Business Strategy for Amazon Inc.

This report provides an analysis of Amazon Inc. using SWOT and PESTLE models. It evaluates different strategic options available to the company and justifies the most appropriate growth platform/s and strategies.

Unit Number and Title Unit 32 – Business Strategy
Title Strategic Management Plan

Table of Content
Introduction 2
Part A: An internal and external analysis that provides a platform
for strategic decision making: 2-6
1. PESTLE and SWOT of the organisation and an evaluation of the
organisation’s resources and capabilities 2-4
2. Competitive environment analysis using Porter’s Five Forces model
4-5
3. Identification and justification of the organisation’s existing and/or potential
competitive advantage 5
4. Valid strategies and tactical objectives to achieve overall strategic objectives
5-6
Part B: On the basis of this analysis critically evaluate and justify
strategic options for the organisation: 6-8
1. Critical evaluation of the different types of strategic directions available to
the organisation 6-7
2. Justification and recommendation of the most appropriate growth platform/s
and strategies 7-8
3. Evaluate ways and means by which the chosen strategy/ies can be
monitored in order to ensure success 8
5.0 Conclusions 8
References 9-10

Introduction
Business strategy refers to the set of plans, actions and aims which helps to identify how the
company would compete in a specific market with the existing product or service. In other words, it is the
competitive move being used to attract the consumers and to furnish or accomplish the objectives of
business (Kumar and et.al., 2021). Businesses who are having better business strategy will have clear
vision and mission to achieve the goals of the enterprise. In this project, it will elaborate the business
strategy of Amazon Inc. which is a multinational technology company being emphasis on the e-
commerce, cloud computing, digital streaming and AI. The report will discuss the macro and micro
environmental factors with the help of different models to know the competitive advantage of the
company. It will further critically evaluate the different kinds of strategic directions and justify the quoted
organization with the suitable growth platform to grow in the near future.
Part A: An internal and external analysis that provides a platform for
strategic decision making:
PESTLE and SWOT of the organisation and an evaluationof the organisation’s
resources and capabilities
To determine the strategic decision-making of the Amazon Inc, there is need to analyse the
macro and micro environment with the help of SWOT and PESTLE model (Vergne, 2020). There is a
need to figure out the internal and external factors of the company with the help of SWOT analysis which
would help to find the strength and weakness of the quoted company. SWOT analysis is a tool to devise
the successful strategy for the future by assessing its attributes and it could be explained by explaining the
elements of the Amazon Inc. :
 Strengths: Amazon Inc. is a multinational company having a huge market globally with a wide
range of services it provides. Even during the pandemic, the quoted company was witnessed a
rise in the sales because of the robust supply chain in the domestic as well as international
market. Apart from the e-commerce business, cloud-computing and video streaming are the two
major activities which contribute in the revenue for the company (Alshmrani, 2021). They highly
invest in the promotion and advertisement strategies which helps them to attract customers with a
big billion deal sales.
 Weakness: The quoted company face lot of challenges while working in the different areas. The
one of the biggest weakness of the company is the relationship between supplier and the
company which has recently been an issue due to the rapid delivery demand, black hat practice,
storage issue etc (Baboolal-Frank, 2021). The another problem that the company is facing is
related to the demand of better health facility at the warehouses which has recently witnessed rise
in strikes, walkouts to fulfill their wants. Hyper-competitive working culture and counterfeit
products are considered to be the weakness for the company.
 Opportunities: Amazon Inc has a long-term plan to succeed in the future. They integrated a
podcast service which provide a substitution to the spotify and Apple market and could be well-
versed with the Amazon's Alexa. They are planning to expand its warehouses in UK for faster
and quicker delivery of the goods (Warrier and et.al., 2021). This would provide a platform for
the company to launch Amazon Fresh products which give competition to the Tesco Plc,
Sainsbury's, M&S stores. They are planning to enter into food delivery lucrative business and
doing various investment towards different loyal sellers. Investing in the payment gateway
service i.e. Amazon Pay helps to provide an edge to the company with the other competitors.
 Threats: The biggest threat to the company is the competition from Walmart, Tesco, M&S,
Sainsbury's, Morrisons etc. which limits the share in the e-commerce market in UK. They are
facing pressure from the government regarding the counterfeit products. During the time of
pandemic, the company faces ban on non-essential goods which results in the loss of revenues in

