Global Strategy and Sustainability

This report explores the global strategy and sustainability practices of Amazon. It includes an analysis of the external and internal environment, value chain analysis, CSR and sustainability analysis, and recommendations for global development and sustainability.

Global Strategy and
Sustainability
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
2. External Environment Analysis...............................................................................................3
3. Internal Environment Analysis of Amazon.............................................................................6
Value chain analysis of Amazon................................................................................................8
4. CSR and Sustainability Analysis.............................................................................................9
5. Identify opportunities and threats facing the industry...........................................................10
6. Recommendation for global development.............................................................................11
7. Recommendations for Sustainability.....................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Every company is required to develop an effective strategy in order to expand in other
market. In recent times, there is tough competition in all industries and markets. So, all firms are
trying to expand at global level and gain competitive advantage. Along with that, it requires for
organisation to focus on sustainability as well (Sukma, Lubis and Utami, 2019). This is because
it helps in building a strong brand image in industry. Besides that, there are many CSR practices
which is implied by businesses. This report will describe about internal and external analysis of
Amazon. Moreover, it will evaluate implication of Amazon in sustainability. Furthermore,
recommendations will be given of how company can deal with global challenges and on CSR
practices.
Amazon is a leading e commerce company who is having presence in over 180 nations. It
was founded by Jeff Bezoz on 5 July 1994. It offers variety of products and services such as
Amazon prime, music, grocery, clothing, etc. The current net worth of firm is $245 billion. The
vision is to be most customer centric company where all products are available. Also, goal of
company is to expand in developing nations.
MAIN BODY
2. External Environment Analysis
It refers to an analysis in which external forces are being studied and analyzed along with
their impact over the company. With reference to Amazon external analysis of the environment
can be performed by –
PESTLE analysis -
Political - It is an important element of the PESTLE analysis. Various political party pressure,
political stability, government intervention, rules and regulations and various other elements
comprise political factor. It will be considered as an opportunity for the Amazon because with a
rising trend of digitalization and government favorable policies regarding the digital moves and
expansion of e-commerce industries will lead to better expansion and operation of the Amazon’s
business (Yusop, 2018). However, along with opportunity Amazon may also face threat as an
intense competition and global level competition.
Economical - As per this factor various aspects regarding the economic environment in terms of
disposable income, economic policies, condition are being included. In case of Amazon this
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factor benefits the company in terms of availing opportunities in terms of favorable economic
condition with greater availability of disposable income in the market. However, due to
economic recession in China the company may be affected because the market of China is
counted as largest which every company want to penetrate. Thus, it will act as threat for
company.
Social – The company is benefiting the customers by assessing and observing their buying
behavior and for this Amazon is improving online habits so that more people and customers are
engaged towards benefiting the customers and organization systems. The social factor also helps
in encouraging the market penetration (Matovic, 2020). Higher disposable income of people is
the major source through the levels of the business of Amazon is being operated and this helps in
ensuring process to be more significant for the organizations and for society as well. Thus, the
society is the leading factor which helps in running the business of Amazon.
Technological – Amazon is following all the technological factors and is following all the up
gradations which are useful in maintaining the social media channels and the systems of the
company itself while producing products and serving the services to the customers effectively
and this makes it significant. Technological advancement in Amazon have lead to the increase
the process and procedures of the company and it has also lessen the cost of the manual working
as technology adaption has made the processing fast and accurate by placing the products and the
services on higher level on an effective level possible.
Environmental – Amazon can follow the environmental standards which help the company in
maintaining positive environment and does not harm. There should be increase in the popularity
in the low – oxygen lifestyles and this will be biggest opportunity for the company in the most
effective way possible. The sustainability standards of the company are increased and this has
made the processing of company even more effective and has reduced the wastage which affects
negatively on environment. This helps the business of Amazon in ensuring that environment
safety is the key source to the success factor overall.
Legal – The legal factors which are there mentioned and works for Amazon is by rising product
regulations which ensure the customers about the products and services which are rendered by
company and this helps them in making the most of work effective for the company (David,
2019). The rules and policies of Amazon helps the company in making the processes and the
regulations in the external business environment more effective as company follows these rules
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and makes them follows in for leading business on large scale. The legal factors also improve the
other processes of the company.
