Industry Analysis of Amazon: Market Positioning, Global Presence, and Size

This essay provides an industry analysis of the Amazon company with respect to market positioning, global presence, and size. It also covers the comparison with its competitors in terms of innovation, governance, and ethics.

Strategic management

TABLE OF CONTENTS
REFERENCES...........................................................................................................................9

Strategic management mainly accounts for the strategic utilization of the business
resources in order to accomplish the business goals in an effective manner. It is a continuous
process which undertakes planning, organizing, monitoring all the necessities g the
organization for meeting its objectives. Any change in the business environment will incur
the need for the organization to assess its strategies for attaining success. This essay provides
an industry analysis of the Amazon company with respect to the market positioning, global
presence and size. It also covers the comparison with its competitors in terms of innovation,
governance and ethics.
Company background
Amazon is the leading online retailer and an American multinational company which
is headquartered in Seattle, Washington. It is considered as an iconic example for the
manufacture of e-books, readers along with the web service provider. It is was funded by Jeff
Bezos in Bellevue, Washington, in the year 1994 with just selling books online. It then
expanded its to selling electronics, home appliances, furniture, food and health products, toys
and jewellery (Amazon.com. 2020). Amazon is having presence in not only e-commerce
industry but also in AI, Cloud computing and self driving car. The major strength of the
Amazon is its lower cost structure, large range of merchandise and large number of the 3rd
party sellers associated with it. Also, the synergies lying between the marketplace, AWS,
prime and the subscription services. The main weakness of Amazon is its imitable business
model, restricted positioning in the growing and emerging market and the limited physical
store presence.
Industry structure and market of Amazon
It can be stated that Amazon is world's top organizations as per the market value that
have resulted in increasing overall profit margin and sales of firm. As on 9 August, 2020, It
had $1.6 trillion market share in ecommerce business that have contributed in growth and
success of firm. The organization's net gain almost multiplied YOY in Q2 2020, which
finished June 30, 2020. Overall gain has increased from 99.7% to $5.2 billion for the
subsequent quarter contrasted with a similar three-month time span a year back
(AMAZON.COM, INC. 2020). Working salary became 89.5% to $5.8 billion. It have been
analysed that overall sales revenue or net sales, rose from 40.2% to $88.9 billion for the
quarter.

Amazon partitions its business into three segments: AWS, North America and
International. North America and International are two initial segments, allude to
geographical breakdowns of the retail business. It produces income from deals in North
America and from rest from different parts of countries, just as from memberships and export
of sales. Retail can additionally be separated into online stores, including the greater part of
deals, and physical stores. The e-stores represented approximately $45.9bn in deals in second
quarter of 2020, and the physical stores produced $3.8bn in deals. Amazon's NA section rules
its sales, representing $55.4bn in quarter second of 2020 and working salary of $2.1bn
(AMAZON.COM, INC. 2020). It accounts for nearly 62% of the organization's revenue in that
quarter. One of the most quickest developing areas of Amazon is North America in quater.
Beside retail, the other essential wellspring of income for North America is memberships,
including Amazon Prime, that provided boundless free delivery, and boundless gushing of
motion pictures and so on.
The International business was one of the portions that have not been flourished.
section comprises of Amazon's retail business for shopper items and memberships for
globally engaged online stores (AMAZON.COM, INC. 2020). It likewise incorporates trade
deals from those stores, however not those from North America-centred online stores. In
International segment Amazon have lost cash in every one out of 3 years. In the second
quarter of 2020, the section posted the op. profit of nearly $345mn contrasted with a op. loss
of for the previous year same quarter. The total revenue from the international business
segment accounts for the 25 per cent of the company’s total sales.
The Amazon's web service propelled in 2006, has provided a wide range of assistance
and support to the business entities and other institutions in the form of storing and conveying
the data. This segment has provided a net deal of about $10.8bn and the working pay of
nearly $3.4 bn in the quarter 2 of the year 2020 which has resulted into reliable development
in the past few years (AMAZON.COM, INC. 2020). The North. A income from this segment
is high. The net revenue is about 12 per cent to the sales and approximately 57% of the
company's complete earnings. The organization has exercised control over the 33% of the
cloud market in 2018, more than double in comparison to its rivals. The rivals to the company
in this segment is Microsoft’s Azure and google cloud.

