External and Internal Environments: Amazon Inc

Running head: EXTERNAL AND INTERNAL ENVIRONMENTS
External and Internal Environments: Amazon Inc
Name of the Student
Name of the University
Author’s note

1EXTERNAL AND INTERNAL ENVIRONMENTS
Contents
Introduction......................................................................................................................................2
General environment.......................................................................................................................2
Society:........................................................................................................................................3
Technology:.................................................................................................................................3
Forces of competition......................................................................................................................4
Competitive rivalry......................................................................................................................4
Bargaining power of the customers:............................................................................................4
Recommendation of the future....................................................................................................5
External threats the opportunities....................................................................................................5
Opportunities of Amazon............................................................................................................5
Threats of Amazon......................................................................................................................6
Corporation’s greatest strengths and most significant weaknesses.................................................7
Strength of Amazon.....................................................................................................................7
Weakness of Amazon..................................................................................................................8
Determine the company’s resources, capabilities, and core competencies.................................8
Value chain analysis of Amazon.................................................................................................8
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

2EXTERNAL AND INTERNAL ENVIRONMENTS
Introduction
Amazon Inc is an American multinational organisation that is founded by CEO Jeff
Bezos; the company was established in the year 1994 and was listed in NASDAQ as AMZN.
The company operates on the e-commerce platform and has over the years with the help of
innovation and creativity grown and expanded its business exponentially over the last decade.
The recorded revenue of the company as on 2017 is US$4.106 billion (Annualreports.com.,
(2017). There is a large array of products and services that is offered by the company: the online
services include providing a platform for the customers and vendors to meet in order to exchange
these vendors are third-party sellers who are also the secondary customer of the company. Apart
from this service the organisation manufactures and sells electronic devices like Kindle, echo,
Amazon fire etc. proving could based computing services is another apect of the range of
services that the company provides. Recently the organisation has ventured in to physical retail
by acquiring the whole foods range and by installing the Amazon Go stores which is marketed as
the next generation of grocery shopping experience. Furthermore, the company has investment in
the entertained industry as well and Amazon Prime is a service membership that is introduced by
the company which can be availed by the customers to explore the facilities that Amazon offers.
The assignment explores the internal and external environmental factors that impact the
organization and its strategic management decisions (Amazon.com, 2018).
General environment
Any business organisation operates under two business environments internal and
external. Where the internal business environmental factors are under the control and influence
of the company, the external factors are not. Hence, in the process of strategic management a
company identifies the strengths and weakness from the internal environment as well as

3EXTERNAL AND INTERNAL ENVIRONMENTS
recognizes the opportunities and threats from the external factors. The business model of
Amazon is based on innovation and the company follows the concept of triple bottom line hence
the two most important aspect of the environment is selected to be society and technology.
Society:
When the company began its operations with the Amazon.com website, the idea of e-
commerce was relatively new. Based on the passion of IT and reading books, Jeff Bezos realized
the opportunity that was in the trend of e-commerce. The acceptance of the shit in the way of
purchase from physical stores to online platform is significant in the industry. The lifestyle of the
people changed with technological advancement and thus, the e-commerce platform has started
making its path with the acceptance of Smartphone and increase connectivity. Buying things
from the e-commerce website is deemed to be now a sign of progression and knowledge this has
helped in attaining business objectives of Amazon. It has been observed that people compare the
price of products online with the price of the same product in the physical store in order to get
the best value price of the commodity. The society has accepted the credibility of the e-
commerce sector which was for the early period of operation one of the biggest barrier in the
industry. The idea of selecting a product with the help is just pictures seemed to be unrealistic at
the beginning but as the idea and the facilities of the service became more and more user friendly
(Popescu, 2013).
Technology:
Innovation has been the strategy of expansion for the company and technology has a
large part in this growth of Amazon. The organization is technology driven as the platform on
which the business is based is internet. Apart from that the company has an array of electronic
devices which are developed with the help of latest technological advances in the industry.