Porter’s Five Force Analysis – The Porter’s five force model help in analyzing five forces
which helps in business analysis which Amazon is doing. This five force model will help with
the various factors and forces which are to be defined for purpose of analysis of the company and
this helps in making attain the relevant information about Amazon. Therefore, the Porter’s Five
Force Model is explained below which helps in creating effective results and provides success to
the company’s processes –
Competitive Rivalry – Amazon has many rivals in the market. Competence in the market enables
Amazon to be creating such environment which helps in regulating and competing with the
rivalries by making the products and services affordable and reliable for the customers (Bruijl,
2018). The online service which is provided to customers is how company competes with their
rivalries in the market. The strategic priority is being set by Amazon as through strategies framed
the company is able to analyze the core competencies.
Bargaining Power of Buyers – Amazon’s approach is customer – centric approach. The
bargaining power of buyers is the main source through which business is being run successfully
by company and this ensures that the external factors helps company in making the business
more effective (Fang and et.al., 2018). This is main purpose through which company is able to
make the decisions and by analyzing the buyers scale in purchasing product or services. This
force of model helps in analyzing the functions of buyers in market.
Bargaining Power of Suppliers – The suppliers impose the strong force on Amazon and these
changes the prices of the products and services which are available to the customers in the
business. This also sometimes limits the suppliers and their actions towards the changes which
are there in the process when the suppliers are active in the market. The strength which the
suppliers hold in the market is there for the purpose of how the business is working effectively
and efficiently.
Threats of Substitutes – Amazon competes with the substitutes in the online retail market. This
force identifies the factor that how the substitutes influence the market on large scale. The
performance of Amazon is impacted by the process which is there for the company and this
makes the process more effective and efficient (Kohtamäk and et.al., 2019). Threat of substitutes
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for the Amazon is the major factor which the company considers as major part in which systems
and the processes of the company are affected.
Threat of New Entrants – There is always a threat of new entrants which make the process more
difficult in competing with the company. This is the major source through which Amazon has to
create variety of new products and services which helps the company in recognizing the
opportunities and threats which are there in market. Therefore it is the major factor which makes
the process of company even more difficult as the company competes with the other online retail
business.
3. Internal Environment Analysis of Amazon
Internal environment analysis includes analyzing internal factors within amazon.com.
Internal factors are those that exist with an organization and work as either its strength or
weaknesses of the company. Factors within organization are very important and enable
organization to deal with external opportunities and threats this means that external opportunities
available can only be utilized by internal strengths of organization (Tresna, 2017). In order to
analyze the internal environment there are different models that can be used and applied for
analyzing internal environment of organization. This models and their application for analyzing
internal environment is as follows -
VRIO Model
This is one of the models of internal environment analysis in which resources and
capabilities of organization are analyzed on the basis of four elements. This four elements
include valuable rare inimitable and organized. Resources and capabilities of organization having
all these four factors allow organizations to gain sustainable competitive advantage. In this
valuable resources are those resources that have value for Organization in terms of competitive
advantage (Yudiono, Wilopo and Iqbal, 2019). Rare element is concerned with limited or no
availability of capabilities or resources for competitors of Amazon. Inimitable is concerned with
ability of resource in which it is very costly to imitate by competitors and organized is concerned
with ability of resource and capability in which they are properly organized to allow organization
to gain competitive advantage.
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Resource/capability Valuable Rare Inimitable Organized Advantage
Brick and mortar
presence
Yes No No Yes Competitive
advantage
Increasing online
diversity
Yes No No Yes Utilized
competitive
advantage
Increasing portfolio of
private labels
Yes Yes No No Competitive
advantage
Extensive delivery
network
Yes Yes No Yes Strong
Competitive
advantage
Strong global brand
equity
Yes Yes Yes Yes Sustained
competitive
advantage
Technological
capabilities
Yes Yes No Yes Sustained
competitive
advantage
Human resources Yes No No Yes Competitive
advantage
Market capitalisation Yes Yes Yes Yes Sustained
competitive
advantage
International
affiliations
Yes Yes Yes Yes Sustained
competitive
advantage
Above VRIO analysis outlines capabilities and resources of Amazon on the basis of their
advantage for the company. Analysis has been done on the basis of whether or not resources and
capability have this for element to make them advantages for organization. Analysis outlines that
strong Global brand equity of Amazon is one of the capability that allows company a sustained
competitive advantage along with its technological abilities. This means that Amazon have
strong technological capabilities allowing it to in sustainable and long term competitive
advantage. Market capitalization of Amazon is also one of the capabilities that allow a sustained
competitive advantage to Amazon (Vargas-Hernández and Garcia, 2019). This means that
Amazon has large market capitalization compared to its competitors and this is a very important
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competitive advantage for company. In addition to this International affiliations of Amazon are
also included in capability that allows sustained competitive advantage to Amazon.