many international markets. Due to the lack of supervision from the leaders stolen goods are
being sold on Amazon resulting in the drop of trust.
PESTLE analysis tool determine the external factors that could influence the decision-making of
an organization which provide a fact-finding activity of the company. It could be done by studying various
factors:
 Political: This factor affects the performance and revenue of the company as the recent stepping
down of UK's Prime Minister Mr. Boris Johnson led to various changes in the government
policy because with the new PM, he will come up with different business strategies which affect
the working of the company (Brevini and Swiatek, 2020). Brexit plays a key role as it reduced
the direct selling to the EU customers and impact the imports which directly comes from the EU.
 Economic: The quoted company has employed approximately 1 million people worldwide and
with the help of innovation and technology they are launching drone delivery technology which
would minimize the requirement of human resources. This could be one of the biggest economic
crisis by making thousands of individuals unemployed. The consistent drop in the stock market
price of the company due to the financial crisis and Covid-19 pandemic. Another reason for
decrease in the revenue is due to the following of capitalist structure model which is a traditional
business which in recent times not fit because of digitization and innovation.
 Social: Amazon Inc growth is depended on the customers and if they are not satisfied with the
experience or there is a change in the taste of the customers resulting in low growth and
productivity of the company. This factor influence with the lifestyle of the people and after
pandemic audience are more cautious regarding their health (Abdelrhim and Elsayed, 2020).
Government and welfare organizations are encouraging the citizens to live a prosperous and
healthy life.
 Technological: Amazon Inc focus on the technology and include in their retail business. They
involved the latest innovative techniques to get a competitive advantage whether it's in the
supply chain, logistics, inventory management etc (Hamblin, 2020). They are planning to start
drone delivery service and also started a delivery service even the customer is outside of its
home which is known as “Hub”. The company invest a decent share in the advancement of its
techniques for smooth operation and functioning. Company also provide 24/7 live chat service
of customer care to resolve problem related to refund, packaging issues, replacement etc.
 Legal: E-commerce companies has to face pressure from the government to share the customer
database. There are many instances when company was under the radar of violating the
international safety laws. They should comply with the recent changes in the wage code and
health & safety regulations which are prevailing in UK.
 Environmental: The quoted company has formed different strategies to cut the carbon emission
which is being caused by the big industries. The company has not published reports on
environmental sustainability after 2016. Although, the company has used various innovative
ways to minimize the carbon emission by using eco-friendly techniques like promoting electric
vehicles rather than normal one.
Competitive environment analysis using Porter’s Five Forces model
Porter five forces are help for analyzing the competitive environment of company also on the basis of
different factor by which competitive environment analyses such as threat of new entrant, customer,
substitute product influence and company profitability (Lincoln and Andrew, 2018). Amazon is one of the
biggest online plate form which are offering wide number of product and services online. Also there are
large number of customer are daily buy product from online. It is considering as the market leader in
commerce industry as well as it can be related to growing competition for other company as well because
it is focus on brand image in order to attract other customer.

Threat of new entrant ( low)- There are different types of online store are available and it is easy to
makes online store or e-commerce website on internet but on the other hand it can be said that it is hard to
make online presence effectively as giant Amazon. That’ is why it has been critically analyses that there
are low threats of new entrants for company. However, it is necessary to require extensive investment
which Amazon can makes on its brand development and customer experience which can be become
difficult for competitors (Sadq, Sabir and Saeed, 2018).
Bargaining power of buyers (high)- Amazon focuses on customer satisfaction and aims in order
to providing high value to the customer. That is why company has used the customer centric approach in
online business because it helps to guarantees for product of company which are high quality. Also, it has
been analyses that there is high bargaining power of customer because of intensive competition in
ecommerce industry.
Threat of substitute (high)- this is the biggest hurdle that Amazon faces is low switching cost in
industry because customer can easily change it from other customer. This is considered as the easy
availability of substitute goods.
Bargaining power of supplier (moderate)- Supplier provide company with products which are need for e-
commerce business but they are influence of supplier in order to get the product which can be easy for
customers. Also, there are strict rules and regulation are followed by supplier in order to focus on e-
commerce delivery (Onyusheva and Seenalasataporn, 2018)
Competitive rivalry (medium to high)- Company competes with strong competition as well as
there are large number of players are increased by small scale brands, startups to sell online product. Then
main competitors are Flipkart, Amazon, Alibaba, eBay etc.
Identification and justification of the organisation’s existing and/or potential competitive advantage
Amazon's flexible technology helps the company to get a competitive edge over its competitors
and there are following advantage:
 Wider product range: The given company has involved in the wide variety of products and
there are around more than 70,000 sellers across the world (Berg and Knights, 2021). Due to the
unlimited variety of products the consumers do get option for choosing the product.
 Highly competitive price: The company has aggressively focus on lowering the price of the
products as it helped to attract the customers which enhance the sales of the company.
 Advance technology: The quoted company had emphasized on the AWS technology which
focus on what consumer wants designing innovative strategy with in-house methods and reduced
the cost of M&A (Tou, Watanabe and Neittaanmäki, 2020).
 Putting its own products: The company has focused to promote its private label brand which
results in higher customer review, repeated purchase of products and lower return rates.
By applying the Mckinsey 7s model it helps to identify the organization goals and changes
required to achieve that. With the help of this model, seven elements of the Amazon company could be
figure out which helps in fulfilling the aims and goals resulting in providing a competitive edge. Structure,
strategy, skill, system, shared values, style and staff are the 7s which together assist the quoted company
in achieving the advantage from its competitors.
Valid strategies and tactical objectives to achieve overall strategic objectives
Strategic objectives are the purposeful statement which assist the company to frame an overall
vision and goals that could be measurable to achieve the long-term and short-term aims of an organization
(Nowak, 2020). Amazon Inc valid strategy and tactical objective could be evaluated with the help of
looking at the objectives of the company. The quoted company relied mainly on four principles such as:
 Customer-obsession: The company has primarily focus on the customers rather than competitor
by making policies considering the customers in mind. Whether it's related to the supply chain

