Strategic Planning for Amazon: Critical Assessment and Evaluation

This report provides a critical assessment and evaluation of the strategic planning process used by Amazon, and the impact of internal and external environmental variations on organizational strategy. It also reviews the organizational strategic plan and provides an action plan for the organization on the basis of change in either internal or external environment.

STRATEGIC
PLANNING

Table of Contents
INTRODUCTION.........................................................................................................................3
TASK..............................................................................................................................................3
Critical assessment of process used by organization to determine their strategy........................3
Critical evaluation of impact of internal and external environmental variation on
organizational strategy.................................................................................................................5
Review of organizational strategic plan providing an action plan for the organization on the
basis of change in either internal or external environment..........................................................8
CONCLUSION..............................................................................................................................9
APPENDIX 1................................................................................................................................11
Business plan for Amazon.........................................................................................................11

INTRODUCTION
Strategic management is the process of management of resources which are used by a
business to meet their targets and objectives (Albrechts, Balducci and Hillier, 2016). The process
of strategic management comprises of setting targets, evaluating competitive environment,
understanding internal and external business environment, forming strategies and ensuring that
all strategies are successfully implemented in the organization to meet the desired targets.
According to John A. Pearce II and Richard B. Robinson Jr., “Strategic management
is a set of actions and decisions resulting in formation and implementation of strategies which
are designed to accomplish the objective of business” (Strategic Management, 2018).
In the view point of Garry D. Smith, Danny R. Arnold, Bobby G. Bizzell, “Strategic
management is approach of evaluating the present and future business environment, formulating
organizational objectives, forming, implementing and controlling decisions which are focused on
accomplish the desired organizational objectives in the current and future business environment.
Amazon is an American multinational technology company which focuses on e-
commerce, cloud computing, AI and digital streaming services. The company was started by Jeff
Bezos in July, 1994 and is one of the leading retail companies. Amazon has strengthened its
roots in market and is also operating with other subsidiary companies, such as Audible, Zappos
and many others.
The report is based on understanding the process which is used by an organization to
determine their business strategy and identify how change in internal and external environment
can create an impact on strategy of an organization. The report will also review the strategic plan
which will define an action plan for the business on the basis of change in internal or external
environment.
TASK
Critical assessment of process used by organization to determine their strategy
The business strategy of Amazon focuses on investing in technology, improving its
logistics application, enhancing their web services by fulfillment capacity, M&A strategy, R&D
activities in logistics and securing their inventions with patents.

Ansoff matrix of Amazon
Ansoff matrix was proposed by H. Igor Ansoff in 1957 and this framework is used in the
strategy stage of marketing planning process. This tool helps organization in determining
opportunities for business growth. Ansoff matrix comprises of 4 growth strategies which are
market penetration, market development, product development and diversification.
The implementation of Ansoff growth matrix strategy followed by Amazon has been
outlined below:
`Market penetration- Market penetration promotes Amazon to sell the existing products to the
existing market. The company has been executing the same strategy since starting and this has
been executed aggressively through employing number of marketing techniques such as
advertising on social media platforms and sales promotions (Amason and Ward, 2020). The
approach is effective quite well in 2020, the company's net revenues in the United States alone
are estimated to reach $263.5 billion.
Market development- Market development is the process of discovering new markets in
which to sell present products. Amazon has built a huge number of new markets throughout the
years. Its products are sold in over 100 countries and territories outside of the United States. The
United States (home market), the United Kingdom, Germany, and Japan are its key markets. In
contrast, Amazon failed in one of its most promising areas, China. It originally came to the
country in 2004 and rapidly became well-known. However, due to competition from Alibaba and
JD, it announced in 2019 that it would close its doors.
Product development- Product development is the next option to be analyzed in
Amazon's Ansoff Matrix. Amazon began as an online bookshop in 1997. Since then, it has been
aggressively expanding its product line. In fact, the company's website currently sells practically
everything. Amazon regularly introduces new products and services (Amrollahi and Rowlands,
2017). It released three new Alexa-enabled items in early 2021, for example: a smart sticky notes
printer, a nutrition scale, and a cuckoo clock. Some of its products and services, on the other
hand, have failed miserably in the past, losing the firm billions of dollars. Amazon Spark,
Amazon Storywriter, and Dash buttons are some instances in this regard.