There are also the factors and capabilities that allow competitive advantage to Amazon
such as brick and mortar presence of Amazon and increasing portfolio of Amazon. Ever
increasing portfolio of private labels on Amazon enables it to effectively fulfill requirements of
its customers. Human resources within organization are also one of the resource or capability
that enables organization to gain competitive advantage over its competitors. Amazon have
highly skilled and competent workforce that works as competitive advantage for company.
Value chain analysis of Amazon
Primary Activities -
Inbound Logistics - This involves the activities through which material and good are acquired by
Amazon. For Amazon this includes vertically integrated suppliers and decentralized fulfillment
centers. Along with this inbound logistics also include quality control and fulfillment from Prime
location and item replenishment (Muflikh, Smith and Aziz, 2021). Amazon is retail organization
and this is why inbound logistics of Amazon are different from those that take place in
manufacturing organizations.
Operations - Operations, is an activity through which good and services are developed so that
they can be delivered to customers. This activity of Amazon includes Marketplace operations
Packaging of products devising and content creation developing AI software.
Outbound Logistics - Outbound Logistics is an activity through which goods and services are
delivered to customers. This includes fulfillment of Orders made by customers on Amazon and
along with this order handling and dispatch of Orders is also included in this. Outbound logistics
of Amazon also involve invoicing in which invoice are developed and given to customers for the
purpose of completion of transaction.
Marketing and Sales - In this activity efforts that are made by Amazon to communicate and
encourage customers to use services of Amazon and promotion of Amazon is included in this
(Muflikh, Smith and Aziz, 2021). Activities included in this include hassle free return Customer
services promotions and order and customer tracking.
Services - This activity includes all those after-sales services that are given to customer such as
warranty and support for Marketplace.
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Supportive Activities -
Firm Infrastructure- This include infrastructure of Amazon that enables it to operational it
activities. Infrastructure for Amazon includes technological infrastructure and information
technology system, web infrastructure, supply chain management.
Human resource management- This activity includes hiring talented and competent employees
in organization and undertaking all the activities for the management so that they are able to
make the contribution in achievement of organizational goals and objectives.
Technology development- Technology is another support activity which enables functioning of
primary activities of Amazon. Technological development at Amazon includes advancing
customer database and analytical tools for improved recommendation and personalization
(Purcell and et.al., 2017). Effective optimization and atomizing of warehouses and distribution
centers along with effective use of AI and Robotics Technology is also included in this.
Procurement- Procurement for Amazon includes supplying material and goods through large
number of vertically integrated suppliers.
4. CSR and Sustainability Analysis
Corporate Social Responsibility is the self – regulation business which helps the society in
promoting the services which also denotes that the nature of the business is charitable sector
which are volunteering towards providing the services and products to the customers. And they
also practice some norms and regulations which are of use to the society and which helps the
society in making the business achieve success (Bosch-Badia and et.al., 2017). The sustainability
analysis of Amazon is described by –
The Carroll’s Pyramid is followed for analyzing the CSR activities and the sustainability
analysis of Amazon which is described as follows –
Economic Responsibilities – The evaluation of the economic responsibilities within Amazon
play a major role in helping the company initiate the working and processes of what the company
offers to the customers and through this the Corporate and economic responsibilities of the
company is evaluated. The threshold of the Amazon market constitutes 596 billion. Therefore the
Carroll model in this aspect reflects efficiency and good figures. There are 51,000 people
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working in the Amazon which denotes that the scale of the economic status of the company.
There is various numbers of jobs which Amazon provides to the people.
Legal Responsibilities – Amazon still does not pay tax from the business tax and profits as the
business generated more than 4.3 billion (Cavender, 2018). Amazon is being active in not paying
tax and has filed the legal case with this issue of not paying tax. Thus, the company is working
with the legal restrictions which are being imposed on them.
Ethical Responsibilities – Amazon has set some criteria which they follow and some of them
are which they do not follow. They follow the ethical code of conduct with the while collar
employees.
Philanthropic Responsibilities - Amazon has the page called ‘Smile Amazon’ which helps in
making charities to the people by donations. There are some fiscal incentives which are being
counted in the donations which are made by Amazon.
5. Identify opportunities and threats facing the industry
There are some of the opportunities and threats and along with this there are some
strengths and weaknesses which are being described here –
Opportunities and Threats – The target customers can reach the scale of having the online
presence and thus can virtually connect with the business worldwide. As Amazon is well
established online retail market therefore the company has many opportunities in the market.
More job options are available in the company and there can be more suppliers for Amazon
(Majed and et.al., 2018). On the contrary, local sellers are also making their online presence to
grab more customers than before. This has been the competitive factor for the customers that are
potential.