management or delivery staff members the company always framed policy by T&D of their staff
members and employees to better deal with the customers.
 Passion for invention: The given organization always looking for innovation by following
different techniques in the working style of the company.
 Easy operational work: The quoted company after the pandemic has emphasized better
operational working environment for the warehouse as well as management employees and
consider their health & safety at utmost priority. They reduce the manual work of the employees
with the engagement of automatic devices.
 Long-term thinking: For strategic objective, the leader plays an important role in framing the
aims and goals of the company to achieve success in the long run of the business (Capolongo and
et.al., 2020). Recently, there is a change in leader of the quoted company which might change the
working style of the company.
Part B: On the basis of this analysis critically evaluate and justify
strategic options for the organisation:
Critical evaluation of the different types of strategic directions available to the organisation
Strategic direction refers to the action plan which required to be implemented by the company to
progress towards its vision and overcome its objectives. In other words, it ensures, owners and
management could communicate the significance of employees and their role in achieving the goals and
objectives of the business (Sharma, Nigam and Sharma, 2020). The quoted company has relied on the
foundational ideas which provides continuity to strategy with time. This would help the Amazon Inc to
provide stability to the direction with that of strategies over the long term. This could be further explained
with the help of devise strategic management plan which would determine the quoted company following
points:
 Background: The quoted company was founded in 1994 by Jeff Bezoz with initially started with a
marketplace for books and later expanded into diversified products.
 Organisation structure: Amazon Inc has a hierarchical structure due to the large size of its
business which provide clear understanding of the roles and duties of the employees with an
accountability for their actions (Rangaswamy and et.al., 2020). They also provide clear career path
for an individual growth.
 Vision: The given company vision is to be the customer-centric organization where they could
find everything which they might want to purchase.
 Mission: Amazon Inc provides better experience to the loyal customers with the help of
innovation and technology which would help the potential consumers.
 Marketing Mix: Amazon has diversified marketing mix which comprises elements that includes
product, price, place and promotion that helps to fulfill its objectives and goals.
 Strategy formulation: The quoted company is known for the customer-friendly approach as they
focus on the lowest price and better experience to the customers with the help of different
strategies.
 Implementation: They implement different strategies to increase their market share in the
international boundaries by emphasizing more on customer-friendly approach which enhance the
productivity and profitability of the company.

