Strategic Planning for Amazon: PESTEL and Porter's Five Forces Analysis

This report analyzes Amazon's environment using PESTEL and Porter's five forces analysis to develop an effective business strategy plan for sustainable competitive advantage. It also outlines Amazon's background, vision and mission statements, financial and non-financial objectives, and strategic alternatives.

Running Head: AMAZON 1
STRATEGIC PLANNING
STUDENT’S NAME
COURSE
UNIVERSITY
DATE

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Table of Contents
INTRODUCTION.....................................................................................................................................3
Amazon background information............................................................................................................4
Vision and mission statements that will form the business objectives...................................................4
MISSION STATEMENT..........................................................................................................................4
VISION STATEMENT OF THE ORGANIZATION.............................................................................5
Financial goals of the organization...........................................................................................................5
Non-financial objectives of the organization...........................................................................................5
Amazon PESTEL Analysis......................................................................................................................6
Porter’s five force model analysis for Amazon........................................................................................9
STRATEGIC ALTERNATIVES...........................................................................................................11
Amazon business strategy......................................................................................................................13
Conclusion................................................................................................................................................15
References................................................................................................................................................16

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INTRODUCTION
This report is going to focus on Amazon, an organization that offers e-commerce services for
clients across various parts of the world. Amazon is based in the USA, and it is one of the
leading organizations in e-commerce in the world. Amazon offers free two days shipping
services for all the available purchased goods within the US for a certain amount of goods
purchased by the clients. The report is going to outline an analysis of the organization’s
environment using PESTEL and Porter's five forces analysis to facilitate the development of an
effective business strategy plan that shall enable the organization to achieve sustainable
competitive advantage over its competitors (E. Dobbs, 2014). The report shall also outline a brief
description of the organization, the vision and mission statements that will outline the objectives
of the organization and lastly the report is going to outline the financial and non-financial
strategic objectives for the business enterprise.

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Amazon background information
Jeff Bezos found Amazon on 5th July in 1994. The organization started to offer a membership
service through offering free two-day shipping for various goods and services purchased by the
customers from the online platform in the US on all the eligible purchases and a further flat
annual fee of $79. Amazon also offers one-day shipping for various goods and services at some
discount rates for the customers enhancing continuous purchases by the consumers (Dess, 2012).
Amazon has progressed throughout the years and has emerged with many new offers to attract a
large number of potential customers (Arnett, Goldfinch & Chinta, 2018).
Vision and mission statements that will form the business objectives
The mission and vision statements for the organization contribute much to the status of the
company being one of the largest online retailers in the world (Norris, 2010). The company does
it best to ensure that the mission and vision statements are adhered to appropriately which has
enhanced its success in the competitive business environment. The vision statement guides the
organization on the future prospective while the mission statement outlining the goals and
objectives to be achieved by the organization.
MISSION STATEMENT
To provide effective and high-quality service for all the customers. Amazon prime targets to
convey its products at the convenience of the customers for effectiveness.

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VISION STATEMENT OF THE ORGANIZATION
Amazon purposes to dominate globally in the future in online retail to facilitate convenient
services for all its customers in the provision of various goods and services. This is important as
it enables the organization to achieve its various goals and objectives to enhance its success in
the competitive business environment.
Financial objectives of the organization
According to Kumar & Ravi (2016), the financial objectives are to:
Increase the sales through effective marketing hence profit maximization
Offer their products at convenient prices for its potential customers
Invest in other sectors in the economy through the profits generated.
Non-financial objectives of the organization
Amazon prime aims:
To participate in various corporate responsibility initiatives through various activities that
involve giving back to society.
To partner with other organizations such as Walmart in the provision of certain services to create
a strong brand.
To be the first choice for various through the provision of efficient services.

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Amazon PESTEL Analysis
PESTEL analysis is a significant tool for business environmental analysis that enables the
business to determine various factors that have an impact on its operations (Khan, Alam& Alam,
2015). It enables the business to formulate effective strategies to address the factors that harm its
operations. These factors are as outlined below:
Political factor.
The government may impose some regulations such as price regulations on some of the products
requiring all the businesses to comply hence affecting the price set by Amazon for its various
products. Government stability in the United States has enhanced peace hence allowing effective
operations of Amazon from its headquarters.
Economic factor.
This is the most crucial aspect that determines the success of the organization in the competitive
business environment. Amazon has achieved success in its online retail business due to the
strong financial position of the population in the US (Johnson, 2018). Most of the people are
employed with well-paying jobs; hence they have a strong financial base which increases their
purchasing power.

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Social factor.
Amazon has been able to progress because of the increased use of social media by most of the
people today who have access to various products sold by the company. This is because the
company advertises it is various products on various platforms such as Facebook, Twitter, and
Instagram. A large number of people in the United States have access to the internet. This is
important because the people can have access to various products advertised by the company on
the company website hence increasing the market opportunity for the business.
Technological factor.
Increased use of e-commerce has facilitated the success of the business organization in the
competitive business environment. Amazon has a convenient online system where the consumers
can transact conveniently. Online business is the recent trend for most of the businesses due to
increased use of the internet by most of the potential consumers for the products.
Environmental factor
Increased concern for environmental care has enhanced the production of recycled products by
Amazon to comply with the environmental standards. Amazon is engaging in green purchasing
practices where it sets regulations for its suppliers who only supply environmentally friendly
products.

