Digital Business Sustainability Challenges

This assignment explores the concept of digital business sustainability, which is essential for maintaining profits in a growing economy. It discusses the process of achieving sustainable development by managing financial, social, and environmental risks associated with digital businesses. The challenges faced by digital businesses are highlighted, including cybercrime and new technological updates that require careful consideration to maintain their business models.

Digital Business

Table of Contents
INTRODUCTION...........................................................................................................................3
Business description.....................................................................................................................3
Traditional Business Vs Digital Business....................................................................................3
Digital business models................................................................................................................4
Digital business activities................................................................................................................5
Mode of operation........................................................................................................................5
Digital business environment.......................................................................................................6
Marketplace .................................................................................................................................6
Market growth..............................................................................................................................7
Market segmentation....................................................................................................................7
Key growth factors for digital business........................................................................................8
External forces impact on business operations............................................................................8
CONCLUSIONS..............................................................................................................................9
REFRENCE ..................................................................................................................................10

INTRODUCTION
Digital business is the creation of new business which is being designed by blurring the
digital as well as physical worlds. They use technology to create new value in different areas
such as business model and customer experience which support their core operations. The
organisation under taken under this report is Amazon which is an multinational technology
company based in the U.S (Fitzgerald and et. al., 2014). It is the largest e-commerce marketplace
in the world in terms of revenue and market capitalization. This report will analyse how amazon
is conducting it's operations in the marketplace and the impact of various external factors on the
business operation. Later part of the report deals various challenges which are being faced by
the organisation in order to maintain it's position in the market.
Business description
Amazon is a vast internet based enterprise which sells books, music, electronic toys, and
many other items. It was founded by Jeff Bezos in the year 1994 and it is situated in Seattle,
Whashington. It provides web services which includes renting data storage and computing
resources known as cloud computing over the internet (Fleisch, Weinberger and Wortmann,
2015). It is the largest e-commerce marketplace and clod computing platform available in the
world which is measured in term of revenue and market capitalization. It is largest revenue
company in the world. It has approx 6,13,300 number of employees working for them in
different areas.
Traditional Business Vs Digital Business
Traditional business comprises of a local stores which offers its services or products to its
local customers. It has a physical existence where customers visit in order to buy products.
Where as Digital business uses technology in internal and external operations in order to create
value. They provide different digital platform to their customers so that they can easily buy their
products and services (Hess and et. al., 2016). The similarities and difference between them can
be elaborated below:
 Overhead cost- Digital business models generally have lower overhead and start-up
costs as compared to the traditional business models which comprises of brick and mortar
stores. In digital businesses it helps in elimination of different needs such as geographic

location, staff and utilities Where as in tradition business models their requirement is a
must.
 Customer convenience- The growth of Digital business have provided an ease to
customers who are looking for a convenient shopping experience. As the digital business
have provided customer various facilities such as any time shopping, prime deliveries and
online payment system it has enhanced the overall customer experience (Iansiti and
Lakhani, 2014). Where as traditional businesses lack to provide all of these facilities to
it's customers.
 Time and Accessibility- Digital business models are always open and provides an
opportunity to customers to complete their transactions in a few minutes. While the
traditional methods comprised of long processes which include viewing the merchandise,
taking to salesperson and waiting in the payment line. Only a limited number of
traditional business provides there services 24 hours a day.
Similarities-
 Customer oriented- Both of the businesses are focused on attracting large number of
audience in order to sell their product and services to them. They create product and
services in order to satisfy customer needs and wants.
 Twenty four hour service- there are different traditional businesses which are providing
their services for 24 hours a day (Kaplan and et. al., 2015).
 Hiring and managing personnel- Both the business requires manpower in order to
operated in the business. So the they can help in different management process such as
solving client problem and assisting them in the decision making process.
Digital business models.
In order to understand business model swot analysis is conducted below:
STRENGTH
Strong brand power as people recognise it by
name and use it for availing discounts and low
shipping rates.
Customer centric.
WEAKNESSES
Shrinking margin because of price wars.
Easily imitable business model.
Limited penetration in developing market.
Limited presence in brick and motor form.

