Global Business Environment Analysis: PESTEL and SWOT of Amazon

This report provides a comprehensive analysis of Amazon's global business environment. It begins with an introduction to the concept of the global business environment and its importance for decision-making. The main body of the report includes a PESTEL analysis, evaluating political, economic, social, technological, ecological, and legal factors affecting Amazon. This is followed by a SWOT analysis, assessing Amazon's strengths, weaknesses, opportunities, and threats. The report then identifies key drivers impacting Amazon's functional areas, specifically financial and information technology functions. The conclusion summarizes the findings, emphasizing the necessity of understanding the global business environment for businesses operating internationally. The report incorporates references to academic sources and industry reports.

Global Business
Environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
PESTEL Analysis...................................................................................................................3
SWOT Analysis......................................................................................................................4
Impact on functional areas......................................................................................................5
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................7
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INTRODUCTION
Global business environment is defined as environment within the different sovereign
nations. Respective environment generally highly impact on the decision making of a company
and it is essential for them to understand these aspects (Andoh and Cantah, 2020). For
conducting respective report Amazon is selected which is operating in e commerce industry. It is
founded by Jeff Bezos in year 1994 and its head office is located at the Washington United State.
Topics covered in respective report are PESTEL analysis on which SWOT analysis is based.
Moreover it also include two key drivers which affect functional areas of Amazon.
MAIN BODY
PESTEL Analysis
PESTEL analysis is used by a company in order to conduct evaluation of external aspects
according to which they develop strategies and plans. The PESTEL analysis of Amazon is given
below:-
 Political Factors - Being an e-commerce industry there are so many political external
factors which are important in their development such as political stability of developed
countries, governmental support for e-commerce, Increasing government efforts to
increase cyber security etc. All these steps of government helps amazon to sustain (Cisko,
2020). On the other hand the same external factor create competition for the company
like involvement of Chinese online retail firms which are expending their operations.
 Economic Factors - Performance of Amazon depends on the situation of economy of a
country and the important economic external factors which affects the company are
economic stability of the developed markets and increasing disposable incomes. On the
other hand potential economic recession in china is a threat for the company.
 Social or Socio-culture Factors - Amazon faces various social changes which needs to be
verified. It can create opportunities for the company like increasing online buying habits
of the customer and increment in consumers in developing countries. But the way wealth
disparity id increasing day by day it is a threat for the company.
 Technological Factors - Amazon has centrality of technology in its business, so
advancement directly affects the company. As efficiencies of the IT resources are
increasing day by day which is an opportunity for Amazon to grow but on the other hand
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cyber crimes are also increasing which can be a threat for the company (Pant, Virdi and
Chaubey, 2020). It also faces a threat of rapid technological obsolescence which impose
pressure on company to develop its assets but it can also became opportunity in
optimising business
 Ecological or environmental factors - Even Amazon has an online business then also
environmental factor affect their business. Rising interest in environmental programs,
rising emphasis on business sustainability and increasing popularity of low-carbon
lifestyle is an direct opportunity to the business as it provides time and waste
management.
 Legal Factors - The legal external factors can create opportunities for the business of
amazon. Rising product regulation intensify the efforts of amazon in reducing counterfeit
sale. Changes in export and import regulations company has opportunity to grow.
Moreover, Amazon can strengthen its brand image in rising environmental protection
regulations on businesses
SWOT Analysis
The respective model is used by a company in order to conduct analysis of internal
aspects or factors. The SWOT analysis of Amazon on the basis of PESTEL is given below:-
Strengths Weaknesses
 Respective company follow legal
aspect of every nation properly which
help them in maintaining effective
delivery system.
 Amazon conduct work according to
social factor which help them in being
customers centric and offer products
according to their need and
requirement.
 The political aspect of every nation is
not same due to which tax related
issues arise. Amazon have negative
publicity in respect of Tax Avoidance
in nations like United State and United
Kingdom (Varshney and Varshney,
2020).
 According to economic factor Amazon
is struggling in making business
profitable in developing nations.
Opportunities Threats
 In respect of political factor aspect  In context of technological factor there
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respective company need to enhance
government efforts on the cyber
security. This will help in increase
effectiveness of business operations
and functions in effective way.
is increase in cyber crime, due to which
company need experienced several
issues related to hack of customer
personal information. Due to which
company experienced decrease in
customer loyalty or trust.
By conducting analysis through PESTEL analysis and SWOT analysis it is determined
that there are several key drivers. In respect of external environment it is to follow political
aspect like tax rate, policies etc. It is also necessary to understand other elements such as
economic, technological, legal and so on. Moreover in respect of internal aspect it is necessary to
understand company strength, weakness, opportunities and threat as that help in decision
making.
Impact on functional areas
There are several different functional areas in an organization by which they able to
conduct their operations properly such as marketing, human resource management, finance,
research and development and so on. In respect of Amazon below two main functional area are
defined which are get impacted by factors determined in SWOT analysis:-
 Financial function – the function of respective company to develop strategies and plans
related to financial activities such as conducting accounting work, maintaining different
accounts, develop budget and so on. In respect of this company management need to
consider different financial rules developed by government (Willcocks, 2020). In respect
of Amazon, financial function get impact when government develop new or modify rules
of taxation. This is so because accordingly to that they need to develop new strategies and
plans.
 Information technology function – The function of this area is to take care of IT activities
as well as develop new system according to requirement. In respect of Amazon their It
function get impacted because they need to develop new system in order to avoid hacking
or cyber crime.
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CONCLUSION
By conducting evaluation of above mentioned topic it can be summarised that for every
company operating in international market need to conduct evaluation of global business
environment as that will help in developing effective decision. In respect of this a company may
adopt several models or analysis such as PESTEL and SWOT analysis which help in determining
external as well as internal aspects or environment respectively. In addition to this it also help in
determining aspects that affect functional area of a company.
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REFERENCES
Books and Journals
Andoh, F. K. and Cantah, W. G., 2020. Foreign Direct Investment in Sub-Saharan Africa: Is Tax
Obligation Still an Issue?. Global Business Review, p.0972150919890241.
Cisko, L., 2020. SEVERAL CONSIDERATIONS TO THE LEGAL SUPPORT OF THE
BUSINESS ENVIRONMENT DURING THE ECONOMIC CRISIS. InterConf.
Pant, M., Virdi, A. S. and Chaubey, D. S., 2020. Examining the effect of marketing innovations
on GPMA: A study using the PLS–SEM Approach. Global Business Review. 21(4).
pp.1025-1036.
Varshney, D. and Varshney, N. K., 2020. Workforce agility and its links to emotional
intelligence and workforce performance: A study of small entrepreneurial firms in
India. Global Business and Organizational Excellence. 39(5). pp.35-45.
Willcocks, L. P., 2020. The Covid-19 pandemic shines a spotlight on the systemic risk to global
business. LSE Business Review.
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