Annual net sales of Amazon in selected leading markets from 2014 to 2019 (in billion
U.S. dollars)
(Source: https://www.statista.com/statistics/672782/net-sales-of-amazon-leading-markets/)
Innovation and strategic innovation
To understand the innovation aspect of Amazon, the diffusion theory of innovation
will be used which revolves around four elements. The first is incumbents continue their
innovation direction as they present new items or highlight upgrades (Conaway and et.al,
2018). Amazon.com in its initial years, had an established enterprise named, Barnes and
Noble had a solid foot in the bookselling market. The organization extended its physical
business quickly during the 90's and mid 2000's, to a great extent concentrating on clients
ready to visit the store face to face to buy the writing. With this plan of action, incumbents in
the bookselling business neglected to address the key component of accommodation in the
client purchasing venture (Arnett, Goldfinch and Chinta, 2018). Second is incumbents neglect
fundamental client needs of things to come as they continue their current innovation
direction. With expanding appropriation of the internet among standard clients in the
bookselling market, the capacity to buy a book on the internet without leaving the seat was
exceptionally viewed as a key offer by web based new companies, for example,
Amazon.com. At present nonetheless, online business and internet advances were growing
quicker than this present reality market request. A dominant part of the book buys happened
at book shops, while internet business organizations seemed to fail to meet expectations for
huge incumbents to check ahead of time.
Third is incumbents recognize the development and have the capacity to react
however neglect to exploit the opportunities with their need to support existing innovation
trajectory. This is decisively how any physical retail outlet including Barnes and Nobles
carried on while Amazon.com concentrated on the low benefit yet profoundly adaptable web-

based business market of literature and media items (Chandra and Chen, 2019). The last
component includes the growth of innovation to a point where mass business sectors pay
heed and grasp selection (Wu and Gereffi, 2018). Organizations like Amazon.com with its
disruptive innovation potential are constructed explicitly to boost the capability of monstrous
scope economies that exist on the internet. Amazon had the key favourable position of huge
distribution system, making it simple to transport deals in huge volumes the nation over.
Amazon and Alibaba can be compared on the 3 aspects. First is state of health and
growth. Alibaba is growing solid. In March 2018, total income of 9.6 billion have been
recorded of company which state that it is continously growing and expanding business.
Alibaba acquires 552 million active customers, thus providing tough competition to Amazon.
Alibaba’s market share in the internet business of chinese market is an astounding 60 percent
and developing consistently over years. Thus, it can be illustrated that Alibaba have
performed extremely welled in near future. Second is in terms of data innovation and the
shoppers experience. Alibaba is known for its innovation gives tough fight to Amazon.
Alibaba has constructed the world's quickest cloud-based streaming handling platform, a
development that Amazon right now needs (Dolata, 2017). In the year 2016, during Alibaba's
Singles Day deal, the entity processed 175 thousand exchanges every second or 10mn request
for every minute. Alibaba's workers presently store one thousand petabytes of information, a
number unbelievable anyplace else. Alibaba is right now creating what they call the "digital
shelf price" which utilizes e-ink to remotely associate with a physical store's information
framework. The last one is fighting for ages. Alibaba's innovation is more disruptive and
greater than Amazon. In any case, the two organizations are seeing consistent development
that is unfathomable in the domain of internet business (Wang, 2019). Amazon's stock price
has dramatically increased in the recent 2 years and on the other hand Alibaba company
remains at flat. The trade war may be blamed for the company’s stale stock, Amazon has
exploited the market effectively which has resulted into achieving the target of $2000 in
respect to the market capitalization of more than 1 trillion.
In case of cloud and AWS, Amazon is the leading with no fight with Alibaba as the
competitor is a kid in this block. In e-commerce, Amazon currently has Alibaba beat in
respect to international reach.
Corporate social responsibility

