Issues Faced by Amazon in Business Expansion and Product Diversification

This report discusses the issues faced by Amazon in expanding its business and diversifying its products. It covers important areas to analyze, such as competition, target customers, growth market, and social and economic factors. The report also presents the top three issues faced by Amazon, including similar products, competition, and changing demand.

Business consulting

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK ..............................................................................................................................................3
Amazon.......................................................................................................................................3
Important areas to analyse by Amazon.......................................................................................4
Top three issues faced by Amazon..............................................................................................6
CONCLUSION ...............................................................................................................................6
REFERNCES:..................................................................................................................................8
Books and Journals:....................................................................................................................8

INTRODUCTION
The report is going to present the issues related to business project. Nowadays
businesses are facing many problem into the competitive market due to uncertainties, product
competition, market growth in technology and innovation also market opportunities. All these
factors plays a vital role for bushiness to look further for betterment of the company. This report
is going to showcase the issue faced by Amazon, it is a leading company which has came under
commencement in the year 1994 (Lovejoy, and Nobre, 2018). it is a renowned form which
regulate E-commerce business, digital computing with the aim to provide product and services
across the world. The company wants to expand E-commercial platforms and reach to large
number of people with new products which creates many issues that is going to discuss in this
report.
MAIN BODY
TASK
Amazon
Amazon is a multinational organisation that regulates digitalisation and comes with a
new ways of E-commerce. It is an American firm which emphasize on technology, digitalisation
and artificial intelligence. It is the most reputed brand at worldwide level as it has developed a
valuable image into market by being the highest contributor into economy. It comes under the
highest earner through internet and digital computing as it brings a new ways of shopping and
buying products which are now become easy to excess. It creates an online marketplace that
provide vast number of products with other different brands and business. The company is
known for highest valuation in 2020. It was first started by Jeff Bezos by selling books but has
expanded these products in electronic. Clothing, software, home appliances, Furniture and many
more. Now the company provide every needful product as per customer demand which
contribute in large society (Timpe and Kaplan, 2017). Therefore, the Amazon wants to grow
more and reach to the height of success. There are severe competition is growing is E-
commercial industry as digital and internet technology growing so rapidly which give rise to
many opportunity due to which every other business is using online marketplace to reach large
number of people. This has becoming a serious threat for Amazon as competition is rising and
requirement of more effective strategies has arrived. The issues facing at the level of

competition which may reduce the turnover of Amazon so that, these problems influence on
companies new product development, market growth and revenue generation.
Important areas to analyse by Amazon
The company is facing many problems in the era of digitalisation and modern market
opportunity. Therefore, it is required to look at various factors which become hurdles to carry
out companies project in the long run. There are several areas that impact on decision to grow
and expand products and services, implement change and formulate strategies for business
environment is dynamic as well as uncertain which could come up with new aspects and areas
of working. These areas are competition, target customers, growth market and its opportunities
and other social, economical factors influence on taking business decision for making project
success. It could be done through using STP approach for Amazon which is described below:
STP approach
This approach Is a framework or planning to built strategies which provides insights about target
markets and who are companies potential customers (Posey, 2019). This approach is helpful to
take competitive decisions within the company for business expansion. In case of Amazon, the
company facing problem of competition due to having similar products into market which
includes factors that are discussed below:
Segmentation: This factor influence on segmenting customers as per various
demographical, physiological elements. Amazon is facing issues of dividing customer as per
their product requirement which creates competition and people are getting same products from
different online platforms. Therefore, amazon is finding issues in divide customer as per their
age, income, culture an values which impact on expansion of project and delivering projects
which have substitutes.
Target marketplace: Target a particular market\ and provide project as per market
requirement is essential for company. It is necessary\y to target market which is leftover from the
reach of company. These are also known as target segments that how company will reach to
these segmented customers. There are various platforms in online selling so that, Amazon is
facing issue in choosing the best segment which will beneficial for revenue generation by selling
similar products at new locations.
Positioning: this factor is highly essential for Amazon as it consist valuing and positions
the brand in the eyes of customers. The company facing issues to maintain a unique brand name

