Digital Business Environment: A Case Study of Amazon

This report provides an overview of Amazon's organizational digital business model, Pestle analysis, SWOT analysis, Porter's five forces analysis, digital platforms and technologies used by Amazon, business issues faced by Amazon, and proposed solutions to resolve those issues.

Digital Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Overview of Amazon Company and its organizational digital business model.........................4
PESTLE analysis of Amazon......................................................................................................5
SWOT analysis of Amazon.........................................................................................................6
Strength.......................................................................................................................................6
Weakness.....................................................................................................................................6
Opportunity.................................................................................................................................6
Threat..........................................................................................................................................6
Porter’s five forces of Amazon or competitors analysis.............................................................6
2-3 Digital platforms and technologies used by Amazon...........................................................7
Identification of Business issues faced by Amazon....................................................................7
Proposed solutions to resolve those issues..................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
Books and Journal.....................................................................................................................11

INTRODUCTION
Digital business environment refers to the environment that has been created by applying
computers and networks for the purpose of business activities. In the modern digital world
business activities uses various kinds of computers and network technologies to cell reproduction
services and provide effective customer experience. All these activities are included in the digital
business environment (Al-Okaily, Al-Okaily, and Teoh, 2021). Amazon is a multinational
organization who deals in information technology industry and considered as one of the biggest
five companies in the market. This report contains overview of the Amazon Company and its
organizational digital business model who understand the internal environment of a digital
business. It also contains Pestle analysis of Amazon to analyze the external environment of a
digital business with SWOT analysis. Porter's five forces of Amazon and competitive analysis
with the help of photo general strategy helps to analyze the competition for Amazon in the
market. Further the report helps to identify the various business issues that has been faced by
Amazon and the digital platforms and technologies that has been used by company with the
proposed solution to resolve the issues that has been faced by the company.

MAIN BODY
Overview of Amazon Company and its organizational digital business model
Amazon is a technology company who have their focus on various businesses such as
digital streaming cloud computing artificial intelligence and e-commerce which was founded in
the year 5th July 1994. Amazon started their business as online marketplace for books and later
expanded their business in various retail items like electronics, apparel, software, food, jewelry,
toys, video games and many more. The company is well known for their technological
innovation and mass scale to become largest digital marketplace in the world artificial
intelligence assistant provider cloud computing platform and live streaming platform. Amazon is
an information technology company which offers the services to their customers of retail, web
services and subscription with the help of various channels in the market for stock written market
is considered as a primary source of revenue for Amazon for which the company has their
presence in terms of online as well as physical stores (Beynon-Davies, 2019) . Although Amazon
follows a traditional distribution system in their retail business having proper business structure
that has been followed in the traditional retail business and directly connected with the suppliers
but the difference between Amazon and traditional retail business is that they are using digital
technology for this business. The company uses internet as well as powerful software data driven
by digital technology to earn their revenues from this retail business.
The business model of Amazon is based on the platform business model in which their
core model includes the various business of Amazon. Being a digital business the Amazon
Company follows a digital business model in their organization which helps them in providing
innovative ideas to their customers with a greater technology. Amazon is based on a business
strategy that focuses on the investment in a latest technologies in order to improve their logistic
application in the organization. The most important feature of the digital business model of
Amazon is that they always focus on digital transformation in their business to gain competitive
advantage in the market and use customer centrism approach to provide customer satisfaction.
Due to application of customer centrism approach in the company business model Amazon is
ranked at number one for their customer satisfaction index and is great in both that is handling
their customer feedback and technology (Chaffey, Edmundson-Bird, and Hemphill, 2019).
Amazon uses agile business model in which they are able to execute changes in effective manner

