Business Strategy & Competitive Analysis for Amazon

This article discusses the PESTLE analysis of Amazon, including political, economic, socio-cultural, technological, legal, and environmental factors. It also covers the key elements of Amazon's strategy, such as increased customer experience and GLOCAL. The article includes references and is relevant for business and management courses.

Running Head: Business Strategy & Competitive Analysis
Business Strategy & Competitive
Analysis
AMAZON

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Table of Content
PESTLE Analysis............................................................................................................................................... 2
Political Factors............................................................................................................................................ 2
Economic Factors........................................................................................................................................ 3
Socio Cultural Factors................................................................................................................................ 3
Technological Factors................................................................................................................................ 4
Legal Factors.................................................................................................................................................. 4
Environmental Factors.............................................................................................................................. 4
Key Elements of Amazon Strategy............................................................................................................ 5
Increased customer experience............................................................................................................. 5
GLOCAL............................................................................................................................................................ 5
References........................................................................................................................................................... 6

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PESTLE Analysis
PESTLE analysis is a strategic management tool which is used for strategic business
planning. The tool helps in understanding the external influence on the business
according to the political, economic, social, technological, legal & environmental forces.
Political Factors
The influence of Political factors on Amazon can be ascertained in the following three
ways:
 Political stability of the developed countries can be seen as opportunity for
Amazon as it creates ideal condition for Amazon to expand and diversify its
business model and scale of operations. The company has the option of
expanding from a click model into a click and mortar model.

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 Governmental support towards the e-commerce sector can be seen as both an
opportunity and threat to the e-commerce behemoth. The opportunity can be
seen in the form that the government supports the business operation of the e-
commerce firm and the threat can be observed in the way the support
government gives to other e-commerce players, thus increasing the competition.
 The increasing efforts of the government towards cyber security can be seen as
opportunity, as it will help in curtailing fraudulent transaction on the web, thus
people will become more open to the idea of online shopping(Diehl, Bishop,
2017).
Economic Factors
The influence of Economic factors on Amazon can be ascertained in the following
manner:
 Economic stability of developed country is an opportunity of Amazon as the
people have a good purchasing power parity to buy products online. Moreover,
the business gets an opportunity to expand its business operation to earn more
revenue.
 There has been a continual rise in the purchasing power of the people living in
the developed countries, especially in the APAC region. Such markets become of
huge potential to Amazon.
 The Chinese market is definitely the biggest market for e-commerce owing to the
population of the country, however due to increased support to domestic player
like Alibaba, Amazon has little or no possibility to make its ground firm in the
Chinese market (Correll et. al., 2016).
Socio Cultural Factors
The influence of the Socio cultural factors can be ascertained in the following manner:
 The increasing wealth disparity in the nation is a big threat to Amazon, as it
directly means a large income gap can lead to difference in the buying behaviour
of both the type of demographic population.
 The growing consumerism in the developing countries can be seen as a sign of
opportunity for Amazon, as more and more buyers are coming on the platform to

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shop. The shopping habits of people have transformed from being offline to
online in the present day (Arnold & Gordon, 2014).
Technological Factors
Technology plays an important role in the e-commerce sector, some of the ways
technology exercises its influence on Amazon are:
 Increasing technology obsolescence can be seen both as an opportunity and a
threat to the e-commerce giant, as the company has an advantage of gaining a
competitive edge over its competitors due to the huge investment in IT. At the
same time, it presents a threat and opens up space for new player to enter into
the highly competitive market.
 Increasing cybercrime activities is keeping people away from sharing their
information online, or putting away their card details on the online platform. If
the efforts to tighten the cyber security are not done at the present, Amazon
would have to change its business model to achieve sustainability (Santiago,
2017).
Legal Factors
The influence of the legal factors is as following:
 Increasing regulation on the original product will help Amazon curtail down the
counterfeiting of the products and help in removing fraudulent players from the
ecosystem.
 Easing import and export policies will help Amazon in bringing a large number of
international sellers and buyers on its platform, thus posing an opportunity in
front of Amazon (Kaghazgaran et. al., 2017).
Environmental Factors
Amazon is under a lot of pressure to work towards the depleting environment. The
company has to start spending resources towards the welfare of the environment as a
part of its CSR activity. The company is also working on creating recyclable packing
material to further alleviate the growing stress on the environment (Welch, 2015).

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Key Elements of Amazon Strategy
The key elements of Amazon strategy is drawn from its vision of becoming the most
customer centric company on the face of planet earth. Based on the above vision, the
key elements of its strategy can be understood as:
Increased customer experience
Amazon always pushed itself to create policies and procedures which are highly
customer centric in nature. This is done to provide the customers with increased
customer experience. The company through its web and social platform addresses the
query of the customers at the earliest. Moreover, the company provides its customers
with a customized shopping list according to their purchase behaviour, which
contributes towards its increased customer experience strategy (Gauthier &
Wooldridge, 2018).
GLOCAL
GLOCAL or as it is popularly called as “Go Global and Think Local” is the strategy
adopted by Amazon in expansion in the international market. The company understand
the importance of the domestic sellers and does not want to hurt them, thus the
company leverages the domestic resources which helps it in building trust and
relationship with the domestic players. Also, the company creates a product line which
is specific to the needs and demands of the country in which it is operating, the pricing
policy and the positioning strategy is all decided on the basis of the understanding of
the domestic market(Choi & Schonfeld, 2017).

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References
Arnold, Denis Gordon. Ethical theory and business. Edited by Tom L. Beauchamp, and
Norman E. Bowie. Pearson, 2014.
Choi, Youngmin, and Paul M. Schonfeld. "Optimization of multi-package drone deliveries
considering battery capacity." In Proceedings of the 96th Annual Meeting of the
Transportation Research Board, Washington, DC, USA, pp. 8-12. 2017.
Correll, Nikolaus, Kostas E. Bekris, Dmitry Berenson, Oliver Brock, Albert Causo, Kris
Hauser, Kei Okada, Alberto Rodriguez, Joseph M. Romano, and Peter R. Wurman.
"Analysis and observations from the first amazon picking challenge." IEEE Transactions
on Automation Science and Engineering (2016).
Diehl, Kristen, and Bill Bishop. "Strategic Analysis of Amazon Madison Morgan
November 16, 2017 MGMT 275." (2017).
Gauthier, Jeffrey, and Bill Wooldridge. "Sustainability Ratings and Organizational
Legitimacy: The Role of Compensating Tactics." In Sustainability and Social
Responsibility: Regulation and Reporting, pp. 141-157. Springer, Singapore, 2018.
Kaghazgaran, Parisa, James Caverlee, and Majid Alfifi. "Behavioral Analysis of Review
Fraud: Linking Malicious Crowdsourcing to Amazon and Beyond." In ICWSM, pp. 560-
563. 2017.
Santiago, D.R., 2017. The role of FSC certification to maintain sustainability: the case of
Precious Woods Amazon Company. REBRAE, 10(1), pp.8-35.
Welch, Adrienne. "A cost-benefit analysis of Amazon Prime Air." (2015).

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