Business Strategy Report: Analyzing Amazon's Strategic Approach

This report provides a comprehensive analysis of Amazon's business strategy, encompassing its macro and internal environments. The PESTEL model is utilized to examine the political, economic, social, technological, environmental, and legal factors influencing Amazon's operations, while a stakeholder analysis identifies key parties and their influence. The report also evaluates Amazon's internal capabilities through a SWOT analysis, highlighting its strengths, weaknesses, opportunities, and threats. Furthermore, it applies Porter's five forces model to assess the competitive forces in the market and explores strategies to improve Amazon's competitive advantage. The Ansoff matrix and Porter's generic strategies are used to develop a strategic plan, culminating in tangible strategic priorities and objectives for Amazon's future.

Business
Strategy

Executive Summary
Business strategy refers to the decision taken by the company that assist to
achieve organisation goals and objectives. The strategy should be implemented by the
management in the way that maintain their position in the market, perform their day to
day operations and build strong relationship with customers that lead to personal growth
of organisation. In Amazon, they are adopting business strategies in order to develop
proper plan, procedures and strategies for business operations. For this they need to
conduct various activities which help them in gaining proper outcome. In order to
analyse the macro environment of Amazon, the company must conduct PESTEL
analysis that will help them in making effective decision and strategies. Along with this
analysis of internal environment of organisation, company must adopt SWOT analysis
that will help in identifying capabilities of Amazon. In addition to this to gain competitive
advantage in the market, Amazon should apply Porter's five force model which will help
them in maintaining their position in the market and examine the external factors to deal
with them. To identify all possible strategies that will benefit company in the long run
they must adopt Ansoff matrix Model as well Porter Generic model that will aid in
developing effective strategies to attain goals and objectives of company.