as there are arrival of many competitors who are in urge to take place of E-commerce to the
height level. This problems is arriving due to not having USP as Amazon deals In regular and
daily essential goods by undertaking several brands under its site.
Porter five forces analysis:
This analysis is helpful to carry out external factors based on the overall industry. It gives
analysation of market surroundings that impact on Amazon to make the project success into this
dynamic market.
Threat of New entries and exit: This external force creates influence on the project of
Amazon as technology is rising is E-commerce industry due to which there is moderate threat
of new players into market as Amazon has reached to highest brand name which could not let the
new entries compete with Amazon.
Bargaining power of supplier: This factor makes influence on the number of supplier
company have(Cheng, and Liu, 2018). Mainly supplier charge high price but in E-Commerce
industry it has relatively no impact on Amazon as supplier could not bargain much in order to
work with a world reputed organisation. The face face issues for finding supplier whop could
provide unique materials so that, the company ill gets success in product expansion.
Bargaining power of buyers: buyers have much bargaining power with the industry
who deals in similar products and set price as per market rates. Consumer will not get ready to
pay high price for similar goods they get in less cost. This factor is also being a issue for
Amazon due to having same deals or price similarly to the other brands.
Threat of rivalry: Threat of rivalry is also being a major factor that becomes a problem
for today business. As competition is growing day by day, rivals comes with new strategies to
attract customer with product innovation and change in business practices. Amazon has high
threat of rivals on making expansion of business in new product as it require knowledge of
competition and what other companies do.
Availability of substitutes: This factor is also one of the major cause reflecting in
external environment of business. People find other options for a particular product which shift
their demand on the less expensive one (Carraher, 2018). Fifing similar products who gives same
satisfaction is a major threat of Amazon as it would become an obstacle for the company to
enable product diversification.

Top three issues faced by Amazon
From the above analysis of the external environment factors,there are many issues reported into
the discussion faced by amazon. The company wants to expand business In many locations
which are still not under covered. The company wants to developed new products and regulate it
into the market which will enhance their market value, brand name, revenue and positioning.
But there ate some problems arrive before the company going to take further decision for
expansion in new product development. The main three issues are presented below:
Problem of having similar products: it is the major issues faced by amazon as they want to
develop new products abut the company deals in consumer goods which are easily approachable
at any other stores or online platforms (Bruijl, 2018). This problems stops the company to grow
their business where sales are uncertain and people may shift demand so often.
Problem of competition: Competition is also crucial problems that must be considers by
Amazon. Therefore, competition creates hurdles to enter in new market and serve similar
products. As people are loyal towards other companies so it becomes difficult to attract them
towards Amazon.
Problem of frequent change in demand: due to modern dynamic environment, demands are
changing frequently due to arrival of new trends and market technology. It become difficult for
the Amazon to work on customer demand at initial level as it require plans and strategies.
Therefore, in order to create expansion (Kharub, and Sharma, 2017). changing demand will
create cause for their new products and company may lead to bear losses.
These are the top three problems which have identified and are essential to look at. They
have main impact on company due to changing business environment and external market
intermediaries.
CONCLUSION
The report has concluded about the issues faced by Amazon in order to make expansion
in new product diversification. It is difficult to grab customer attention for the same products
they have built trust on. Therefore, the main problems find out are similar products, competition
and changing demand.

REFERNCES:
Books and Journals:
Lovejoy, T.E. and Nobre, C., 2018. Amazon tipping point.
Timpe, K. and Kaplan, D., 2017. The changing hydrology of a dammed Amazon. Science
Advances, 3(11), p.e1700611.
Posey, D.A., 2019. Indigenous ecological knowledge and development of the Amazon. In The
dilemma of Amazonian development (pp. 225-257). Routledge.
Cheng, D., Qi, H. and Liu, Z., 2018. From STP to game-based control. Science China
Information Sciences, 61(1), pp.1-19.
Bruijl, G.H.T., 2018. The relevance of Porter's five forces in today's innovative and changing
business environment. Available at SSRN 3192207.
Kharub, M. and Sharma, R., 2017. Comparative analyses of competitive advantage using Porter
diamond model (the case of MSMEs in Himachal Pradesh). Competitiveness Review:
An International Business Journal.
Carraher, S.M., 2018. An examination of an instrument to measure Porter’s Five Forces Model.
In International Journal of Arts & Sciences Conference at Harvard University.