Business Practices of Amazon: External and Internal Analysis

This report provides an analysis of Amazon's business practices, including their resources, capabilities, and proposed information system. It also discusses the opportunities and threats faced by the company.

Running head: BUSINESS PRACTICES OF AMAZON
Business Practices of Amazon
Name of the Student
Name of the University
Author’s note

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Table of Contents
1. Introduction..................................................................................................................................2
1.1 Business Background.............................................................................................................2
2. External Analysis of Amazon......................................................................................................2
2.1 Type of Industry....................................................................................................................2
2.2 General Environment Analysis..............................................................................................3
2.3 The Industry Environment.....................................................................................................5
2.4 Competitive Environment......................................................................................................6
2.5 Opportunities and Threats......................................................................................................6
3. Internal Analysis and Proposal)...................................................................................................7
3.1 Resources of Amazon............................................................................................................7
3.2 Identification of Capabilities.................................................................................................7
3.3 Core Competency Analysis...................................................................................................8
3.4 Suitable Information System for Amazon.............................................................................8
3.5 Evaluation of the Proposed System and Recommendations..................................................9
4. Conclusion...................................................................................................................................9
References......................................................................................................................................10

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1. Introduction
1.1 Business Background
Amazon is a multinational e-commerce and technology based company that have mainly
focused on bringing in several forms of impacts in the field of marketing with the help of the
advancements in technological aspects. The company has made their massive foothold in the e-
commerce industry due to their disruptive innovation strategies, market capitalization and brand
equity (Stanford 2014). In the recent years, the growth of Amazon has resulted themselves to
become the largest e-commerce marketplace based on marketing impacts with the help of the
cloud computing platform. In the e-commerce industry, Amazon is well known for their faster
options of shipping and cheap pricing options. The Amazon Web Services (AWS) had launched
their services in 2012. They had also introduced other forms of services that have been able to
help them in making a massive foothold over the e-commerce industry in Australia. The
Australian website of Amazon has been populated with a vast array of products (Bassi and
Chaudhary 2015). This report helps in focusing on the different prospects of the business and a
thorough research on the strategic systems that could be included within the systems.
2. External Analysis of Amazon
2.1 Type of Industry
Amazon has recently engaged in the retail sector based on selling of consumer products
and making vast advancements in the technological sector. The major focus of the industry is
based on e-commerce and cloud computing technologies. The use of these kind of technologies
have helped in diversification of the organisation and expanding their customer base.

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2.2 General Environment Analysis
Economic – Based on the economic analysis of Amazon, it has been seen that in the
recent times, the different external factors of the economy of Amazon would be significant:
1. The economic stability of the most developed markets.
2. Increasing disposable income within the developing countries.
The stability of income within the developed countries has mostly helped Amazon in
increasing their likelihood of success within the global marketplace. Such type of conditions
would help in minimizing the economic issues within the macro or remote environment
(Latawiec et al. 2014). This would further reduce the risks affecting the company within the
expansion of the online retail business.
Physical – The expansion of Amazon within the Australian marketplace is happening at a
gradual pace. In the recent times, Amazon has purchased a warehouse that would be able to
provide supplies (Pinho, Marengo and Smith 2015). The arrival of the e-commerce giant within
the Australian market has been the major factor of changing the online shopping habits of the
customers.
Sociocultural – The sociocultural environment within Amazon would define a set of
certain practices, customs, beliefs and behaviour that would exist within a certain population.
The impact of sociocultural environment would have a massive form of impact within the
international business environment of Amazon. The culture of work would be defined as the sum
of the knowledge of an individual, beliefs, morals, customs and law that would be needed to be
abided within the work culture of an individual.

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Global – Based on the impacts of the organisation within the Australian market, it has
been seen that the e-commerce giant have begun to offer their services to the different
consumers. In the global marketplace, the retailers have been presented with a new platform for
exhibiting their products in order to gather a range of audiences (Eweje 2014). This would also
incur a huge base of customers, thus resulting in a surge of gaining a huge market revenue.
Technological – There has been a major form of impact on the company based on
focusing on the technological aspects. The technological innovation has formed the major key
for success in the recent times. In the recent age of technology, Amazon has mostly been able to
implement Cognitive Intelligence and Artificial Intelligence technologies within their vast
expanding market. The company should mainly focus on putting a major impact on customer
service (Vintró, Sanmiquel and Freijo 2014). Hence, the impact of the latest technologies would
be useful for serving the customers and thus make better focus on engaging with the customers.
Political/Legal – The legal compliance of the business of Amazon would be important
for the businesses on a global basis. It is important for Amazon to remain in compliance with the
law set by the government of Australia. The company possesses a separate legal team that would
be responsible for viewing the legal challenges and issues.
Demographic – Amazon has majorly invested a major proportion in sustainability and
CSR. They have also invested in waste reduction, sustainable packaging and renewable energy
sources. They have also majorly invested in engaging in the community based on sustainability
projects. Amazon has researched into putting an impact on the Australian market in relation to
the structure of populations.

