concentrate on delivering the high quality customer
service. An enterprise is required to provider high value proposition to clients.
Bargaining power of buyer: It is high. The major forces which have provided customers with
high bargaining power are high quality of information, low switching costs and high availability
of substitutes. Buyers or shoppers can encourage business entity to reduce the prices of goods
and services. It is required by manager in Amazon UK to ensure that all the information related
to the company, products are easily accessible by shoppers. In addition, this, an organization can
adopt customer centric approach.
Bargaining power of seller: It is moderate. In context of Amazon, business has good brand
image and reputation in the market, there are many suppliers those who want to enter into
contract with such reputable firm. Amazon can negotiate with suppliers and force them to reduce
the price. In context of Amazon UK, suppliers have to follow the supply chain standards set by
Amazon.

SITUATIONAL ANALYSIS
PESTLE analysis
Pestle analysis is considered to be as the techniques which are generally used for
analyzing impact of changes in external environment factors on business.
Political factors It includes changes in political conditions in the nation and also the
regulations related to the industry.
Negative impact: Political instability has negative effect on the
business operations of Amazon UK. Due to political instability in
the nation an organization is facing difficulty in performing routine
business functions which has negative effect on their financial
performance.
Positive impact: In addition to this, Amazon UK can expand its
business with the support of political party.
Illustration 1: Porters five force Analysis
(Source:Amazon.com Inc. Five Forces Analysis & Recommendations, 2017)
2018)

Amazon UK should follow the rules formed by the political parties,
as this will help them in increasing the chances of business
sustainability.
Economic factors These variables include economic condition of nation, individual
income, inflation rate, interest rate etc.
Negative impact: In context of Amazon , adoption of continuous
fluctuation in prices of product has negative effect on the
profitability of organization.
Positive impact, decrease in the exchange rate provide Amazon an
opportunity to gain transitional benefit.
Amazon is required to adopt flexible pricing strategy, as this will
assist an enterprise in dealing with the threats associated with
changes in economic factor. In addition to this, Amazon is required
to emphasize on development of only one sector.
Social factors It involves changes in trends, taste and preferences of customers.
Negative impact: In context of Amazon, business entity is facing
the difficulty in making the balance between the demand and supply
due to continuous changes in the trends. Changes in the social
factor has direct as well as significant effect on the demand for
company products or services (Kostin, 2018).
Positive impact: The changes in the shopping pattern by customer
has provided Amazon lots of opportunities such a increase in
profitability as well as sales. Negative effect due to continous
changes in the demands of products or services by customers, an
organization is facing the difficulty in maintaining balance between
demand and supply.
Technological factors Changes in this factor have direct as well as significant effect on
Amazon business operations.

Negative impact: Advancement in technology has given rise to the
intense competition in E-commerce . It has also led to the increase
in threat of rapid technological obsolescence, which imposes
pressure on Amazon to continuously develop its technological
assets.
Positive impact :Emergence of digital technology has provided
firm an ease in promoting goods or services at international level.
Legal factors It includes laws, government policies etc.
Positive impact: In context of Amazon, Easing of import and
export regulations has provided business entity opportunity to
expand business and increase sales .
Negative impact: Due to the continuous amendments in laws
company is facing difficulty in complying with the same due to
which they have to face legal issue.
Environmental factors It includes weather conditions, intensity of competition in industry
environmental laws etc.
Negative impact: In context of Amazon, changes in environmental
factors have direct effect on the services provided by Amazon. For
instance due to bad weather condition an organization might fail to
deliver products to customer at specific location.
Positive impact : Business entity has opportunities to improve its
environmental impact in response to the rising interest in
environmental programs.
SWOT analyses
Strengths :
 Leading position in industry.
 Effective marketing strategies.
Weaknesses :
 Security and privacy issue has lead to
the decline in the sales of Amazon.