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Legal factors
There various legal requirements involved in online purchasing of products. Amazon should not
breach the contract after agreeing to deliver the products to the speculated consumers. The
organization should not discriminate the consumers on the products offered for various goods
and services. The government can set price regulations for various products; hence, Amazon has
to ensure that it complies with the formulated price strategies.

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Porter’s five force model analysis for Amazon
This is a unique model that identifies and analyzes five competitive forces that co-ordinate the
activities of the firm in the struggle to outshine the competitors within a given business
environment (Mathooko & Ogutu, 2015). This analysis facilitates the identification of the
weaknesses and strengths of the industry. This model facilitates the explanation of the reason the
firms strive to achieve different levels of profit sustainability. This model is outlined below:
Stiff competition in the industry.
The stiff competition that exists in the market from other firms such as Walmart and E-bay
results to rivalry where some firms end up lowering their prices for various products to attract
consumers with the intention of kicking others out of business. The more the number of
competitors offering similar products in the market the lesser the power of the company in the
market concerning its products. Low rivalry in the competition gives the company the power to
make various decisions concerning its products facilitating profit maximization.
Threats posed by new entrants into the market
Amazon has established itself well in the market by offering the best prices for its goods and
services hence entry of new firms into the market is a minor threat to the organization. An
organization with substantial barriers to entry by new businesses will always maximize the
profits due to the lack of stiff competition.
The bargaining power of new buyers
New buyers may have strong bargaining power and as a result, must be ready to adjust to the
consumers' needs to a certain level. The suppliers for critical goods and services usually

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determine their price in the market. A supplier that serves most of the businesses has more
power.
Threats posed by substitutes.
The buyers have a wide choice concerning the online purchasing platform to purchase goods
from. This poses a threat to Amazon, which has to apply unique strategies to enhance its success
in the market.
The bargaining power of the suppliers.
The suppliers for various products to the company are the key determinants of the prices for
products sold by Amazon. Amazon should ensure that they deal with suppliers who have average
bargaining power. This enables the organization to acquire various products on average prices
hence enhancing its competitive strategy based on price.

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STRATEGIC ALTERNATIVES
According to Lovelock and Wirtz (2016), Amazon has various strategies to enhance maximum
success in a competitive business environment. Some of the strategies are as outlined below:
Offering after sales services
Amazon offers shipping services for its consumers. This unique service attracts many customers
(Diehl & Bishop, 2017). This initiates repetitive purchasing behavior by the consumers
enhancing profit maximization by the company.
Offering discount
Amazon offers a discount for some of the products an aspect that initiates repetitive purchasing
behavior from the customers.
Competitor analysis
Amazon should carry out a thorough analysis of the strategies used by its competitors such as
Walmart and E-bay to enable it to come up with the best strategy to achieve the competitive
advantage over these firms in the competitive business environment (Yunna & Yisheng, 2014).
Through the analysis of the strategies used by the competitors, Amazon distinguishes itself
through its unique services and efficient services.

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Seeking consumer feedback
Through various surveys, Amazon obtains the feedback from the consumers regarding the
quality of goods and services offered (Mazzolini, 2016). This is important because it enables the
organization to improve the services where necessary hence enhancing the consumers
satisfaction and initiating repetitive purchasing behavior from the consumers.
Competent marketing team
A competent marketing team is very crucial for the success of the business. This is because they
use various criteria to reach potential consumers enhancing an increase in sales by the company.
Amazon business strategy
Amazon uses market mix strategies to achieve business objectives (CAMPBELL, 2017). The
marketing mix is at outlined below:

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Product strategy
According to Reimers & Waldfogel (2017), Amazon offers quality products hence attracting a
large number of consumers. The company provides a wide range of products at different prices
to increase the purchasing power of consumers. The products are always available for the
consumers.
Price strategy
Amazon offers their products at affordable prices for various types of consumers hence attracting
the customers. Amazon offers a discount for some of the products an aspect that initiates
repetitive purchasing behavior from the customers.
People strategy
Amazon has appreciated diversity in a wide range of services and products offered an aspect that
makes it the consumers' choice. This is a significant aspect that enhances the success of the
organization because all the individuals' products needs are catered for. The company offers
products for children, adults both males and females increasing the potential market for its goods
hence profit maximization enhancing the continuous success of the business enterprise.
Positioning strategy

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Amazon has positioned itself in the market by offering unique services to potential consumers.
Amazon has a useful online platform where all its products are posted which enhance the
accessibility by a large number of consumers.
Promotion strategy
According to Jain & Choudhary (2017), Amazon uses various social platforms such as
Facebook, Twitter, Instagram and various blogs to advertise its products that has enhanced its
vast market for the goods and services. This is an essential aspect of the success of any business
unit in the competitive business environment.
Distribution strategy
Amazon offers two-day shipping services for its customers for the purchase of a given amount of
product (Dawson, Hirt, & Scanlan, 2016). This is important because most of the individuals have
been motivated to purchase from the company a large number of goods due to unique service,
which is usually rarely found in other business organizations.

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Conclusion
Strategic planning is essential for the success of any business unit. The business unit can only
formulate winning strategies after a thorough analysis of its business environment. Amazon’s
success in the future shall heavily rely on the formulation of effective winning strategies. Pestle
analysis is very important for the success of any business organization because it enables the
business to compete effectively. Market mix strategies result in the achievement of a sustainable
competitive advantage by the organization if applied effectively by the business unit. The
mission and vision of the organization should be expertly formulated to promote the achievement
of the set goals and objectives of the organization.

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References
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Lovelock, C., & Wirtz, J. (2016). Services marketing (2nd Ed.). Hackensack (NJ): World
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