in the company. The company has their focus to be based on technology and make the company
to be technology intensive rather than to become a labor intensive organization. The culture of
the organizational which business model is based on innovation and change because of its
innovative nature. To make its business model effective the company always focus to think
outside the box and fulfill the needs and wants of the customers by providing them better
products all the time.
PESTLE analysis of Amazon
Just like the traditional businesses digital business are also affected by the external
environment and it is essential for Amazon to focus on their external environment. For the
purpose of external environment analysis Amazon can use Pestle analysis that has been given
below for the company:
Political factors: The political stability in the market of United Kingdom and United States
helps the online retail business to grow in the market which can also create a tough competition
for Amazon from big brands in this online retail business (Ershova, Hohlov, and Shaposhnik,
2018).
Social factors: Social factors are the factors that are related to the society and their benefit in the
market in which an organization is operating their business. The Amazon focuses their business
to be technological extensive instead of labor extensive which can create a great threat for the
company to manage their business in the society with less job opportunities for people in the
market (Farani, Karimi, and Motaghed, 2017).
Economic factors: The factors which are directly related to the company’s revenue are called
economic factors. Amazon services are extended all over the world in which taxes remains the
main challenge due to change in numbers mainly in Asian countries (Coupey, 2016). The
company has earned great economic values in UK at the time of COVID19 pandemic.
Technological factors: Amazon uses upgraded technology which helps them to provide
innovative products to their customers. Increased demand of the technology for shipping and
delivering of different products will help the customers to keep in touch with Amazon (Gupta,
Mejia, and Kajikawa, 2019).

Legal factors: Amazon is a worldwide company which always focuses on the safety and security
of costumer especially in the field of software security. It emphasis on the health and safety of
the employees and follows the act of consumer law. It helps the organization to prevent
themselves from legal interventions (Hamilton, and Webster, 2018).
Environment factors: It has strengthen its brand image through environmental protection
regulation act which shows that the company has their effective concern towards the
environment (Jabłoński, and Jabłoński, 2020).
SWOT analysis of Amazon
Strength Weakness
Strong brand name
Customer oriented
Cost Leadership
Large number of third-party sellers
Product Flops and Failures
Over dependence on distributors
Losing Margins in Few Areas
Declining consumer safety
Opportunity Threat
More acquisitions of E commerce companies
Self-driven Technology
Developed marketing skills
Improved technological measures and
organizational policies
Links to exploitative labor
Aggressive competition
Economic Recession
Fake reviews
Porter’s five forces of Amazon or competitors analysis
After analyzing the internal as well as external environment of the company Amazon is required
to analyze their competitive environment for which the company has the option to use porter's
five forces model. The porters five forces model for Amazon Company is given below:
Competitive Rivalry: Amazon has many competitors like Walmart, Alibaba, and Flipkart etc. It
has a big challenge of the costumers that can transfer from one site to other easy within the
fraction of seconds. Within the course of time it has developed small online sellers who have
started their online selling (Kache, and Seuring, 2017).
Threat of New Entrant: Amazon is a big brand company which is established almost all over
the world with its huge range of products. It’s not easy to compete with such monster of the
market without proper resources and financial background.

Bargaining power of buyers: Amazon has a large number of buyers as well as products. So it’s
easy for the buyers to bargain for the product like household products, Online streaming services,
Amazon fire TV stick, Kindle etc. due to its availability, easy approach and market trust.
Threat of substitute: Amazon has a huge range of competitors on this online business. There are
many multi-national companies those have started their online setup these days . These
companies are giving low cost durable products which affects the sale of amazon. Although
amazon gives best customer service but still there is a risk of costumer going to some other sites.
Bargaining Power of Suppliers: Amazon is a well-established brand which has its own rules
and regulations for the suppliers. It solely depends on the product of the supplier which can
decide whether the supplier can bargain or amazon can bargain for the specific product.
Amazon has unique strategies for its customers in comparison to any other online
marketing business portal which helps them to gain competitive advantage in the market. It gives
high discount to its regular customers with its services within prime membership. It ensures on
time delivery for the ease of the costumers. It also provide various kind of festival discounts and
emphasis on no delivery charges (Kane, Phillips, Copulsky, and Andrus, 2019). All these
activities by the company helps them to be different from their competitors. This company
provides same day delivery, low cost good quality products, and instant solution of costumers’
problems to gain competitive advantage of the market.
2-3 Digital platforms and technologies used by Amazon
There are so many platforms and technology that has been used by the company. Amazon
uses different kind of digital marketing tools or platforms to upgrade its traffic and valuable
costumers. These platforms help Amazon to engage more and more general people who are not
too much computer savvy. These platforms are Facebook, Instagram, and YouTube etc.
Whenever a costumer searches for something on any search engine it will automatically reflect
on their social accounts like Facebook, Instagram etc. The digital platforms that has been used by
Amazon Company are Amazon Drive to store valuable data, Amazon prime to provide effective
web streaming services to their customers and E-commerce platform to deal in retail business.
For the purpose of using these platforms the company uses effective digital technologies. Three
digital technologies that has been used by the Amazon Company are Artificial intelligence, Data
pulled from multiple sensors and computer vision in the company. These technology helps the

