Amazon's Strategic Dominance in E-commerce

This assignment delves into Amazon's dominant position in the e-commerce landscape. It examines the company's strategic approach to rapid growth, focusing on key markets like India and China. The analysis explores Amazon's technological innovations, including Alexa and drone delivery, highlighting their impact on the industry. Furthermore, the assignment investigates Amazon's competitive strategies, particularly its head-on challenge to Netflix with Prime Video. Overall, it aims to understand how Amazon leverages a calculated approach and adapts to macro environmental forces to maintain its global leadership.

Running Head: Introduction to Management
Table of Content
Introduction...........................................................................................................................................3
PESTLE analysis
of
Amazon..................................................................................................................................................4
Political factors..................................................................................................................................4
Economic Factors...............................................................................................................................5
Socio Cultural Factors........................................................................................................................5
Technological Factors........................................................................................................................5
Legal Factors......................................................................................................................................6
Environmental Factors.......................................................................................................................6
Porter 5 Force analysis..........................................................................................................................7
Competitive Rivalry............................................................................................................................7
Bargaining power of Customers........................................................................................................8
Bargaining power of Suppliers...........................................................................................................8
Threat of Substitution........................................................................................................................8
Threat of new Entrant.......................................................................................................................9
Recommendation for Amazon...............................................................................................................9
Expansion of Amazon Web Services (AWS).......................................................................................9
Being customer centric- Always providing value for money..............................................................9
Go pro on Technology front.............................................................................................................10
Amazon.com
Introduction to Management
Macro Environment Force analysis on Amazon

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Social engagement activity..............................................................................................................10
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11

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Introduction (228 Words)
Amazon.com was founded in the year 1994 and it offers a wide range of products through its
website. The company is one of the largest e-commerce companies based out of Seattle. The
company operates through three segments; North America, International and Amazon Web Services
(Varia & Mathew, 2014). The company is a unique marketplace which connects the buyers to sellers,
besides being a connecting marketplace it also manufactures electronic devices like Alexa, fire fly,
and is also one of the biggest players in the cloud services ecosystem. Jeff Bezos is the founder and
the mastermind behind this great company, he realized a lacunae in online shopping model and set
himself on a mission to improve the customer’s online shopping experience. It was Amazon who
came up with lighting fast deliveries to push other players in the market to step up their game.
Amazon also produces and provides premium entertainment content for its online and offline
audience (Santiago, 2017)
Amazon has more than 22 segments carry extensive product line as its Product offering. It truly is
one of the biggest and best online marketplaces in the world. The company had revenue of $ 136
Billion which makes it the largest internet company of the world, much ahead of its competitor
Alibaba. Another interesting fact which sets Amazon apart is, its cloud is bigger than Google,
Microsoft and IBM combined together (Belk, 2015)

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PESTLE analysis of Amazon (707 Words)
Political factors (161 Words)
 Political stability in the developed countries- It can be seen as an opportunity as the business
has chances to grow and diversify its business operation thus creating an ecosystem of
growth and development. Political stability benefits Amazon as it opens up avenue for future
growth
 Government support towards the e-commerce industry-It can be seen both as an
opportunity and a threat in the way that if the support increases towards e-commerce
industry, it gives rise to immense competition and more and more firms operate in the same
market fighting for the same market share, causing a threat to Amazon. Opportunity is in the
way that government policies will be favourable towards ease of doing e-commerce
business(Salam, 2016)
 Tightening efforts by the government on cyber security- It is most definitely an opportunity
for the entire e-commerce landscape including Amazon as it will lead to rise in digitally
secured payments, data safety and hence people would be more comfortable in shopping
online(Newton, 2014)

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Economic Factors (103 Words)
 Economic stability of developed markets is an opportunity for the Amazon as the customer
spending is already high and the likelihood of having economic issues in the developed
countries is low, thus developing countries create favourable situation for Amazon (He,
2015)
 Increased disposable income of the population in developing economies again creates
opportunity for Amazon, as it can easily penetrate the market further.
 Economic recession in china, which seems to be a possibility can be a major source of
concern for Amazon, China, is one of the biggest markets Amazon wants to penetrate and
hence it could cause a difficulty for Amazon(Sayyed, 2016)
Socio Cultural Factors (129 Words)
The following three points take into consideration the socio cultural external impact on Amazon:
 Increasing wealth disparity- High disparity in the income range will create a huge income
gap, the rich will get richer and the poor will get poorer, this is definitely a threat for Amazon
 High consumers in developing countries is a terrific advantage for Amazon as it will help the
company to expand globally and if it already has a strong ready consumer base, its
marketing spend will get reduce thus earning more Profits(Turlais, 2016).
 Growth in online buying habits of people across the globe is a definite boost to the e-
commerce industry. People are frequently going online and buying products, the increase in
the online activity of people will bring in more revenues for Amazon.
Technological Factors (158 Words)
One of the most important Macro environment factors when it comes to e-commerce industry.
Technology has a major role to play in the following ways:
 Technology being obsolete rapidly is both a threat and opportunity for Amazon in the way
that it has the risk of new players entering the market providing better and new improved
technology, at the same time if the company keeps updating its tech, it becomes non
replaceable(Janys, 2016)
 Increase in the IT efficiency in processes is a solid avenue of opportunity and growth, IT
efficiency leads to better operation process and a smooth transition from one process to
another.

