Amazon Five Forces Analysis

This report analyzes Amazon's competitive landscape using Porter's Five Forces framework, examining the bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and the intensity of rivalry. It also includes a resource audit of Amazon's core competencies and a stakeholder analysis, highlighting the company's key relationships and their impact on business strategy.

REFLECTIVE REPORT

BENEFITS PROVIDED BY FIVE FORCES OF AMAZON
Porter's five forces framework is comprised of individual five forces which help to
provide shape to overall competition in the particular industry which are discussed as below:
Bargaining power of Amazon Buyers
Bargaining power of buyers for Amazon vary as it depends upon various situations, in
case of online shopping, their power is very strong as there is an availability of many other
competitive shopping sites which provide similar kinds of products and services as well as the
switching cost for opting another competitor is very less. In this scenario, customers are very
price sensitive which results in having a glance on the options available at the best affordable
price. This also results in highly intensive market competition.
Also, for web services which are provided by amazon, customer possesses less
bargaining power in respect to online shopping sites because the switching cost associated with it
is very high. Another web services might require high amount of subscription fees which leads to
not only sustaining of customer but also presence of less competition in this market place.
Accordingly, Amazon should use effective pricing strategy which can lead to minimise
the potential bargaining power of customers and would lead to attract and retain them for many
products and services. This will result in less switching rate of buyers (Chiu and et.al. 2017).
Bargaining power of Suppliers
Bargaining power of suppliers is considerably high. With the aim of providing everything
to everyone, they have a huge inventory which needs to be ordered, supplied and stored.
Therefore, they have to manage obtaining resources which are supplied by the suppliers as they
do not have their own plants. Therefore, this is the reason why suppliers have high bargaining
power and they have to negotiate with them for their products and services that can be forwarded
for further processing. These suppliers include not only those who supply inventories but also
helps to make the products reach at the market place and also, further companies with whom
they have partnership of web services. The success of Amazon is completely dependent upon the
collaboration which they have with various online sellers and partnership in business such as
target, borders, etc. These two are considered as key providers which help it to maintain huge
variety of products (Cardoso-Castro, Swan and Mendes, 2017).
Suggestions which can be provided in this case is that Amazon should collaborate with
those suppliers who are completely dependent on the organisation and cannot negotiate for more.

Threat of New Entrants
New entrants possesses a low threat to company as amount of inventory and its status is
hard to achieve for new competitor. The organisation is offering a tremendous variety of
products and services to the customers and was established 13 years back which means it has a
high sustainability and an immense customer base which is a threat to new entrants because
establishing it in a short time span is very hard in this market place. Amazon has adequate
amount of products that keep the loyalty of customers with various kinds of pricing strategies. It
is very difficult for a new comer for economies of scale, advantages related to cost factor which
is related to the large scale production.
Threat of substitute products
It is considered as a high threat as there is a wide variety of substitute for the products
and service which are offered by Amazon. Only exception present there is the technology which
is patented which is one click ordering. There are lots of alternatives present for the products
which are offered by company. Such as books can be taken from the book stores, news stands
and discount stores. Various kind of furniture can be taken from IKEA and also possible
substitute for this organisation can be Argos (Bommel and et.al., 2017). Whereas, the substitute
for Amazon's web service is least. For apparels, customers can buy from retailers may be on less
price comparatively. So, there is more chances for the presence of similar products but the
quality can vary due to many reasons.
Rivalry
Rivalry among different competitive firms in this market place is very high. There are
many reasons which can support this statement as the kind of products they provide are very
similar and also, they have more or less same establishment time period making them a
competitor of long run with huge customer base. Internet retail websites such as Barnes and
Noble.com as well as eBay are top most two strong rivals. For the MP3 of Amazon Apple's i-
tunes provides a great competition. The most important reason why it still been on the top
despite of toughest competition in the market because the customer ratings for this website is
very high (Grant, 2016).
RESOURCE AUDITING
Resource auditing is considered to be one of the important aspects of a company. It is one
of the management tools for judging effectiveness and performance of Amazon. It refers to

evaluation and examination of certain policies and practices which can help in determination of
the personnel management. It is the process which is analytical, investigatory and comparative. It
facilitates in the process of feedback related to various specialists and managers. It provides a
check on efficiency and effectiveness of certain aspects of company's human resources.
It has many features which make it an effective procedure in every organisation as it
includes measuring the effectiveness of their goals, policies, activities and various programmes
that can create benefits. It also helps in determination of the action plan for future (Forrester and
et.al., 2015).
Objectives
 Determining the effectiveness of certain programmes by reviewing various aspects
related to it.
 To search reasons and information for the occurrence of failures in implementing
policies.
 Evaluating the implementation of policies.
 Evaluation of skills and capabilities of company's employees in order to maintain the
standard productivity.
 Determining the core competencies of company in order to compete well in market
economy.
Due to dynamic nature of human resource management, it demands participation of
various professionals and specialist as well as provide complete contribution to company for
developing various strategies that are beneficial for successive operating of organisation (Jia and
et.al., 2016).
Skills and capabilities of the employees plays an important role for every company. Fully
skilled and capable employees are efficient handler of the task because they know different
techniques for making any work more effective which consumes less time in completion. Skills
are managed and developed with time which results in effective productivity of various
operations. HR audit helps to generate various programmes and policies for maintaining these set
of skills so that every employee gets updated with the advance technology. Various budgets for
training and development programmes are made which includes making a schedule of
conducting these programmes which are beneficial for workers.
The process of auditing contains the following steps which are discussed as follows:

 Determination of the scope and the type of audit
 Developing the questionnaire related to auditing
 Collecting the required data
 setting up the related findings
 Providing feedbacks for the results
 Creating of action plans
 Fostering the climate for improvement
There are also certain core competencies of Amazon which has helped to maintain its
strong position in the market. Core competencies plays an important role for this organisation as
it is the perfect combination of the various skills and capabilities which helps the company to
distinguish itself from others in order to compete in the market (Khan, Alam and Alam, 2015).
These are regarded as the foundation pillar of Amazon
Core competencies provides following benefits which are
 It provides access to various markets.
 Provides contribution to the benefits of the customer through end product.
 It creates difficulty for other competitors for imitating their products and services.
Various potential core competencies of Amazon are their large warehouse which have
huge inventories as they provide nearly everything through their e commerce websites. They are
very technically advanced and provides one click delivery advanced service. They have a strong
brand name in the market which has retained the loyalty of huge customers. They have a very
trustworthy and a strong relationship with their customer that is why they are sustaining at
number one position from years. They have a strong marketing strategies which effectively
promote their brand in the market and has a reach to large number of potential customers. The
financial aspect of the company s very strong as they grab every opportunity of investment and
has a strong financial position in the market economy. The Supply chain management of the
company plays a crucial role as it supplies inventory to it and make their product available to the
customers on time. The coordinative management of all the process in the supply chain is the
positive factors that has smooth functioning. They continuously works on the technological
innovation and has made their services technologically advanced (Rothaermel, 2015).
STAKEHOLDER ANALYSIS OF AMAZON

Every company performs following steps in order to analyse their stake holders which
are:
 Defining their stakeholders
 Analysing them with respect to impact and influence
 Planning for management of stakeholder communications and their respective
reporting
 Engaging with them.
Following are the stakeholders of Amazon:
Customers
They are the most important stakeholders of the organisation as Amazon gives them the highest
priority. They are regarded as the primary determinants of their e-commerce business by the
company itself. This prioritisation has a perfect match with the vision and mission of the
company which provides highlight to the centrality of the customers in their development of
business. The interest of them are pricing which is completely fair, convenience in the service,
online security and quality products whenever they are performing certain transactions with the
organisation (Smith, Rupp and Offodile, 2017). Amazon successfully satisfies these interest
areas of consumers so that it can retain them and this is the major reason which has lead them to
hold the huge customer base since 13 years. They are successful in satisfying the interest by
continuously working on their services and technological aspects which has made the4m
advanced and provide effective selection and delivery services. Every employee within the
organisation is provided special training in order to maximise the benefits which are related to
these technologies that creates convenience to every customers. Also fair price of the products
and services are maintained due to the tough competition with rivals in the particular market
segment.
Employees
Employees are considered very important as they maintains the performance of the
organisation. This group has major interest in the competitive compensation and development of
career. Human resources plays an important role as it helps in various unique idea generation for
satisfying the customers. The company satisfies these stakeholders through various effective
development policies which are beneficial for them in monetary as well as non monetary aspects.
Company also develop various strategies related to leadership in order to retain the interest of

them in the company. Continuity in the growth of Amazon across the world has lead in the
generation of various employment opportunities for workers especially for the position in the
management or leadership field.
Communities
These stakeholders play an important role in changing the perception of other customers
for the goods and services provided by the company. The interest of these stakeholders are in
their support for development such as providing them the facilities of education, healthcare and
conserving the environment. Company fulfils their interest by forming various sub organisation
for these social works such as Amazon Smile which provides a percentage of revenue generated
from sales for the charitable cause (Edward Ferguson, 2017).

REFERENCES
Books and Journals
Bommel, P. and et.al., 2017. Playing with models. How to use agent-based models with
stakeholders for understanding social-ecological systems.
Cardoso-Castro, P., Swan, A. and Mendes, R., 2017. Structural factors affecting the
implementation of rainwater in the amazon. The case of Belem.
Chiu, H. and et.al. 2017. Company Synopsis.
Forrester, J. and et.al., 2015. Combining participatory mapping with Q-methodology to map
stakeholder perceptions of complex environmental problems. Applied
Geography.56.pp.199-208.
Grant, R. M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Jia, J. and et.al., 2016. Implementing a GPU-based Machine Learning Library on Apache Spark.
Khan, U. A., Alam, M. N. and Alam, S., 2015. A critical analysis of internal and external
environment of Apple Inc. International Journal of Economics, Commerce and
Management.3(6).pp.955-961.
Rothaermel, F. T., 2015. Strategic management. McGraw-Hill Education.
Online
Edward Ferguson.2017.Amazon.com Inc. Stakeholders, Corporate Social Responsibility (An
Analysis).[online].Available Through <http://panmore.com/amazon-com-inc-stakeholders-
corporate-social-responsibility-analysis>