 Evaluation: Amazon's supply chain evaluation determine the quality of the products by examining
the customer satisfaction level. It is important to evaluate the support, consistency, coverage and
sufficiency of the strategies.
 Culture: It is the set of behaviour, principles, values, norms, expectations within an organisation
which acts as a strong strategic direction helps in the improvement of the customer dealing.
 Grand strategy: This refers to the long term strategy which helps to direct an organisation to
frame approach considering the view of grand strategy. This would save the time, resources and
helps to achieve the short-term objectives of the company.
Justification and recommendation of the most appropriate growth platform/s and strategies
The most appropriate growth platform for the Amazon Inc is the e-commerce business which is
most successful for the quoted company. Almost every business would be impacted when there is a
change in strategy of the given company. The most appropriate growth platform and strategies are:
 Prime as the hub: Amazon Prime played a key role in enhancing the members by providing free
shipping to them (Culpepper and Thelen, 2020). This was one of the most successful loyalty
programme being run by the company to attract the customers as well as sellers.
 Fuel for small business: Amazon is providing a platform for the small businesses with the service
which is designed especially for the startups named Launchpad. They provide finance support to
the new ventures which would help them to smoothly run their business and for the Amazon Inc it
would increase the market share of the company.
 Home delivery logistics: The one of the most astonishing patent is the drone facility which the
Amazon would find ways to use technology as third party logistics (3PL). They are delivering
products within 48 hours and emphasizing prssure on the supply chain to build strong network to
satisfy coast-to-coast demand.
 Artificial intelligence: This is one of the most appropriate growth platform for any business. The
quoted company has entered by launching Alexa into AI. Apple has already entered into this
business with the help of launching Siri. Zero-click would be one of the merit of this AI which
provide user the ability to start music, shopping and search anything.
 Pharmacy business: This was the most appropriate strategy to enter into pharmacy services.
During the time of pandemic, pharmacy was the only industry whose shares were booming.
Amazon Inc has launched delivery of pharmacy by joining hands of Cardinal Health and various
distributors in regard to reach public.
 Geographic expansion: The company would grow in emerging market and primarily expanding
its geographic expansion in European market with increase in the international sales of the
company. They also look to expand in the Middle East and Asia providing opportunity in niche
market.
 Merger and acquisition: Amazon Inc has enhanced the acquisition activity by including
GameSparks and Blink home security. The quoted company expands its platform giving an
opportunity for the new businesses to grow. Having differentiated strategy the given company is
poised to become most valuable organization.
 Corporate agility: The quoted company focus on the ability to be flexible, executing with speed
and being adaptable which provide an advantage to the company in the market. Amazon Inc
formed teams to conduct a research work and what are the innovation being required to be in the
market.
 Payment gateway and e-book: Amazon Inc has entered into departments which provide them an
edge to its customers like they launched Kindle through which an individual could access various
books on a single device with an easy accessibility. AmazonPay is another platform which helped
the company to increase its customer number by providing cashback offers and many other
advantage.
Apart from these, the company can enter into travel & lodging business which is one of the tourist
industry where the company can grow its market share.

Evaluate ways and means by which the chosen strategy/ies can be monitored in order to ensure success
Performance evaluation is necessary to evaluate the success of the company. To measure the
success of the chosen strategy there are different ways to monitor those strategies (Bartelucci and et.al.,
2020). It is important to determine whether the plans have been successfully implemented or not. Before
figuring out the strategy it would be essential to compare it with the vision of the quoted company. There
are certain ways to ensure that the chosen strategy would help to achieve success which could be further
explained:
 Be committed to the plan: The first thing to monitor strategy of the quoted company is to stick to
the plan which was finalized by the stakeholders and leaders. There should be an opportunity to
mold the strategy with complying with new challenges. Committed to the strategic plan before
implementing ensures decision-making of the leaders and stakeholders.
 Align jobs to strategy: Another mean to monitor success while choosing strategy is designing the
job role according to the strategy selected. The quoted company focus on employees before
framing the strategy as it enhance the performance of the business. The job's design is based on
four factors i.e. control, accountability, influence and support which could be narrowed or widened
before finalizing the strategy.
 Better communication: This is important to empower employees as there are circumstances when
the workforce are not aware about the new strategy due to the lack of communication. In order to
ensure success of the strategy it is important that it must be communicated to the employees of an
organization which motivates them to work for the betterment of the company.
 Consistently measure performance: This is one of the method to assess the progress of the
company with the help of key performance indicitors (KPI) which helps to determine the success
numerically (Prathapan, Sajin Sahadevan and Zakkariya, 2018). For example, quoted company had
formed strategy to retain the customers by launching a big billion sales for them with various bank
offers involved.
 Maintain innovation and control: Another way to monitor the success is by maintaining the
balance between the innovation and control. Amazon Inc develops a process to evaluate the
challenge, barrier and opportunities that would arise. An organization need to be flexible rather
than stagnant because it has no room for growth.
The strategy success could also be evaluated on the basis of three things i.e. by determining the
quality of the products, use of technology in the company and customer satisfaction of the company. By
improving the quality of the product or service with the help of strategy it could be determined that the
selected strategy is beneficial for the company. The strategy should be selected on the basis of objectives
or goals of the company.
5.0 Conclusions
The report has been concluded by critically analyzing the marketing strategy of the Amazon Inc. It
was able to determine the micro and macro environmental factors with the help of SWOT and PESTLE
analysis to know the ability and capability of the company. The research has been evaluated the
competitive forces with the help of porter's five forces model to know the existing degree of risk in the
particular industry. Further, it was able to justify competitive advantage that the company has and figuring
out strategic objectives with the aid of devise strategic management plan to know the vision and mission
of the quoted company. The case study has been summarized the different kinds of strategic directions
with recommending most appropriate growth platform of the quoted company. It was evaluated ways
which could be monitored in order to ensure success of the quoted company.
References