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 Increase in cybercrime activities is the major threat posed to Amazon as it will keep the
consumers away from spending online, at the same time; the risk of data theft is always
present(Hegde, 2015)
Amazon thus has to continuously work towards improving its technological landscape and try to stay
ahead of the learning curve.
Legal Factors (86 Words)
Legal factors can affect Amazon in the following ways:
 Increase in product regulation would lead to less counterfeiting activities and the growth of
societal demands, thus providing an opportunity door for Amazon.
 Easing of import and export regulation will help Amazon to connect with global suppliers
and hence exploiting the ability of suppliers to access the global markets will definitely
benefit Amazon.
 Amazon also has a great opportunity to enhance and strengthen its brand image by working
towards environmental sustainability as its CSR activity(Williams & Figureido,2014)
Environmental Factors (57 Words)
Every country is talking and taking care of environmental sustainability. Amazon has a great
opportunity to strengthen its brand image by working towards the environment as a part of its CSR
activity. At the same time low carbon lifestyle provides huge space to Amazon to bring higher
environmental sustainability standard which would further improve its brand image.

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Porter 5 Force analysis (658 Words)
The company operates in an industry space which is exposed to many external factors and at the
same time it also competes with small retail chains to big retail chains like Walmart, hence the
company has to really stay resilient even during the changes in the online business environment.
Competitive Rivalry (149 Words)
As mentioned earlier, Amazon competes with multiple small retailers and big giants like Walmart, at
the same time it faces strong competition from Alibaba and other online players. Some of the factors
behind a strong competitive rivalry are:
 High aggressiveness of the firms against which Amazon competes like Amazon has a very
strong retail presence, at the same time it is expanding its online model which poses a very
strong competition for Amazon
 High availability of the substitutes in the forms of small retail stores, and brick and mortar
model of Walmart can be seen as strong substitutes for Amazon and thus high availability of
substitutes is a very strong force.
 Low switching cost in terms of consumer moving from one retailer to another or one e-
commerce companies to other and the ease of transfer makes low switching cost as a strong
factor of competitive rivalry for Amazon(Greenspan, 2017)

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Bargaining power of Customers (132 Words)
Amazon is a customer centric firm and the consumers have strong influence on the business of the
company. Some of the factors supporting strong intensity of bargaining power of consumers are:
 Quality of information on the web is extensive and thus consumers know what products are
being sold on the internet and which companies are selling the product. This thus showcases
a strong force for Amazon.
 Customer have a ease of switching in the sense they can easily go to a retail store and buy
the product, thus putting in a strong bargaining power for the customers(Ji, Chen & Wang,
2015)
 High availability of substitutes for the consumers makes it easier for consumer to move from
one company to other. All the factors mentioned above make strong bargaining power of
the consumers.
Bargaining power of Suppliers (134 Words)
Suppliers are important component in the e-commerce model as they control and sell what is being
supplied on the web. In context to bargaining power of suppliers, it can be understood as a
moderate force owing to the following reasons:
 Amazon has small number of suppliers and hence it is a very strong force, change in the
supplier’s price of a product might put pressure on Amazon’s selling price.
 Forward integration is moderate in e-commerce industry, as supplier has limited control in
terms of sales of product at Amazon, and thus with low control the power remains moderate
of the suppliers.
 Moderate size of suppliers limits the equipment manufacturer from having a strong
influence of the company.
Amazon through its good and balanced supplier network aids in controlling the bargaining power of
the suppliers.
Threat of Substitution (45 Words)
Threat of substitutes is a strong force for Amazon, the contributing reasons to which are the low
switching cost, high availability of options & very low switching cost for the consumers. All these
factors contribute towards threat of substitutes being a strong force for Amazon.