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2.3 The Industry Environment
Supplier Power – The suppliers control the availability of different materials or supplies
that are made to amazon.com.au based on their needs of the operations of e-commerce. The
small population would help in empowering the suppliers to impose a strong force on the
business of Amazon.
Buyer Power – The consumers have a direct access to high quality of information based
on the services provided to online retailers and the products that are being sold by them (Ritala,
Golnam and Wegmann 2014). This kind of external factor would affect the company in terms of
providing the customers an ability to find alternatives for the online retail service. The low
switching costs makes it simpler for consumers for transferring their focus on other companies.
The high availability of various substitutes have made it easy for customers to transfer from one
retail sector to another.
Potential Entrants – Several nee companies have mostly reduced the share of online
market for Amazon. The company have experiences the weaker intensity of threats based on
different external factors (Chong, Wong and Wang 2014). The consumers of Amazon can easily
shift their focus on new firms and thus empowering these firms to impose stronger force
Substitute Products – Amazon mainly compete with different substitutes within the
online retail market. There are certain external factors that primarily support the stronger
intensity of threats based on substitution. These factors include higher availability of substitutes,
lower costs of switching and low cost of substitutes.
Rivalry among Competitors – In the online market, there is a major form of rivalry
among the online competitors. Amazon also faces a major form of competition in bringing new

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products. There are certain factors that would be responsible for the strong intensity of
competition within the online environment of retail industry (Correll et al. 2018). These factors
include the high availability of substitutes, low costs of switching and high aggressiveness of
firms.
2.4 Competitive Environment
Amazon has become the top global retailer in terms of generating of revenues. The e-
commerce market of Australia has set a strong foothold and is growing rapidly. A stronger
economy and high form of internet penetration has been the major factor of fuelling the growth
of e-commerce (He et al. 2015). As per certain reports, 65% of people within Australia have
reportedly shop within the online platform. This has been making Australia an attractive
marketplace based on their wide form of diversification of products and initiatives of customer
retention.
The different strategies adopted by Amazon within the online market of Australia are:
 Providing a rich experience to the customers and thus make them feel as if the customers
are the supreme entity within an organisation.
 Offering a seamless Omni-channel experience for the customers. Customers should spend
their major time in researching for online products and services before searching from the
offline store.
 Providing customers with a delight experience based on after-sales. This would help in
the prevention of customers from switching to different competitor if there is an
unsatisfactory order experience.

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2.5 Opportunities and Threats
The opportunities within the business of Amazon are:
 Selling of different products and services on the online platform, thus reaching out to a
wide number of users.
 Selling of information for a digital product on the online platform.
 Reaching out to new customers, while also building healthy relationship with existing
customers
The threats for Amazon and their business are:
 Impact of other retailers who have also sought the online platform based on providing
services to customers (Pandit and Poojari 2014).
 Rise of impactful technologies that have been majorly supporting the growth of different
online e-commerce companies.
3. Internal Analysis and Proposal)
3.1 Resources of Amazon
The tangible resources of Amazon include their several warehouses, distribution centers,
offices and the engaged employees. The tangible assets are not of a much significance as
Amazon is a completely online business platform. The intangible resources of Amazon is the
hard earned reputation and image of the brand that has been established all over the years. The
brand image of Amazon has helped them in sustaining their position in the global marketplace
(Rossman 2016). Another form of intangible resource is the extensive amount of the awareness
of the customers that has been acquired all over the recent years.

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3.2 Identification of Capabilities
The company provides a range of different resources that mainly contributes to their
capabilities. The different employed resources help in the creation of capabilities =. The
maintaining and sustaining of market position has been possible based on the development if
capabilities and resources (Jara, Parra and Skarmeta 2014). The identification and use of
different capabilities have helped the firm in gaining a competitive advantage within the rival
market.
3.3 Core Competency Analysis
The core competency of Amazon is based on providing the largest election of items within the
online platform. These are combined with the aid of superior IT systems and efficient customer
service. The company also possesses professional and skilled employees who would be
responsible for maintaining negotiation power over various suppliers. Moreover, Amazon also
possesses a cost-effective system of outbound logistics (Varia and Mathew 2014). They mainly
outsource logistic system that would form the major part of the organisational capabilities.
Another form of organisational capability of the company is that they mainly focus on the
satisfying the needs of the customer.
3.4 Suitable Information System for Amazon
There are various forms of information system for Amazon. Among them, one of the
most suitable information system that could be applied within the business of Amazon is the
Electronic Customer Relationship Management (e-CRM) System. The application of the e-CRM
system within Amazon would majorly help the organisation in capturing, integrating and
distributing the data that would be gained within the website of the organisation (Harrigan and
Miles 2014). The impact of the e-CRM system would be able to support different kinds of

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solutions based on marketing, service and sales. These services would be based on the growing
form of online based business.
3.5 Evaluation of the Proposed System and Recommendations
The proposed e-CRM system could be implemented based on the performing a detailed
analysis over the customers. The implementation of such kind of system would be helpful in
building a new kind of ecosystem within the business grounds and would also majorly help in
retaining of the customers.
Some of the major recommendations of Amazon within improving their services are:
 Innovation within new products
 Integration of latest technology within their application
 Customer loyalty in the competitive market (Harrigan et al. 2015)
 Global Expansion in different sectors of inventory, management and supply chain
4. Conclusion
Based on the discussion from the above report, it could be concluded that Amazon should
review their systems and internal processes in order to make their major foothold in the highly
competitive market. There is a major possibility of different rival companies to make use of
different technological platforms for improving their services in order to gain the attention of
maximum number of customers. Amazon should be able to upgrade their systems based on
gathering more customer information and performing a detailed analysis of each aspect. Based
on such kind of analysis, Amazon should upgrade their systems according to the latest
technologies, which would be helpful towards customer information. This would be based on
better understanding of the needs of customer and thus providing improved services.

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