Macro Environment Analysis of Amazon using PESTLE and SWOT Tools

This presentation outlines different macro environment analysis with using of PESTLE and SWOT tools and therefore highlighting various positive and negative impacts on the organization. It will help the organization to align its organizations plans and policies effectively and identify external factors that influence the decision making process.

Business
Environment

INTRODUCTION
■ This presentation outlines different macro environment analysis with
using of PESTLE and SWOT tools and therefore highlighting various
positive and negative impacts on the organization.
■ It will help the organization to align its organizations plans and
policies effectively and identify external factors that influence the
decision making process.

PESTLE ANALYSIS OF AMAZON
■ PESTLE analysis is a tool to assess various significant macro
environmental factors such that impacts on business internal
environment and force organization to change its policies and plans.
■ It stands for political, economic, social, technological, legal and
environmental factors.

PESTLE ANALYSIS OF AMAZON
■ Political Factors (Shrinking data regulations and political red tape) –
Due to political bureaucracy and tight government regulations,
various barriers are being created for the company to do business in
global markets.
■ For instance, the company sell off its China cloud assets due to
tightening policies in relation with online data.
■ With regards to this, Amazon in UK will also face threat due to
consequential impact of BREXIT, a policy that will both cause political
and economic upheaval.

PESTLE ANALYSIS OF AMAZON
■ Economic Factors (Impact of BREXIT) – In spite of BREXIT, Amazon
UK increase its size of workforce by 5,000, however, in future, it can
bring various challenges for the company as Amazon depend on low
wages, often immigrant workers to employee its fulfillment centers –
hence, it creates various challenges for the employees to work in the
UK.
■ BREXIT also bring difficulties in relation with taxation and effect on
sellers as there will be further taxes for EU Amazon consumers whose
orders are required to be traded by FBA centers in the country.

PESTLE ANALYSIS OF AMAZON
■ Social Factors (Shift in the retail and e-commerce landscape) –
Consumers now feel more connected to the brand because of new
technologies used by Amazon such as chatbots and AI.
■ However, changing food habits and health consciousness may impact
Amazon grocery market and thus requires Amazon to formulate new
policies and plans.

PESTLE ANALYSIS OF AMAZON
■ Technological Factors (Big data analytics transforming retail and e-
commerce) – The application of AI systems and machine learning in
retail was newly showed by corporations like Amazon using the
“Amazon Go” grocery marketplace.
■ However, big data also benefit Amazon to progress into a goliath
online retail stores. In addition, the company also use this technology
for selecting the warehouse that is best improved space between the
company and vendor and therefore decreases cost of shipping by 10
to 40 percent.

PESTLE ANALYSIS OF AMAZON
■ Legal Factors – Legal factors highly influences the business survival
and sustainability. At present, Amazon is not facing any legal
challenge in UK, however, the company had a somewhat fraught
association with HMRC.
■ For instance, only £11.9m in UK taxes was paid by the company and
yet it confirm to recompense business tax on UK sales in 2015 as of
media shamming and lot of public pressure.

PESTLE ANALYSIS OF AMAZON
■ Environmental Factors – In case of Amazon, there is a limited
disclosure on environmental initiatives and sustainability by the
brand.
■ Amazon is, in many means, a great organisation with having a good
consumer service. However, the company did not made much
considerations in disclosing or improving its performance when it
comes to workplace or environment issues.
■ Previously, employees at warehouse in the UK stated they were being
reprimanded for using sick days and for seven days a week, they used
to work.

SWOT ANALYSIS OF AMAZON
■ SWOT analysis is a framework used to explore strength, weakness,
threat and opportunities of an organization so as to attain various
opportunities in the internal and external environment of an
organization.
■ It provides glimpse of both internal and external environment of an
organisation.

STRENGTHS OF AMAZON
■ The strengths of Amazon can be identified as strong brand offerings
with huge selection of products, efficient delivery networks, low cost
model and first mover benefit in cloud computing and services.
■ In 2016, Amazon subsidiary in the UK was classified as the top retailer
by paid search ad clicks.

WEAKNESS OF AMAZON
■ The weakness of Amazon includes near zero margins due to high
focus on customers, history of products flops, diminishing strategic
advantage in core competencies, mounting debt and tax avoidance.
■ Amazon goodwill in UK is affected due to various accusations related
to avoiding taxes, raising ethical questions and many more. For
instance, Amazon was involved in avoiding taxes in 2016, amounted
to be astounding one billion UK Pounds.

OPPORTUNITIES OF AMAZON
■ The major opportunities held by Amazon is own brand selling,
capturing of emerging markets, foray into pharmacy and bringing its
own payment platform.
■ Amazon already has its presence in one of the most prominent
emerging market i.e. India. However, the company not able to fully
incorporated in China and therefore, company can use another
channel to tap into the market of China.

THREATS TO AMAZON
■ The major threats to the company includes lawsuits from competitors,
competition from native players and security of data and scalability.
■ E-Commerce giant Amazon just suffered a fraud attack where hackers
syphoned funds from its merchant accounts over six months previous
year.
■ Such threats can put a question mark on Amazon sustainability.

Inter-relationship with the
external factors
■ Considering the environmental factors and company weakness,
ethical questions are being raised against the company considering
disclosure of sustainability reports.
■ It presents an opportunity to Amazon to improves its brand reputation
by showing itself an environment friendly brand.

Inter-relationship with the
external factors
■ In relation with its technological factors and strength, Amazon can use
full potential of its cloud computing technology and makes its
streamline with other operations and divisions of the company.
■ It will help the brand to gain first mover advantage in the e-commerce
and other industry to which the company plan to tap the market.

Summary and Impact on Decision
Making Process
■ From the whole discussion, it can be said that the macro environment
analysis of the company is made through PESTLE tool and internal
exploration with the help of SWOT framework.
■ Both external and internal environmental analysis help Amazon to
take strategic decision making and help in gaining competitive edge
in the e-commerce industry.

Summary and Impact on Decision
Making Process
■ The macro environment of the company (using PESTLE framework)
influence the company decision making process by embracing on
required strategic decisions such as product innovation, competitive
pricing, and focusing on innovative and creative marketing campaign.
■ In align with that, it also focuses on effective consumer service use to
target UK population in more effective way.

Summary and Impact on Decision
Making Process
■ In relation with internal or micro environment, it emphasis on the
effective decision making to meet the goals and objectives of the
enterprise considering e-commerce operations of the company.
■ Internally, the company can improve its sustainability standards to
step out ethical questions raised by society and political authorities

Conclusion
■ The decision making process also help the company to attain its
business objectives to reach the global consumers in an effective
manner.
■ It also provides company an opportunity to increase its footprint into
new countries with coordination to various authorities including
community.
■ At last, it will help Amazon to take competitive advantage over its
rivals and brings more revenue and the customer base to the
company.

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