Diversification- Diversification is a high-risk strategy since it requires the development
of new items for previously unexplored markets. Amazon is well aware of the challenge and has
invested billions of dollars on diversifying its company. It has, for example, been working on
developing a fully autonomous vehicle for quite some time.
Critical evaluation of impact of internal and external environmental variation on organizational
strategy
SWOT Analysis
SWOT analysis is a technique which is used to determine the internal (strengths and
weakness) and external (opportunities and threats) business environment changes which can
create an impact on the organization. To critically evaluate the impact of change in internal
environment, SWOT analysis has been used by Amazon. The implementation of SWOT analysis
has been briefly discussed below:
STRENGTHS
 Strong brand name- As amazon is
one of the leading e-commerce retail
giants, the company has a strong
competitive position and successful
brand image in the market (Bryson,
Edwards and Van Slyke, 2018).
 Customer oriented- As Amazon is
the customer-oriented company, the
company focuses on meeting everyday
needs of the customers by providing
them products at reasonable and
affordable prices.
 Cost leadership- With economies of
scale, Amazon effectively manage
their cost and decrease their inventory
replenishment time. The company
have established various strategic
WEAKNESS
 Decline in customer safety- Due to
high incline in offerings of products,
this has been a challenge for Amazon
to guarantee highest level of safety to
their products.
 Unfair use of third-party data- Due
to engaging in unfair trade practices,
this has adversely affected customer
trust and increased legal risk which
has been a source for hindering the
brand image of the organization
(David, David and David, 2017).
 Easily imitable business model- As
online retail business has strengthened
its root in the industry, it has been a
weakness for Amazon that their
business model is easily imitable by

alliance with various companies and
this has driven strong value chain
which supports the organization in
maintaining a low-cost structure.
 Superior logistics and distribution
systems- Amazon use their highly
efficient logistics and distribution
systems (Dyer and et.al, 2017). The
company executes reliable, secure and
fast delivery to meet their customer
demands.
their rivalry companies operating in
the same industry. Such weakness
creates threats and challenges for
business which can hinder the
customer loyalty and brand image of
the company within the industry.
 Employee strike- Due to unfavorable
and unsafe working conditions, the
employees of Amazon went on strike
which can lead to halt in operations
performed by Amazon.
OPPORTUNITIES
 Expansion of physical stores- This
opportunity will help Amazon to
increase their competition, maintain
competitive position and engage
customers with the brand.
 Improvement in technological
measures and policies- The company
can enhance technological measures
and organizational policies which will
help Amazon in minimizing
counterfeit sales.
 More Acquisition- Amazon can
engage in more acquisition of e-
commerce companies which will be
helpful in increasing the market share
and focusing on business growth.
Through incline in acquisition,
Amazon can also reduce the level of
competition and sustain their
THREATS
 Aggressive competition- The
company is engaged in high
competition and all the subsidiary
companies faces high competition
from their rivalry companies as there
are many companies such as Uber,
FedEx and many other leading
companies which possess high threat
to the organization (Gallus and Frey,
2016).
 Fake reviews of customers- As
product reviews are critical indicators
which defines the quality of the
product and due to incline in fake
reviews, this has affected the
authenticity, trust and customer
loyalty of customers on the company.
 Controversies- As few controversies
has taken their pace in the industry