Abdelrhim, M. and Elsayed, A., 2020. The Effect of COVID-19 Spread on the e-commerce market: The
case of the 5 largest e-commerce companies in the world. Available at SSRN 3621166.
Alshmrani, H. M., 2021. An analytical view of amazon success in the worldwide. Life Science
Journal. 18(6).
Baboolal-Frank, R., 2021. Analysis of amazon: Customer centric approach. Academy of Strategic
Management Journal. 20. pp.1-16.
Bartelucci, N. and et.al., 2020. High-Level Metrics for Service Level Objective-aware Autoscaling in
Polaris: a Performance Evaluation. In 2022 IEEE 6th International Conference on Fog and Edge
Computing (ICFEC) (pp. 73-77). IEEE.
Berg, N. and Knights, M., 2021. Amazon: How the world’s most relentless retailer will continue to
revolutionize commerce. Kogan Page Publishers.
Brevini, B. and Swiatek, L., 2020. Amazon: Understanding a Global Communication Giant. Routledge.
Capolongo, S. and et.al., 2020. COVID-19 and cities: From urban health strategies to the pandemic
challenge. A decalogue of public health opportunities. Acta Bio Medica: Atenei
Parmensis. 91(2). p.13.
Culpepper, P. D. and Thelen, K., 2020. Are we all Amazon primed? Consumers and the politics of
platform power. Comparative Political Studies. 53(2). pp.288-318.
Hamblin, K., 2020. Technology and social care in a digital world: challenges and opportunities in the
UK. Journal of Enabling Technologies.
Kumar, S. and et.al., 2021. What do we know about business strategy and environmental research?
Insights from Business Strategy and the Environment. Business Strategy and the
Environment. 30(8). pp.3454-3469.
Lincoln, I.V. and Andrew, C.E., 2018. Porter Analysis: A Business Strategy of Amazon. Com
Through a Value Chain and Comparative Advantage Analysis of Amazon’s Trademarks
and Intangibles. Com Through a Value Chain and Comparative Advantage Analysis of
Amazon’s Trademarks and Intangibles (November 27, 2018). Practical Guide to US
Transfer Pricing,.
Nowak, R., 2020. Does employee understanding of strategic objectives matter? Effects on culture and
performance. Journal of Strategy and Management. 13(4). pp.477-493.
Onyusheva, I. and Seenalasataporn, T., 2018. Strategic analysis of global e-commerce and
diversification technology: the case of amazon. com inc. The EUrASEANs: journal on global
socio-economic dynamics, (1 (8)), pp.48-63.
Prathapan, M., Sajin Sahadevan, D. and Zakkariya, K. A., 2018. Effectiveness of digital marketing:
Tourism websites comparative analytics based on AIDA model. International Journal of
Innovative Research & Studies. 8(4). pp.262-273.
Rangaswamy, A. and et.al., 2020. The role of marketing in digital business platforms. Journal of
Interactive Marketing. 51. pp.72-90.
Sadq, Z.M., Sabir, H.N. and Saeed, V.S.H., 2018. Analyzing the Amazon success strategies. Journal of
process management and new technologies, 6(4).
Sharma, V., Nigam, V. and Sharma, A. K., 2020. Cognitive analysis of deploying web applications on
microsoft windows azure and amazon web services in global scenario. Materials Today:
Proceedings.

Tou, Y., Watanabe, C. and Neittaanmäki, P., 2020. Fusion of technology management and financing
management-Amazon's transformative endeavor by orchestrating techno-financing
systems. Technology in Society. 60. p.101219.
Vergne, J. P., 2020. Decentralized vs. distributed organization: blockchain, machine learning and the
future of the digital platform. Organization Theory. 1(4). p.2631787720977052.
Warrier, U. and et.al., 2021. Factors that lead Amazon. com to a successful online shopping
platform. International journal of Tourism and hospitality in Asia Pasific (IJTHAP). 4(1). pp.7-
17.