 An organization enjoys top of the mind
recall from consumers globally.
 Super logistic and distribution system.
 Strong brand image
 extensive product mix
 Easily imitable business model.
Opportunities :
 Penetrate developing markets
 Expand brick-and-mortar business
Threats :
 Aggressive competition
 Technology obsolescence.
ANALYSIS
Internationalization Theory
UPPSALA internalization model, this hypothesis seeks to explain slow as well as
incremental internationalization of organization which want to grow and want to earn long term
profit by keeping risk at low level. The reason for selecting the specific model is to assist
Amazon UK in identifying the way to earn long term profit. UPPSALA internalization model,
emphasizes on gradual acquisitions, integration as well as utilization of knowledge about the
international market. In context of Amazon, business entity can conduct market research in order
to gain knowledge about global market, as this strategy will assist firm in developing the
understanding about the customer demand in specific region. In addition to this, information
collected through market research will help an enterprise in developing an effective marketing
plan for promoting goods or services (Hannibal and Rasmussen, 2018). Business entity can
utilize social media platform for gathering the information about the market and consumers. In
context of Amazon, an organization can first choose to enter nearby market with low market
commitment. The Scandinavian stages model of entry recommends the sequential pattern which
can utilized by an enterprise for entering into Internationale market. This hypothesis states that
upon deciding to enter a foreign market, should a firm do so through internalization within its
own boundaries or through some form of collaboration with an external partner (Kaur, 2018).
The Scandinavian stage's hypothesis states that collaboration strategy will help Amazon in
reducing the transaction costs.
Born global internalization theory

As per this hypothesis born global organization are those which intends to seek
competitive advantage by making the utilization of resources and sales of its products or services
in more than one country. In context of Amazon, an organization has adopted the product
differentiation and low cost pricing strategy for entering into the new market which has assisted
business entity in gaining competitive advantage (Sarkum, 2018). Born global internalization
theory hypothesis states that born global organization are established to exploit global niche
from first day of their establishments.
Cultural factors
Amazon UK has such corporate culture sets the traditions and values that influence
employees’ behaviors. An organization needs to develop such culture which pushes workers to
explore ideas as well as risks. Employees working in Amazon, understands the vision of an
organization and they act autonomously for achieving the same. Business entity has created
culture which encourages employees to facilitate innovation that is the main factor which haws
drive Amazon towards success. In addition to this, Amazon has unique performance driven
environment which motivates workers to become more creative. Brand equity of firm is
completely dependent on delivering that same disruptively innovative experience to customers.
Adapted Strategy
In context of Amazon, An organization can adopt the Customer- Centricity strategy . By
adopting this strategy, management in Amazon can reinforce its workers to concentrate on
fulfilling customer needs. Customer-Centricity strategy will help an enterprise in maintaining its
effectiveness in satisfying customers.
Home nation's competitive advantage
Porters diamond model is very useful in context of comparing the competitive advantage
of nations. This hypothesis is based on the assumptions that competitiveness of organization is
completely based on the performance of other organizations. In context of Amazon, business
entity can utilities Porters diamond model for identifying the ways through which they can
translate national advantages into global advantage. This hypothesis is also based on the
assumption that the national home base of companies plays crucial role in the creation of
advantages at international level.
Demand conditions: In context of Amazon , due to quality services there has been increase in
demands for the services as well as products offered by organization. It is required by Amazon to

concentrate on providing high value proposition to customers, as this will help firm in retaining
clients for long time. Business entity can launch more offers as it will assist them in attracting
more numbers of shoppers. Presently approx. thirty seven percent market share has been capture
by Amazon in UK (Asseraf, Lages and Shoham, 2018.). In context of other country, demanding
buyers might force Amazon for moving into advance segment. Amazon needs to implement
advance technology and require to concentrate on productivity improvement.
Factors endowment : In context of Amazon, an organization can make huge capital investment
on developing the employees especially those who are responsible for promoting goods or
services at international level.
Related and supporting industry: In context of Amazon, an organization is completely
dependent on third party those who are seller for creating the additional value for their clients. It
is required by Amazon to develop good relationship with suppliers. As suppliers are very much
important for facilitating innovation through more efficient as well as high quality of inputs.
Firm strategy and structure : Continuous changes in international business environment as
well as intense competition in other nations might force Amazon to develop additional skills and
core competencies. In such situation, Amazon UK can adopt innovation strategy in order to
remain competitive. An organization is also required to bring change in the business structure it
will be helpful for them in context of gaining competitive advantage.
MARKETING ACTIVITIES
Segmenting, targeting and positioning
Segmentation, targeting and Positioning are the three core elements on which the firm
performance is based. The segmentation, targeting and positioning strategy of Amazon includes
different activities aimed at identifying those people who will buy their products or services.
Segmentation : Amazon, an organization is presently using demographic as well as
demographic segmentation strategy. In context of international market, business entity can utilize
behavioral segmentation strategy for dividing market.
Targeting : In relation to Amazon, an organization can utilize undifferentiated targeting
strategy. Mass market philosophy views the market as one big market with no individual
segments. As this plan will assist firm in selecting the specific products, categories, brands, or
other product features that are similar to the product in advertisement (Koivuniemi, 2018). By