competitive position within the
industry.
 Market penetration- Amazon can
drive various market penetration
opportunities where they can grow or
expand their business and operation in
the developing markets through which
the company can maximize their
profitability and maintain their
competitive position.
which has been a source for damaging
the brand image of the organization
within the industry. Due to criticism,
this has not only affected the brand
image whereas it has been another
source for negatively manipulating
customer loyalty of the organization.
 Economic recession- As due to high
changing business environment and
global scenario, the company is also
not immune to economic recession
and this can possess threat to the sales
and profit margin of the company.
PESTEL ANALYSIS
PESTEL analysis is the framework which is used to determine the external factors which
can create an impact on the business operations and strategies. To critically evaluate the impact
of change in external environment, PESTEL analysis has been used by Amazon. The
implementation of PESTEL analysis has been briefly discussed below:
Political factors- The political factors have driven many opportunities for Amazon and
this has been a source for driving political stability of developed countries especially in USA and
European countries (Hanlon, 2018). The incline in government efforts for cyber security has
been increased which has driven many business opportunities for business. The governmental
support for e-commerce has driven opportunity as well as threat for the organization.
Economic factors- Economic stability of developed markets, especially the US and
European countries has been a source of opportunity for Amazon through which the company
can gain higher competitive advantage and expand the business in developing countries
(Hubbard, Rice and Galvin, 2015). Economic factors such as incline in disposable incomes in
developing countries has been an opportunity for business whereas, potential economic recession
of China has been a threat for the organization which can hinder the growth of the organization.

Social factors- The social factors such as sociocultural trend which has been threat for
the organization in terms of potential stagnation of disposable income levels. The incline in
wealth disparity has been a threat for Amazon which has affected the operations and activities of
business (Kachaner, King and Stewart, 2016). The increase in consumerism in developing
countries and incline in online buying habits are source of opportunity for the organization which
supports in gaining competitive advantage and intensive strategies for growth.
Technology factors- The technological factors such as incline in rates of cyber crime has
been a threat for the organization and other technological factors such as increase in efficiencies
of IT resources has driven opportunities for business which has been source of improving
performance and minimize the operations costs. Amazon faces the threat of rapid technological
obsolescence which imposes pressure on the company which supported in developing its
technological assets.
Environmental factors- Amazon is an online business and there are various factors
which influences the natural environment. There are various environmental factors which are
considered as rising interest in environmental programs, high emphasis on business stability and
incline popularity of low carbon lifestyles has been various sources of opportunities that can
develop the business and supported the business in strengthening their brand image in the
industry (Mallon, 2019). Amazon engage in meeting corporate social responsibility to increase
the competence of company in meeting ecological concerns in its remote and macro-
environment.
Legal factors- The legal factors such as rising product regulations and change in import
and export regulations has been an opportunity for business for minimizing the counterfeit sale
on its online retail website. The company has opportunities to grow and expand their business on
the basis of change in import and export regulations. Amazon expanded its global operations
which increased the ability of sellers to access overseas suppliers. The e-commerce company has
the opportunity to strengthen the brand image of the organization in the industry.
Review of organizational strategic plan providing an action plan for the organization on the basis
of change in either internal or external environment
Review of action plan- In order to meet the organizational objectives planned by
Amazon, the company will follow various strategies which will support in accomplishing the

desired targets. Some of the strategies which will be used by Amazon are market penetration
strategy, the company will implement various digital and physical security measures and will
engage in providing training to employees through which they can enhance their skills in
understanding the threats which can hinder the data and brand image of the organization.
By implementing the market penetration strategy, Amazon will promote their exiting
product range by using various social media channels and platforms through which they can get
higher customer attention and generate higher revenues (Ropianto and et.al, 2017). The company
will organize various social media campaigns and define their diversified product range portfolio
through which attention of customers can be gained and this will be helpful in strengthening their
brand image and generating higher revenues through which Amazon can maintain its competitive
position within the industry.
By implementing various physical and digital security measures, Amazon will provide
required training to employees through which they can effectively analyze the threats which can
hinder the data and corporate image of the organization (Stephen and Martin, 2019). Amazon
will ensure that all employees are effectively enhancing their skills through training programs
which will help them in avoiding situations of employee negligence in understanding cyber
threats and crimes.
CONCLUSION
From the above project, it can understand that strategic management is the process which
is used by an organization to effective use all organizational resources and plan strategies which
must be implemented effectively to meet the planned organizational objectives. The process of
strategic management helps the organization in gaining competitive advantage, reaching
objectives, ensuring sustainable growth of business and increasing the managerial awareness of
business. Strategic management is a planned approach for utilizing the business resources to
meet the desired organizational objectives. It can be analyzed that to understand the business
strategy which has been sued by an organ situation, the Ansoff matrix can be used to determine
the growth strategy which has been used by business. To examine the change in internal and
external business environment, SWOT and PESTEL analysis has been implemented. Therefore,
SOSTAC model is a planning process which can be used by an organization through which they

can create an action plan which will be executed by business for achieving the organizational
objectives.