To analyse the CSR of Amazon Carroll’s pyramid of CSR is used. It is a four-part
theory, first is economic responsibilities, the main focus of Amazon is to be profitable in
every business, it has employed over 51000 employees but there are certain issues of working
conditions it is facing. Second is legal responsibilities, there are 2 legal issues the company
has been involved in. The business practice controversy in Germany is legal but the sales tax
issue in US s much more controversial. On this responsibility of Amazon, one might say that
they are effectively looking for loopholes or dubious interpretation of enactment however are
as yet working inside the lawful limits (Heikkonen, 2016). On the ethical side, there are very
small issues which are being reported in the past 10 years. Customers complained that
product prices vary with the change in location of as the zip code is entered. Bezos responded
by taking it as a mistake and ensure it won’t happen again. Apart from the working condition
issue, Amazon is working ethically. The last is philanthropy, the company is not very
generous. It does not consider doing charity. It has only provided small grants of $25000
which was for its own benefits.
In contrast to it, Alibaba has put focus on the philanthropic and has even issued the
report of the same which provided details of its chartable events. The organization has raised
over 1.27 billion for the purpose of charitable donation last year through platforms namely -
Alibaba and Alipay Philanthropy and Each Person Three Hours. Therefore, this aspect of
CSR makes a huge difference.
Governance and ethics
Governance Committee of Amazon's BOD supervises Amazon's ecological, social
and corporate administration strategies and activities, including the advancement for The
Climate Pledge and dangers identified with the operations, flexibly chain and client
commitment. In playing out their activity obligations, Amazon.com by abiding to moral
values and obligation have gain greatest advantages and attracted large number of customers
to make purchased from Amazon rather than others firm. The Code of Business Conduct and
Ethics represent core values of amazon business that helps in building strong brand image.
(Governance. 2020). In the same way, Alibaba is also having a well-established code of
conduct and governance policy put in place which helps in ensuring effective management of
the business operation and the workforce.
It can be concluded that on the overall analysis, the company is working effectively
and highlights the lot of business opportunities. But on the part of CSR it is lacking behind.

The company is required to put more focus on its philanthropic responsibilities. Even though,
the company is generating greater revenue and profits and providing employment worldwide,
it becomes important not to neglect the issues it is facing like poor working conditions and
the customer service employees. The legal aspect also questions whether company is working
legally or not. Also, the company requires to take the first mover advantage by being more
innovative and first at place to come up with something new. Amazon has provided a case
study which will be helpful to the future entrepreneurs to succeed in future and learn lessons
from it.

REFERENCES
Books and Journals
Arnett, J., Goldfinch, B. and Chinta, R., 2018. Multi-dimensional nature of innovation at
Amazon. International Journal of Business Innovation and Research. 15(1). pp.1-
13.
Chandra, P. and Chen, J., 2019, January. Taming the Amazon: the domestication of online
shopping in Bangalore, India. In Proceedings of the Tenth International Conference
on Information and Communication Technologies and Development (pp. 1-11).
Conaway, R. N. and et.al, 2018. Amazon Whole Foods: When E-Commerce Met Brick-and-
Mortar and Saved the Brand of Conscientious Capitalism. Journal of Marketing
Development and Competitiveness. 12(3).
Dolata, U., 2017. Apple, Amazon, Google, Facebook, Microsoft: Market concentration-
competition-innovation strategies (No. 2017-01). SOI Discussion Paper.
Heikkonen, J., 2016. Corporate social responsibility in online retail–Perceptions from online
discussions on Amazon.
Wang, S., 2019. The Innovative Study of Marketing Strategy for E-commerce Case Taobao.
Wu, X. and Gereffi, G., 2018. Amazon and Alibaba: Internet governance, business models,
and internationalization strategies. International business in the information and
digital age, 13, pp.327-356.
Online
AMAZON.COM, INC. 2020. [Online]. Available Through:<
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/a77b5839-99b8-4851-
8f37-0b012f9292b9.pdf >.
Amazon.com. 2020. [Online]. Available Through:<
https://www.britannica.com/topic/Amazoncom >.
Governance. 2020. [Online]. Available Through:<
https://sustainability.aboutamazon.co.uk/governance>.