strong background and deep pockets.
Efficient delivery network.
OPPORTUNITY
Entering into developing market.
Expanding brick and mortar business model.
Adopting measures in order to reduce
counterfeit sales.
THREAT
Imitation by other market player.
Aggressive competition in the industry.
Cyber security as cyber crimes are hampering
their security systems.
Digital business activities
Digital business activities includes activity that are engaged in the purpose of making
profit. It encompasses all the economic actives that are being carries out by companies while
operating in the market (Laudon and Laudon, 2015). Digital business activities includes several
activities such as investing and financing activities which are being focussed on creating value
for the shareholders of the company. Amazon is adopting different business activities which
comprise of selling products and services on online platform providing prime facilities which
comprises of deliver of product in one day and it's application help customers to stream various
things such as movies and web series.
What digital technologies dose that company employ
Amazon have a large technology core which help them in running entirely on Linux
based. It has the world third largest Linux database, with a total capacity of 7.8 terabytes, 18.5
TB and 24.7 TB respectively. The head data warehouse of the organisation is made up of 28
Hewlett Packard servers, comprising of four CPUs per node, running Oracle 9i database
software. Amazon technology architecture is responsible for handling million of back-end
operations on a daily basis.
Mode of operation
Amazon operates in different forms in the market all of them are connects digitally in
order to capture customers. It sells it's product and services with the use of online platform
through the application which is available on online sites to download. The application help

customers serve and find the correct product as per their needs and wants and it also provide
various facilities such as prime delivery. Wish list, online payments and etc.
Digital business environment
Business environment is dynamic and changes on a daily basis there are various macro
and micro factors which impact the functioning of business. Micro environment comprises of
factors which exist in organisation immediate area of operations and have a great impact on the
business decision making. These factors includes competitors, customers, supplier and other
general public. In order to serve customer better and also in an efficient manner organisations
needs to analyse market factors such as customers so that they can produce product and services
in order to satisfy needs (Libert, Beck and Wind, 2016). Where as macro environment comprises
of major external and uncontrollable factors such as legal, political, social and technological
factors that influence an organisations decision making. If there is a change in one of factor such
as a technological factor it will impact the business of digital business because then they have to
update their systems in order to keep with the changes existing in the businesses. On the other
hand Meso environment serves as an link between the micro and macro opportunities. It consists
of factors such as distributors, competitors and general industrial factors that can influence the
working of a business. By generating a link between micro and macro opportunities digital
business will be able to attract and capture different market opportunities existing in the market.
Marketplace
Meso- It is the setting between macro and micro opportunities which serves as an framework for
an organisation. It can be considered as its infrastructure, policies and rules and guidelines. It is
related to factors with which an business can respond to environment in direct or in indirect
form.
Porter five force model.
In order to analyse the marketplace porter five forced model is being used. It is
framework that represents five forces that shape the overall extents of competition existing in the
industry. It can be further elaborated below:
 Threat of new entry: The threat of new entry is low (Matt, Hess and Benlian, 2015). As
it will be difficult for new entrant to reach the level of status in which amazon is existing.
It has already been in the market place for a long period of time. It has offered sufficient
product and service differentiation in order to keep loyal customers.

 Bargaining power of suppliers- It comprises from medium to high. As the number of
supplier of the organisation is high and they have to follow the code and conduct
established by the businesses. It can easily switch or find new suppliers for any product.
 Bargaining power of buyers: It comprises from medium to high as there are various
other business in the industry providing product and services. It have reduced the
customer switching cost which have resulted in increasing their power.
 Threat of substitute: The threat is at high level as other brands existing in the industry
who are using aggressive promotion methods in order to attract customers (Scuotto and
et. al., 2017). These are focussed on increasing their market share by selling the similar
products and services.
 Rivalry existing in the industry: It competes against strong competitors which make the
high of competition high in the market. Competitor such as Walmart are giving a tough
competition to amazon. Along with it experience a strong force of substitution because of
high level of competitors existing in the industry.
Market growth
Competitive matrix is an tool used by companies in order to establish competitive
advantage. It provides an easy to read portrait of organisation competitive landscape and it's
position in the marketplace. Company can design an matrix design which will provide rank out
of 5 to two organisation so that they can be compared on different basis and their market position
can be analysed accordingly. Through this they will get an idea about their company position in
the market and will also help in development of new products. The two organisation taken are
Amazon and Walmart.
Factor Amazon Walmart
Affordable price 4 3
Product quality 5 4
Installations facility. Yes No
Market segmentation
Amazon target audience is audience are those who are interested in internet shopping. As