Strengths and Weaknesses – Along with the delivery and logistics, Amazon has strong online
presence which makes it the biggest strength. The cloud services of Amazon are also technology
viable which make the products of the company productive. The expenses which are increasing
should be reduced.
SWOT analysis for CSR and Sustainability –
Strength – Some of the strengths of Amazon are – new job creation, threshold in the market is
strong, the Return on Investment factor works effectively.
Weakness – A little poor treatment with employees and unhealthy work environment.
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Opportunities – Amazon should focus more on creating health work environment and fair
treatment with employees should be initiated. Charity work should be done more for helping
people (Flamand and et.al., 2020).
Threats – There can be some ethical issues which can lead to damage of brand reputation and
brand name in the market.
Therefore, this is the complete analysis of SWOT.
6. Recommendation for global development
There are several strategies that can be followed by Amazon to enter in new market. With
that they will expand their operations and earn more revenue and sales. Therefore, company can
use Ansoff matrix strategy for global development. It is a tool used by firms to analyze and plan
their strategies for growth (Loredana, 2017). The matrix shows four strategies that can be used to
help a firm grow and also analyzes the risk associated with each strategy. With that it becomes
easy to do planning as it provides 4 options for growth. It is as below -
Market Penetration - This strategy refer to selling of existing goods in existing market. So, it
allows firm to gain competitive advantage by creating large customer base and retaining them.
Hence, Amazon can use data analytics to find out needs of people. Besides that, by offering
goods at low prices they can attract more customers and retain them.
Market Development - It is a strategy in which the company find out new market and expand
there. This is done to attract more customers and generate more sales and revenue. Similarly,
Amazon can also expand in other developing countries. It will help them to offer variety of
products at cheap prices. Moreover, the company can so acquisition or merger with local supplier
in other countries. It will allow them to grow in market and attract customers. However, many
local suppliers are going online thus it can impact on gaining competitive advantage by Amazon
Product development – This is also a useful strategy that can be used by Amazon to expand at
global level. In that they can develop new product by doing innovation and offer them in the
market. The new products are offered in existing market. Likewise, Amazon can use technology
to develop new products. For instance- AWS, Alexa, etc. are examples of it. The company can
provide new and differentiated products in market by which they can gain competitive
advantage.
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Diversification - It is the riskiest strategy in which company can enter in new market with new
products. Therefore, it can often lead to failure (Dawes, 2018). The main purpose of strategy is to
increase global presence in market. Amazon can follow this strategy in which they can enter in
different small countries in Africa. Furthermore, they can also diversify their product in existing
and new market. Hence, with that company can gain competitive advantage easily.
So, these are some global strategies that can be followed by Amazon. Along with that,
there are some other strategies as well that can be applied by company such as merger
acquisition, licensing, etc. to enter in new market. This is because company is already having a
strong online presence globally hence it will be easy to adopt and imply strategy. Alongside, they
are having a strong brand image in e commerce so they can easily merge or acquire other
companies in local market and gain competitive advantage.
7. Recommendations for Sustainability
For sustainable business practices there are three P’s which are being described for the
Amazon. Based on the three P’s the analysis and recommendations are being provided for the
Amazon. These three P’s are described as follows –
People – There has been the bad criticism for staff members and the employees of the Amazon
as they complain about the working environment which company follows. The poor work
environment has led employees to walk at court doors as the company is not providing the
services to employees and is failing in rendering them proper work environment (Tomkins and
et.al., 2018). Along with this, Amazon emphasises on customers rather than improving the
relationships with employees and staff members.
Profit – Due to the market approach of Amazon being unique, the company is incurring much
profit with the investments for future purpose. There has been a lot more increase in the profit
scale of the company.
Planet – There has been lack of information provided by Amazon about the sustainability and
disclosure of carbon project (Morales and et.al., 2020). This has created more difficulty for the
company as it is failing in the basic processes.
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CONCLUSION
Thus, it is concluded from the above report that introduction of Amazon was being defined
along with the objectives which the company incurs. Along with this, external environment
analysis for the company was being done which provided the facts and figures. Internal
environmental analysis was done along with the models being applied. Sustainability analysis
and CSR activities of the company was analyzed. Analysis was done for the threats and
opportunities done for Amazon. Various recommendations for the global development were
made for the company. Furthermore, recommendations for sustainability were made to observe
the company’s patters and services effectively and efficiently. Therefore, the work process and
the procedures of Amazon were analyzed which helped in serving the major drawbacks and
benefits of how the company is serving to the customers and in the market. This also ensured that
what are the major key factors which are to be improved and details.
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