Table of Contents
INTRODUCTION...........................................................................................................................1
P1. Analyses of Macro environment on organisation............................................................1
M1 Critically analyse the macro environment to determine and inform strategic management
decisions.................................................................................................................................3
P2. Evaluation of internal environment and capabilities of business.....................................3
M2. Critically evaluate the internal environment to assess strengths and weaknesses of
organisation internal capabilities,structure and skill set.........................................................5
P3. Porter' five force model and competitive forces in market..............................................7
M3. Strategy to improve competitive advantage ...................................................................9
P4. Ansoff matrix and Porter's generic competitive strategies interpret and devise a strategic
plan for your business...........................................................................................................10
M4.Strategic management plan that has tangible and tactical strategic priorities and objectives
..............................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Marketing strategy can be referred as overall plan of business for reaching
people and converting them into potential customers of business (Baker and Saren,
2016). These are strategies made to accomplish long term plans of business.
Companies develop marketing strategies for effective and efficient working of business
in order to get comparative advantage over it rival companies. These strategies support
organisation decision making by providing proper guidelines and achieving goals and
objective of company. For this report chosen company is Amazon. This is leading e-
commerce company and American multinational organisation. This company was
founded on 5 July, 1994 by Jeff Bezons. Amazon is providing it services all around the
world and it headquarter is located at Washington, US. Mission of Amazon is to provide
lowest possible price to customers with best available selection and utmost
convenience to customers. Its values include earn trust, customer obsession,
ownership, hire the best and set highest standards in marketplace In this assignment
consist of complete study regarding various strategic decisions of company. Impact of
macro environment on business operations and critically analyses of external factor on
company. Evaluation and analyses of internal and external factor of business in order to
identify capabilities of business. Study of porters five force model to evaluate
competitive force and improve company competitive edge.
P1. Analyses of Macro environment on organisation
In order to analyse macro environment of Amazon company, PESTLE model has
been used. This model is a strategic analytical tool which helps in developing strategies
and decision-making of company (Baker, 2014). Through this external environment
such as political, economic, social, technological, environmental and legal factors can
be critically analysed and its impact on business operations can be understood.
Political factors
Amazon is an e-commerce organisation which offers its service through online
catalogue but political environment of a country can impact its business in positive and
negative way. Political factors consist of rules and regulation of political and government
parties. It includes trade policies, tax rates, political stability, changes in regulations etc.
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 Positive: Currently British and American government is holding a decisions
regarding potential trade deals between countries. So this could serve Amazon
ease in operating UK and reduce import taxes and strict regulations also.
 Negative: Brexit can have negative effect as Amazon of UK have to face
consequential impact which cause political upheaval and uncertainty on country.
Economical factor
This factor has major impact on decision making of Amazon company as
economic factors are connected with goods, services and money. It includes interest
rates, recession, taxes demand and supply etc.(Baker, 2016). Positive: People of UK are continuously looking for job options so Amazon can
have positive impact on organisation and leads to addition in human capital of
company.
 Negative: Increasing changes and uncertainty in stock market can have negative
influence over Amazon company and leads to drop in share price.
Social factor
This factor incudes lifestyle, briefs, buying habits, population, social trends etc.
All these factor have impact on overall business of Amazon company. Organisation
have to consider social factor before developing strategies (Banerjee and Soberman,
2013). Positive: Social trends of UK or behavioural shift in customers by using online
services and market is leading to positive impact on Amazon company.
 Negative: Government is not encouraging extending services of Amazon such
as delivery of products to doorsteps of customers as its is influencing lifestyle of
UK and resulting in obesity pandemic.
Technological
These factors affect business operations and competitive edge over other rival
companies. Technology factors include all those variable which are related to
development, existence, availability of technology (Bang, Joshi and Singh, 2016). Positive: Increase in digital devices and services trends in UK customers is an
opportunity for Amazon to grow and rise in this field. UK country is very advance
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in technology so company is also using new and innovative technology which
leads to improve in its business activities.
 Negative: Company is also facing constant treat of cybercrime. Major activities
of Amazon in done online with the use of internet technology. Data breaches and
hacking can affect organisation and leads to compromise with sensitive
information of organisation.
Environmental
External factor such as environment in which company is affected, includes
climate change, pollution, availability of resources, environment related laws etc. (Baran
and Galka, 2013) Amazon is mainly using online source but its operations affect natural
environment as well as macro environment. Positive: Amazon company can work to improve its environment situation and
solving environment issues through CSR activities. This organisation can build
strong positive image by taking interest in environmental programs.
 Negative: Government is continuously increasing pressure on large companies
to reduces organisational emissions and Amazon company also have to follow
strict rules and regulation of government.
Legal
Legal factors which are affecting Amazon business includes all regulation and
law determinates that are influencing business action and decision in positive and
negative way. Positive: Amazon company is has good relationship with HMRC which is HM
revenue and customs department of UK and this leads to help company in
various way as company is not facing any legal challenges at moment.
 Negative: company is currently under federal investigation for selling goods to
individuals on watchlists and disregard to international law and safety.
M1 Critically analyse the macro environment to determine and inform strategic
management decisions.
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Stakeholder Analysis:-
Stakeholder analysis refers to technique which is adopted by an organisation in
order to identify and evaluate requirement of stakeholder. Through this it can be
analysis that which stakeholder has minimum and maximum power in decision making
process within a company. It will also help in bifurcating stakeholders on the basis of
their role, responsibilities, expectation and power. It is generally divided into four
categories, which is explain below in respect of Amazon:-
 High Power and High Interest: It refers to those stakeholder who have high
interest and high power on a particular project of a company. In respect of
Amazon, these stakeholders are the other companies which are incorporated
with them. This is so because respective company sell products of different
manufacturer so it is essential for to know each and every things which is
conducting as well as adopting by Amazon.
 High Power and Low Interest: It indicate those stakeholders who have low
interest in decision making process of a company but they have high power such
as investors. In respect of Amazon it is necessary for them to inform each and
Illustration 1: Stakeholder Analysis – How To Analyze Project Stakeholders?
(Source: Stakeholder Analysis – How To Analyze Project Stakeholders?, 2019)