Amazon Company in effective working of their routine operations and providing innovative
services to their customers.
Identification of Business issues faced by Amazon
There are several challenges that has been faced by business organizations in order to run
their business in the dynamic business environment. Like other businesses Amazon is also facing
big business problems in their organization which they are required to be solve for their great
success in the market. Being an online platform the company Amazon is also facing several
business problems and challenges in their retail business and other businesses that has been
identified below:
Pricing competition: With increase competition in the market in the online business Amazon is
also facing a problem of pricing competition in the market. The product and services that has
been sold by the Amazon are also available on other websites with low pricing that creates a
great competition for the company in their e-commerce website (Rothrock, Kaplan, and Van Der
Oord, 2018). Apart from the E-Commerce industry the company is also facing several kinds of
competition of pricing in their cloud-based services and other businesses.
To deal with the government scrutiny in the company: Another challenge that has been
identified to be faced by Amazon company as their business issue is to manage the government
scrutiny in the company. Is the company deals in many countries they are required to follow the
legal laws and policies of various countries. Amazon in countries like European union and other
like France in which the regulation and taxation policies for large technology companies has
stepped up it increases that chances for government scrutiny in the large organization like
Amazon it is the major challenge that has been faced by the company.
Maintaining loyalty of their customers: The main suit that has been faced by Amazon in the
online retail business is the loyalty of their customers as it became very easy for the customers to
switch to another and online platform as it is just one click away. To survive and sustain in the
business market it is essential for the Amazon Company to maintain the loyalty of their
customers with the company.

Proposed solutions to resolve those issues
In order to solve the issues that has been identified above in the Amazon Company there
are several propose solutions that can be used by the company (Scuotto, Santoro, Bresciani, and
Del Giudice, 2017). This proposed solution will help the company to effectively manage their
challenges and earn growth in the online market by generating more profitability in the company.
Some of the solutions that has been identified to resolve the above given issues are given below
Switch to different sellers: In order to solve this issue of rising competition the Amazon
Company provides there sailors a tool to be used to set their prices automatically with the help of
automated pricing tools. If the sellers of the company does not sell their products and services
according to the automatic writing tools company as an opportunity to switch their sellers due to
availability of higher suppliers in the market. Amazon is a large organization on which there are
many sellers registered and switching to different sellers will help the company to deal with this
pricing competition.
By attaining effective knowledge about the regulations and taxation policies: In order to
solve this issue the Amazon Company is required to have effective knowledge about the
regulation and taxation policies of various countries so that they can be able to manage and
follow these taxation and regulation policies in their organization and deal with the situation of
intense government scrutiny.
More schemes for loyal customers: In order to solve the issue of maintaining loyalty of the
customers the company has already launches a scheme of prime membership in their business to
identify their loyal customers in order to maintain loyalty in their customers the company can
offer more benefits to their prime customers to maintain their loyalty with the company and also
attract more customers to became their loyal customers.

CONCLUSION
The above discussion helps to conclude that accompany who is involved winner digital
business activities is required to analyze their digital business environment in order to achieve
success in the market. To understand the digital business environment in effective manner
company is required to be considered which deals in digital technology that is Amazon. Being a
digital organization Amazon company uses digital platform business model as their core model
for which the company has undergone with SWOT analysis in Pestle analysis. This SWOT and
pestle analysis helps Amazon company to analyze their internal as well as external environment.

REFERENCES
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