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Threat of new Entrant (132 Words)
It is another important force of Porter model. The new entrant would be competing for the market
share which amazon holds. The threat of new entrant can be seen as a weak force in totality due to
the following reasons:
 Cost of switching is a strong force for consumers; hence it is a strong contributing force.
 Brand development and image setting takes a lot of time, effort and money and thus it’s
really difficult for a company to invest a huge sum of money to build the image before
earning profits.
 Amazon has an added advantage, it has already achieved high economies of scale which
benefits the company immensely and thus other players will take ages to reach economies
of scale making the threat of new entrant as a relatively weaker force.
Recommendation for Amazon (441 Words)
Amazon started its journey from in the year 1994 and started selling book in the year 1995, from
working in the garages the company moved to big offices in Seattle. Amazon has covered one full
circle of its growth and is still expanding by working towards high customer centric solution. Some of
the recommendation for Amazon is:
Expansion of Amazon Web Services (AWS) (114 Words)
Amazon web services was started as a small cloud storage platform to support Amazon’s online data
and keep it safely, back in the time ,Jeff Bezos had no idea how big AWS would get. At this point in
time Amazon web services is bigger than Google, Microsoft Azure and IBM combined and is one of
the highest contributor to the operating profits of Amazon. Hence the future as it is being said is
cloud computing, Amazon has to keep its foot strong and maintain the lead it has already taken in
the cloud computing division to stay ahead of all. Amazon web services will make Amazon the
world’s biggest company in the future (Kang, 2015)
Being customer centric- Always providing value for money (94 Words)
Amazon had multiple reasons for its success like well thought of business model, a resolute team,
strong operation, good supply chain management process and many more. One big reason for the
success was the company being customer centric right from the start. Customer goes to Amazon

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because they have faith in its quality of product, delivery, and they know that Amazon offers value
for Money. The company has to keep the faith alive among its audience and keep customer at top of
its focussed areas (Rossman, 2016)
Go pro on Technology front (103 Words)
Amazon is in news always for something or the new development in terms of technology it keeps on
doing. Recently it was in news for testing of Drones to deliver product to the customer. No e-
commerce company ever imagined this even as a possibility. Amazon left them blank when it did it
first drone delivery in Cambridge England. It was a breakthrough in logistics and more companies are
looking to grab on the tech used by Amazon. Hence, Amazon has to keep moving forward with the
innovation in technology to make things simpler and easier (Kenter & Streitfeld, 2015)
Social engagement activity (67 Words)
Online population of Amazon is growing by heaps and bounds, if Amazon has to keep up with its
own pace, it has to engage with audience on all the social platforms and seamlessly integrate the
same with their online behaviour. Further using predictive and sentimental analysis for targeting the
customers will be more useful than just targeting customer on basis of their online activity.
Conclusion (210 Words)
Last year Amazon celebrated its 20th year in the e-commerce business and it’s no doubt that the
company has changed the world of online retail and has pushed the envelope for its competitors and
new entrants. The current market environment is focussed on quick deliveries and logistic, Amazon
is leaving no stone unturned to be ahead of the race. Testing of drone for delivery is one such
example of Amazon activities towards the future. Internet of things, another technological
revolution which is expected to change how the devices interact with each other and the role
technology has to play in it is inexplicable, Amazon’s Alexa and Dash are its product in the same
category, much ahead of its competitors. The company is on a stress of rapid expansion and has
targeted two biggest markets India and China as its focussed market; this strategy will bring in
billions of dollars for the company. The company has also taken a head on battle with Netflix by the
launch of its prime video and producing shows for its audience. It can be said that in the current
market ecosystem, Amazon is truly behaving like a global leader and moving forward with a
calculative strategy whilst keeping a track of the macro environmental forces.

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References
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Belk, E. J. (2015). The Effect of Showrooming on Specialty Retailers: Leveraging a Framework for
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Greenspan, R. (2017). Amazon. com Inc. Five Forces Analysis & Recommendations (Porter’s Model).
He, Z., 2015, August. External Environment Analysis of Commercial-use drones. In 2015-1st
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Hegde, S. (2015). Entrepreneurial Opportunities for E-Commerce in the Retail Sector in India.
Janyš, R. (2016). An Analysis of the Marketing Communications Mix of the Czech Company Elektro
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Ji, C., Chen, Z., & Wang, X. (2015). Exploration of Sentimental Analysis for Amazon Rating Prediction.
Kang, H. (2015). Toward Entrepreneurial Success: A Strategic Planning and Analysis Model. Business
Journal for Entrepreneurs, 2015(3).
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York Times, 15, 74-80.
Newton, P. (2014). What is the PESTLE Analysis?.
Rossman, J. (2016). The Amazon Way: 14 Leadership Principles Behind the World's Most Disruptive
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This Paper.
Santiago, D. R. (2017). The role of FSC certification to maintain sustainability: the case of Precious
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Williams, B., & Figueiredo, J. (2014). Lessons from an innovation-leader and tools to learn
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