every things to investors so that they feel prioritise in company and encouraged
to invest in project. Through this respective company able to get proper funding
for conducting particular project in effective way.
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 Low Power and High Interest: It refers to those peoples who have very less
power in a company but they have high interest for example employees. It is
necessary for a company to involve their employees in decision making process
so that they know about project which help them in conducting work. In respect of
respective company it is necessary for them to involve staffs in decision making
process so that they get new idea in order to expand business or launch new
products. Through this employees of amazon also conduct work in effective
manner that leads to expanding business online.
 Low Power and Low Interest: These are those stakeholder of a company which
have low power as well as low interest in operation of workplace such as cleaner,
guard and many more. In respect of Amazon these stakeholder which have low
power as well as low interest are delivery man whose main motive is to deliver
products on time. They are not generally related with activities which are groining
in a company.
Amazon company should follow all rules and regulation set by government to
decrease threats from different legal and political factors. By this company can work
effectively and efficiently in market place as well as political and government parties will
also support organisation working when company is full fill its responsibilities towards
government (Cacciolatti and Lee, 2016). Amazon is a leading e-commerce company
which deal in a retails sector and customers will purchase products even when
economic conditions is not good. Company can provide different offering and discount
to customers, this will attract them as customer wants to save their money. In order to
deal with high inflation rates and high interest rates, amazon company should develop
strategies to decrease interest rates by cutting cost of business. Customers does not
have trust on online purchase and transactions because of threat of fraud and company
is also facing issue of cybercrime. To deal with this issue company can improve
security on site and while customer is making transactions. Company can also connect
with person who deal with cybercrime and ensure fraud free transactions to customers.
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P2. Evaluation of internal environment and capabilities of business
For understanding and evaluating internal environment of Amazon SWOT model
has been used. SWOT stands for strength, weakness, opportunity and threat of
company (Foxall, 2014). This will help in identifying Amazon capabilities.
Strength
Amazon is the largest e-commerce company and it has strong band name. This
organisation is offering wide range of variety of products online and have efficient
delivery or supply chain network for shipping of goods. Amazon have strong sales in UK
and world leading online retailer company. It is using new and innovative technology in
its business operations and enjoys advantage of first mover in cloud services. Amazon
is catering large number of customers an full fill their everyday needs at inexpensive
prices. Company brings creative idea and innovative idea and using differentiation
strategies which helps in have edge over other rival companies.
Weakness
Online business model is becoming very common in today's world. So it is very
easy for rival company to imitate amazon business model in digital world (Truong, Garry
and Hall, 2014). In few areas Amazon has faced losses by providing free shipping to
customers can be major reason for losing margins in some market area. Past
controversy of Amazon of avoidance of Tax in Japan, UK and US have stabilised
negative impact on company publicity. Amazon is majorly dealing with online services
and have very limited physical store which sometimes hinders to attract customers buy
things which are not sell-able on digital stores.
Opportunity
Amazon have opportunities to expend its operation in developing countries and
capture emerging market area. With the emerging relationships between UK and
America and decision regarding trade policy as well as import and export of goods
between these two countries is biggest opportunity for Amazon. This company can sell
its own brand products and can improve competitiveness against rival companies
through expanding more physical stores. company can improve relationship with
customers by conducting more CSR activities and solving sociality issues. UK
government is focusing on updating its technology which will help Amazon company is
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performing its logistics operation with better technology. Social trend of UK and usage
of smartphone in country as well as behavioural shift of customers towards online
purchase is opportunity for Amazon to provide qualitative services and increase
potential customers.
Threat
Strict rules and regulation of UK government in trade policy is a threat for
company as it does not allow Amazon to provide its services to some major areas.
Effect of Brexit on Amazon company is the biggest threat for organisation as well as
unexpected changes in stock market will affect market share of company. Increasing
cybercrime is threat for organisation as its affect network security system of company as
well as customers trust on online market also. As online business and e-commerce is
very trending it is aggressively increasing competition to company. Goverment of UK is
not supporting home delivery services of online company as its is affecting lifestyle of
UK citizens in negative way. Amazon have threat from big retails firms like Walmart and
eBay also as customer have more trust on local retails as compared to online retailers.
(Kanagal, 2015).
Mc Kinsey model:
This model describes the effectiveness of a company consisting of seven internal
factors that are strategy, structure, system, style, staff, skills and shared values. These
factors must be well organised in order to accomplish goals and objectives of an
organisation.
 Strategy: The organisation must make long term strategy or plan to remain
competitive in the market. In respect of Amazon, the manager of company
frames such long term plans that sustain their products in the market for longer
period as well as beat their competitors products.
 Structure: Organisation must be well structured and organised as well as made
up of embodied hierarchy, chain of command and division of roles and
responsibilities. In context of Amazon, company follow chain of command where
employees are delegated to only one superior who will assign them task. With
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this no confusion will be created in the mind of employees to follow which
superiors order and will perform their task effectively.
 System: It refers to the day to day operation that takes place in an organisation
that helps them in making effective decision. As per Amazon, company manage
its daily activities regarding proper cash flow and can take effective decision that
will be beneficial for the growth of the organisation.
 Shared values: Shared values refers to the attitude and behaviour of employee
at work place. In Amazon, company provides guidelines to their new recruited
employees regarding values of organisation which has to be followed by them in
a company.
 Skills: It refers to the talent and capabilities that a company require in their
employee while performing functions of the organisation. In respect of Amazon,
the manager of company recruit those candidates that have knowledge and skills
to access website and apps of the company and able to manage the feedback of
their customers
 Style: It describes the personality of an individual in the way they approach to
perform business activities of an organisation. In context of Amazon, employees
represent their personality by dealing with activities, function and their customers
that increases the productivity of company.
 Staff: Staff are the workforce of the company that perform business activities and
function to achieve organisational goals and objectives. As per Amazon, the
company consist of talented and skilled staff that manage their business
operations effectively and satisfy their customers by providing them quality goods
and services as per their requirement.
Amazon company should focus on their strategies in order to gain competitive
advantage and employees follow proper system and structure of organisation. Company
shared values, skill of employees, style of performing task and staff play a very crucial
role in Amazon overall performance.
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