they are offering a large range of product it can be concluded that they are targeting
customers of all age group comprising from young to the old people (Veit and et. al.,
2014). Their site has been designed in such a manner that their sites can be easily
accessed by even those people who are computer illiterate. It does not target on a
particular type of customer it is aimed at offer items to people from all walks of life and
interests.
Key growth factors for digital business
USP-Unique selling proposition is an feature or characteristic that distinguish a product
service in comparison with others. It is an unique benefit which is being exhibited by a company,
service or product that will enable it to stand out from it's competitors in the market. Amazon
unique selling proposition is that it has the largest collection of books online in the globe. It has
different categories of books comprising from kids to academic books.
Factors contributing to the growth of businesses- There are numerous factors which
are responsible for the growth of the enterprise such as their customer centric approach they have
focussed on pleasing their customer rather then trying to stay ahead in competition. Another
reason is that it is creating innovation in their business path by exploring artificial intelligence
and outer space. As the digital technology is booming in the current market they are creating
innovation technique through which they can optimise the level of customer satisfaction for
example use of drone and prime time delivery facility.
External forces impact on business operations
Pestel analysis- It is framework used by marketers in order to analyse and monitor macro
environment factors that have an impact on the organisation performance. It can be further
elaborated below:
 Political factors: There are range of political factors that can influence Amazon which
includes political stability of a country, attitude of government on e- commerce and retail
sector. It is important for organisation to abide by the political and legal regulation in
each location in which it is selling it's product and services.
 Economic factor: Its performance is effected by the situation of economies where it
operates its online retail business. It have to respond to different economic trends and
changes in order to maintain it's performance for example economic stability of most

developed market can serve an opportunity for the business to increase it's financial
performance.
 Social factor: These factors include social environment and identify emerging trends.
This include changing family demographics, education level and attitude changes and
changes in lifestyle (Westerman, Bonnet and McAfee, 2014). As the customer
preferences keeps changing from time to time in order to satisfy customer organisation
needs to examine these factor and design product and services accordingly.
 Technological factors: Technological advancement directly effect the functioning of
business. Technological advancement has be both a threat and opportunity for the
business such as new technology will help the organisation to increase it's IT efficiency
where as it can also result in making the current technology obsolescence which will
increase the cost for the organisation as they have to invest in latest technology.
 Environmental factors: These factor relate to influence the surrounding environment
such as pollution and recycling waste. Organisation have opportunities to improve its
environmental impact in response to the rising interest in different environmental
programme. Through adoption of different programme such as corporate social
responsibility.
 Legal environment: These comprises of different rules and regulation set by the
governing authority. These includes rules related to import and export, tax policies and
wage regulations. In order to avoid any legal complications organisation needs to follow
this rules as different state have different set of rules. In order to perform without facing
any legal proceeding company have to follow different rules of different countries.
CONCLUSIONS
As the economy is growing so the digital world is growing. It needs to maintain
sustainability in the business in order to maintain profits. Business sustainability is process from
which company manage their financial, social and risk associated with environment. It helps the
organisation to achieve sustainable development which is focussed on achieving and meeting the
current needs without compromising on the future needs. Digital business needs to work on a
sustainable level in order to achieve profits. There are different challenged which are being faced
by digital business as there are increasing concern related to cyber crime and some others factors
also contribute to be a challenge for the business such as new technological updates which is

important to be tackled by them as there business model comprises of digitally connecting
different activities.

REFRENCE
Books and Journals
Fitzgerald and et. al., 2014. Embracing digital technology: A new strategic imperative. MIT
sloan management review.55(2). p.1.
Fleisch, E., Weinberger, M. and Wortmann, F., 2015. Business models and the internet of things.
In Interoperability and Open-Source Solutions for the Internet of Things (pp. 6-10).
Springer, Cham.
Hess and et. al., 2016. Options for formulating a digital transformation strategy. MIS Quarterly
Executive.15(2).
Iansiti, M. and Lakhani, K.R., 2014. Digital ubiquity: How connections, sensors, and data are
revolutionizing business.
Kaplan and et. al., 2015. Beyond cybersecurity: protecting your digital business. John Wiley &
Sons.
Laudon, K.C. and Laudon, J.P., 2015. Management Information Systems: Managing the Digital
Firm Plus MyMISLab with Pearson eText--Access Card Package. Prentice Hall Press.
Libert, B., Beck, M. and Wind, J., 2016. The network imperative: How to survive and grow in
the age of digital business models. Harvard Business Review Press.
Matt, C., Hess, T. and Benlian, A., 2015. Digital transformation strategies. Business &
Information Systems Engineering.57(5). pp.339-343.
Scuotto and et. al., 2017. Shifting intra‐and inter‐organizational innovation processes towards
digital business: an empirical analysis of SMEs. Creativity and Innovation
Management.26(3). pp.247-255.
Veit and et. al., 2014. Business models. Business & Information Systems Engineering.6(1.
pp.45-53.
Westerman, G., Bonnet, D. and McAfee, A., 2014. The nine elements of digital transformation.
MIT Sloan Management Review.55(3). pp.1-6.