Introduction
This report helps in understanding about importance of external and
internal factors over productivity and profitability of an organization.
This report helps in understanding about different aspects of external
and internal environment which could affect organization. External
factors cannot be controlled by an organization but in case of
internal factors organization can control its impact on organisation. It
is important for organisation to understand importance of impact of
these factors as it can lead organization towards its desired goals and
objectives. This report is based on Amazon which is an leading E-
commerce organization based in Seattle which is in US.
Amazon And Its Environment
External Environment
External factors are considered as factors which cannot be controlled by
organization and also business decisions are also affected by such factors.
External factors have greater impact on organization productivity and
profitability. Internal factors of organization basically includes strengths and
weaknesses of employees of organization and factors which can influence
outcome of organization. Internal factors of organization can be controlled and
impact which these factors made on outcome of organization can also be
controlled by managers. In order to understand internal and external factors of
organization SWOT and PESTLE analysis of Amazon is mentioned below:
PESTLE Analysis
This framework is utilized by organization in order to understand
external factors of business environment and how such factors can affect
organization performance. PESTLE analysis of Amazon is mentioned below:
Political Factor
Political factor is explained as government intervention in an economy
and stability of government in business environment. Amazon have to understand
stability of government in different countries and according to that develop their
strategies. Political factors plays vital role in formulation of goals and objectives of
an organization.
Economic Factor
Economic factors are explained as factors which have direct impact on
economy of nation. Such factors help organization in understanding their
profitability and productivity. Amazon have made higher profits amid COVID-
19 pandemic and it helped them in expanding their consumer base and also
contributed in boosting their profits.
Social Factor
Social factors help organization in understanding about culture, beliefs,
value and attitude of people which belongs to a society. Amazon focuses on
delivering its products to consumers effectively and focuses on utilizing
How the company impact its context External Environment
Amazon focuses on adapting to its external environment by
understanding changes and impact of external factors on business.
Amazon operates in different countries and with changing
environment there is change in impact of factors of organization. It
is important for Amazon to effectively analyses external factors
and form plan according to need.
CONCLUSION
This report concludes about internal and external factors
impact on organization and how these factors influence
performance of organization. This report concludes about
organization Amazon and different techniques utilized by
organization to effectively compete in business environment.
Internal Factors
SWOT analysis
Amazon is considered as global leader in retail business and
this analysis would help managers of Amazon in understanding need
of changes.
Strengths - Amazon global competitive edge help them in focusing
on resources and achieving their goals by effective strategies.
Amazon focuses on using cost leadership and differentiation strategy.
Such strategy helped them in boosting their revenues and also help
in achieving its goals and objectives.
Another strength of Amazon is that organization is famous among
global consumers which have made contributed in increasing their
market share.
Weaknesses - Amazon focuses on providing free delivery service to
its consumers which can affect their profits and might have negative
impact on their overall revenues it could lead to increase in their
overall cost.
Amazon is considered as leading online retailer but their strategy of
focusing on only retail sector can affect their strategy of expansion.
Opportunities - By making its payment system more flexible Amazon
have the opportunity to reach out higher number of consumers and
by providing more number of payment options it is easy for
consumer to pay for their products.
Amazon have the opportunity to expand its business by reaching out
to more number of consumers and expanding its business in different
sectors.
References
Bentz, C., 2018. 6. Explanatory Factors: Language “External”
Effects. In Adaptive Languages (pp. 111-120). De Gruyter Mouton.
Nurrahmat, M. H. and Sunindyo, W. D., 2019, July. Determining
External Factors Analysis Summary (EFAS) Metric for Company
Technological factor
Such factors focuses on technological innovation in
business environment and how such technological changes can
affect organization productivity and profitability. Amazon have
utilized digital technology as their major weapon and organization
have invested effectively in making their delivery services better
and efficient. Amazon also focuses on utilizing technology to make
their payments system effective and efficient.
Legal Factors
Legal factors help organization in understanding rules and
regulation which should be followed by organization before
conducting its business. Amazon had to deal with various legal
challenges as there are different law and policies in different
business environment.
Environmental Factors
Environmental factors are concerned with protection of
environment it focuses on environment friendly practices which
should be utilized by an organization while doing its business.
Amazon focuses on reducing greenhouse gas emission by using
environment friendly practices.
Threats - One of the threats to Amazon is regarding personal information
of its consumers as individuals which make online payment have fear of
being victim of identity theft and hacking which can leave their personal
information exposed to others.
Amazon faces competition from domestic retailers which are considered
more flexible and organization have to understand local market condition
carefully and develop their strategy according to their need.

Introduction
Internal and external environment are crucial part
of each and every business. Internal environment
is made with internal competencies and resources
whereas external environment is a combination of
different external factors(Cao and Chen, 2019).
The present report is related with Amazon which
is a well known Ecommerce company based on
US. The present report includes PESTLE and
SWOT analysis for analyzing internal and
external environment of organization.
Amazon And Its Environment
Name of the Student
External Environment
External environment is the accumulation of different
elements which all are related with outside environment
still put a tremendous impact over business. For this
purpose, PESTLE analysis is given as under:
Political Factors: : Amazon is American international
technology organization that is based within. Their focus
is on operating their business worldwide in US, UK,
Australia, Canada, China and so on (Firooznia and et. al.,
2018). It is also analyzed that the political decision of
opportunity to Amazon for further development and
growth that imposes positive effect on the organization. It
is analyzed that Brexit also affected trade practices of
Amazon due to its impact over relationship of UK & EU
countries.
Economical Factors: The Amazon focuses on achieving
favorable results, they also focus on analyzing need of
customer such as groceries, gaming, news & entertainment
and so on. Therefore, consumer spending is increasing that
is a beneficial for organization (Grady and Garrett, 2018).
How the company impact its context
External Environment
It is analyzed that Amazon put a great impact
over its external environment which can be
understand with below mentioned points:
•It is a well known ecommerce company that
owns higher market share in ecommerce that
restrict new companies to enter into market
(Huang, Gao and Chen, 2020).
•Now, Amazon has become the favorable place
for customers to purchase products online. By
this, they are affecting customers and their
mind set by providing higher ease and
convenience.
•Apart from this, Amazon is also known for its
technical advancements and innovations which
affect the whole environment and industry
significantly
Internal Factors
Financial resources: It is analyzed that Amazon
owns huge financial resources and funds as it is a
renowned company which has positive brand
image in market which really helps in
maintaining huge customer base for earning
significant amount of profit margin (Lin and et.
al., 2020).
Human resources: Amazon has competent and
qualified staff members who are highly efficient
in their work due to which company is able to
provide best possible services and products to
their customers.
References
Cao, H. and Chen, Z., 2019. The driving effect
of internal and external environment on green
innovation strategy-The moderating role of top
management’s environmental
awareness. Nankai Business Review
International.