REFERENCES
Books and journals
Albrechts, L., Balducci, A. and Hillier, J. eds., 2016. Situated practices of strategic planning: An
international perspective. Routledge.
Amason, A. C. and Ward, A., 2020. Strategic management: From theory to practice. Routledge.
Amrollahi, A. and Rowlands, B., 2017. Collaborative open strategic planning: a method and case
study. Information technology & people.
Bryson, J. M., Edwards, L. H. and Van Slyke, D. M., 2018. Getting strategic about strategic
planning research.
David, F. R., David, F. R. and David, M. E., 2017. Strategic management: concepts and cases: A
competitive advantage approach. Pearson.
Dyer, J. H and et.al., 2017. Strategic Management: concepts and cases. John Wiley & Sons.
Gallus, J. and Frey, B. S., 2016. Awards: A strategic management perspective. Strategic
Management Journal. 37(8). pp.1699-1714.
Hanlon, A., 2018. Digital marketing: Strategic planning & integration. Sage.
Hubbard, G., Rice, J. and Galvin, P., 2015. Strategic management: thinking, analysis, action.
Pearson Australia.
Kachaner, N., King, K. and Stewart, S., 2016. Four best practices for strategic planning. Strategy
& Leadership.
Mallon, W. T., 2019. Does strategic planning matter?. Academic Medicine. 94(10). pp.1408-
1411.
Ropianto, M and et.al., 2017. Optimization of Strategic Planning Organization in the Framework
of Achievement Objectives of Education. Advances in Social Science, Education and
Humanities Research (ASSEHR). 149(2). pp.149-151.
Stephens, E. and Martin, B., 2019. Business Policy and Strategic Management. Scientific e-
Resources.
Online
Strategic Management, 2018 [Online]. Available through <https://www.introduction-to-
management.24xls.com/en202 >

APPENDIX 1
Business plan for Amazon
SOSTAC MODEL- It is a planning model which was introduced in 1990s to support with
marketing planning. The acronyms of SOSTAC stands for situation, objectives, strategy, tactics,
action and control.
To create a business/action plan for Amazon, SOSTAC model will be used which has
been briefly outlined below:
Situation- As Amazon is one of the leading retail companies, the company have strong
brand image and strong customer base in the industry which has been a source for maximizing
profit margin of the organization. The main focus on Amazon is on delivering quality customer
experience by planning customer centric strategies. The company will plan to promote their
existing products through which they can increase their sales, will use advanced technologies
through which they can manage to reduce the rate of cybercrime and maintain their position in
the industry and face competition in the market.
Objectives- To promote the existing products range and increase the sales and revenues
of the company and to protect all important and confidential information or data from
cyberthreats.
Strategy- For grabbing customer attention towards existing products range, Amazon will
use market penetration strategy for growth and expansion of their business as this will also help
in increasing business sales. For safeguarding the data and information of the organization,
Amazon will implement digital and physical security methods and will provide training to
employees which will help them in identifying and reacting to such threats which are possessed
by unwanted hackers.
Tactics- By planning promotional and marketing strategies, Amazon will focus on the
growth and incline in sale of the products offered by the company. Amazon will use security
measures to create barriers for cybercrimes by using firewalls, antivirus, network and server
monitoring. The company will provide training to employees through which they can avoid
employee negligence and this will be helpful in protecting the data from cyber threats.

Action- By executing market penetration strategies, Amazon will promote their exciting
product range to get customer attention and thus the company will also maximize the revenues
and profit of the company. Amazon will ensure different digital and physical security methods
have been implemented through which they can safeguard the data from such threats.
Control- Amazon will regularly engage in promotional activities through various social
media platforms and other mediums through which they can attract higher number of customers
and generate higher revenues. Amazon will also monitor the whole training process through
which they can avoid employee negligence and ensure that all protocols are appropriately
followed by the employees.