utilizing the undifferentiated marketing strategy Amazon can utilize one marketing mix for the
entire market
Positioning : In context of Amazon, an enterprise can adopt Adaptive positioning
strategy.
Branding
It is the branding strategy has made this company one of the Internet's giants. In context
of Amazon , an organization can adopt customer centric approach as this strategy will assist
business entity in increasing its brand value.
Consumer trends
Customers use multiple devices on their path to purchase products these are – starting
their search on mobile phones, purchasing products using tablets or laptops, and interacting with
their friends about their purchases using all these devices. In a multi-device, omnichannel world,
an organization cannot operate a website optimized only for the desktop (Jahanmir and Cavadas,
2018). Amazon needs to share information using such platforms which are accessible with
smartphones and tablets. Amazon is required to provide as smooth an integration as possible for
good customer experience.
ONLINE ACTIVITIES
Effectiveness of Online presence
Marking online presence is considered to be as important component of marketing
strategy. By marking the online presence, Amazon can offer their products and services to wide
number of customers. In addition to this, firm can share their vision and other important
information with public which is very much crucial for gaining the loyalty of customers. By
marking online presence, an organization can enable customers to find them (Sarkum, 2018.).
Marking online presence strategy helps an organization in building strong brand. It also helps in
enhancing reputation.
RECOMMENDATIONS
Suggestions
It has been commended to firm that it should adopt the customer centric approach as it
will help them in delivering high level of satisfaction to clients. The other suggestion given to
business entity is that marketing manager an organization should conduct market research and

keep themselves update with regular trends as this will provide them ease in developing an
effective promotional plan.
CONCLUSION
It has been concluded from the report that the changes in the international business
environment have direct as well as significant effect of business performance of company. The
fact which has been found during the study is that selection of appropriate customer segment is
very much important in order to accomplish desired business and marketing objectives.

REFERENCES
Books and Journals:
Hannibal, M. and Rasmussen, E. S., 2018. Digital Entrepreneurship: A Longitudinal Case Study
in a Traditional Firm. In Entrepreneurship, Collaboration, and Innovation in the Modern
Business Era (pp. 1-21). IGI Global.
Kostin, K. B., 2018. Foresight of the Global Digital Trends. STRATEGIC MANAGEMENT,
23(1), pp.11-19.
Checchinato, F. and Hu, L., 2018, July. THE ROLE OF DIGITAL PLATFORMS IN THE
GLOBAL BUSINESS ENVIRONMENT: THE CASE OF CHINA. In 2018 Global
Marketing Conference at Tokyo (pp. 707-707).
Brown, S. C. and Holt, T. J., 2018. Digital Piracy: A Global, Multidisciplinary Account.
Routledge.
Kent, A. and et.al., 2018. Branding, marketing, and design: experiential in-store digital
environments. In Fashion and Textiles: Breakthroughs in Research and Practice (pp. 275-
298). IGI Global.
Jahanmir, S. F. and Cavadas, J., 2018. Factors affecting late adoption of digital innovations.
Journal of Business Research. 88. pp.337-343.
Sarkum, S., 2018. A Strategy Engagement in Marketing: A Reviews of the Literature.
Koivuniemi, U., 2018. Digital marketing process. Sloan Management Review, 58(4), pp.10-13.
Asseraf, Y., Lages, L.F. and Shoham, A., 2018. Assessing the drivers and impact of international
marketing agility. International Marketing Review.
Kaur, T., 2018. Amazon Associates: A Model of Affiliate Marketing. In Driving Traffic and
Customer Activity Through Affiliate Marketing (pp. 51-63). IGI Global.
Watson IV, G.F., Weaven, S., Perkins, H., Sardana, D. and Palmatier, R.W., 2018. International
market entry strategies: Relational, digital, and hybrid approaches. Journal of
International Marketing, 26(1), pp.30-60.
Oyewole, P., 2018. International Marketing of Services and Developing Countries. Services
Marketing Quarterly, 39(2), pp.79-91.
Garner, B.A., 2018. Amazon in the Global Market. Journal of Marketing and Management, 9(2), pp.63-73.
ONLINE:

Amazon.com Inc. Five Forces Analysis & Recommendations. 2017. [Online]. Available through:
<http://panmore.com/amazon-com-inc-five-forces-analysis-recommendations-porters-
model>.