Strategic Analysis of Amazon's Business Operations Report

This report provides a comprehensive analysis of Amazon's business strategies. It begins with an executive summary and an introduction outlining Amazon's mission and vision. The report then delves into an analysis of the macro environment using PESTLE analysis, evaluating political, economic, social, technological, legal, and environmental factors impacting Amazon. It also employs the Ansoff Matrix to examine market penetration, development, product development, and diversification strategies. The internal environment is assessed using SWOT analysis and McKinsey's 7S model to identify strengths, weaknesses, opportunities, and threats, as well as the organizational structure and systems. Porter's Five Forces model is applied to evaluate the competitive forces. Finally, the report culminates in the formulation of a strategic management plan, integrating the findings from the environmental and competitive analyses to establish strategic directions, objectives, and actions for Amazon. The report aims to provide insights into Amazon's strategic decision-making and its approach to navigating the dynamic business landscape.

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Executive Summary
Business strategies are considered as some predefined set of actions which need to
undertake to deal with a situation in effective way. There are lot external as well as internal
factors that affect business performance and need to analyze with the help of appropriate
framework. Therefore, administration of company is required to prepare appropriate strategies to
face future circumstances and competitive positing in an appropriate way.

Table of Contents
INTRODUCTION.......................................................................................................................................4
TASK1........................................................................................................................................................4
P1) Apply necessary models to monitor impact of macro environment on organization and its strategies
.................................................................................................................................................................4
M1) Analyze external environment to determine decision of strategic management...............................7
TASK 2.......................................................................................................................................................7
P2) Discuss internal environment and capabilities of entity by using appropriate tools..........................7
M2) Evaluate internal environment to assess weakness and strengths of internal capabilities, skills of
organization...........................................................................................................................................11
TASK3......................................................................................................................................................12
P3) Apply Porter’s five forces model to evaluate competitive forces for organization..........................12
M3) Develop necessary strategies to improve competitive edge and market position on the basis of
outcomes................................................................................................................................................14
TASK 4.....................................................................................................................................................14
P4) Apply appropriate theories, concepts and models to formulate strategic plan for organization.......14
M4) Develop a strategic management plan............................................................................................15
D1) Interpret information and data of environmental and competitive analysis to produce strategic set
of directions, objectives as well as actions.............................................................................................15
CONCLUSION.........................................................................................................................................16
REFRENCES............................................................................................................................................17

INTRODUCTION
Business strategies are the set of actions which are prepare in order to attain predefined
goals and objectives. It is analyzed that strategies provide direction that will lead towards
attainment of desired goals. It can be considered as the combination of small tactics that are
prepared to accomplish future objectives (Kitsios and Kamariotou, 2019). Here, strategies are
prepare by managers through future anticipations so that they can meet with uncertainties in an
effective manner. In addition, these strategies also help to inflate overall sales and profitability of
company to sustain in market for longer duration. In the current report, Amazon is taken into
consideration which is well known Ecommerce Company having headquarters in United States.
It provides different products such as home appliances, mobiles, clothes and more at a single
platform. The company is currently working in different segments such as entertainment and
media & finance. It was founded by Jeff Bezos in 1994 as an online platform for books selling
and has done seamless growth in recent years. In the current report, strategies that are used by
organization have been discussed in detailed manner along with analysis of its internal as well
external environment. There are different tools such as PESTLE, Porter’s model have been
applied in order to assess external environment of organization. Further, it comprises various
models of internal analysis such as SWOT, VRIO framework and more. In the present report,
porter’s five forces model has been discussed thoroughly that provide information regarding
competitive positioning of company. Lastly, appropriate theories, approaches are carried out for
formulation of effective strategies.
TASK1
P1) Apply necessary models to monitor impact of macro environment on organization and its
strategies
Strategies refer to predefined set of activities which are formulated to attain desired outcomes. it
is considered as general directions for organization that governs behavior of individuals working
within organization (Shmeleva, 2017). It is monitored that Amazon is a well known ecommerce
giant that prepare ample of strategies for business growth and success. For this purpose,
objectives, mission and vision of company are given as under:

Mission: “To enhance customer experiences with the use of internet and technology in order to
help customers to discover and buy any products”
Vision: Vision of company is “to become highly customer centric organization to provide them
such as online platform where they can find anything which they wish to buy online”
It is analyzed that macro environment consist ample of external factors which put great
impact over business and its performance. It is related o external environment that is beyond the
control of managers but significantly affect overall productivity as well as profitability of
organization. There are different models have been applied by Amazon that are given as under
PESTLE Analysis:
Political Factors: It comprises policies, rules as well as regulations that are made by
political parties. These rules put a great impact over business. It is analyzed that there are
different political conditions are prevailing within different countries at global level. So, it is
vital for manager to examine these conditions and prepare business strategies accordingly. In
context of Amazon, it is working within 15 countries at global level so highly affected with
change in political environment of different nations (Agustina and Karyono, 2019). Here, it is an
organization which imports and exports products globally so tariffs, custom duty, taxes also play
a major role in overall revenue of organization. In addition, it is also affected by FDI norms,
cyber security bills at various nations worldwide.
Economical Factors: It refers economical factors such as disposal income, interest rate,
employment opportunities and more. It is analyzed that Amazon is operating in both developing
as well as developed nations such as US, UE, India and more. Here, company plays a crucial role
in development of economies by creating jobs, enhancing income level. Despite of recession,
demand of daily products do not affected in the market of US and UK that is given rise to overall
revenue of organization.
Social Factors: These factors are concern with personality, status, attitude, buying
behavior of customers. It is monitored that now customers like to get necessary things at their
own place. Here, Amazon provides this facility to users by offering all the necessary products
start from groceries to clothes to home appliances (Saldanha, 2019). Now, it has become a

crucial part of lifestyle of people by which they can get required products at their doorsteps.
Therefore, customers base of entity is enlarging rapidly as it provides everything at single
platform with easy accessibility.
Technological Factors: In current time, it is imperative to remain ahead in terms of
technology to ensure long term sustainability in market. It is stated that Amazon is known for its
innovation and highly efficient technologies. They are completely relying on technologies to
deliver products to customers on timely basis. In some countries, Amazon have been started
drone delivery that provides higher competitive advantage to entity. In addition, company invests
higher amount in research & development so that they can bring new, innovative as well as
creative products in market. It is stated that logistic management of entity is highly efficient
which makes it enable to meet with needs and requirements of customers on timely basis.
Legal Factors: In this, various compliances, rules, regulations are included that are
formulated by higher authorities in order to manage smooth functioning of business. In context
of Amazon, it is operating in different countries thus highly affected with legal and trade
restrictions of different nations (Vardarlier and Zafer, 2020). As per anti-countfeit policy all the
products that are being sold over Amazon need to be verified. This practice is essential to get
higher trust of customers. In addition, company is required to follow data protection, customer
protection laws to safeguard personal credentials of customers.
Environmental Factors: It is stated that Amazon is have great concern about
environment and society thus they avoid use of such activities which increases environmental
pollution. Initiative of using drones is also considered as a crucial step to reduce use of fuel in
delivering products to final users. In addition, organization also adopts several steps such as
increment in job opportunities, life style for wellbeing of society at large.
Ansoff Vector Matrix:
Market Penetration: It is concern to sale existing products within existing market place
without making any changes in them. In reference of Amazon, it is offering wide range of
products such as clothes, furniture and more to existing group of customers. Here, they can
penetrate business within current market with the help of advertisement, promotional activities.

Customers are also attracted with discount promos. By this way, Amazon uses several
approaches to strengthen its position in existing market place.
Market Development: Under this, managers tap into new market with already available
products and services. In context of Amazon, they keep expanding business in more countries
with an aim to target new customer base (Anderson, 2019). Here, Amazon also launches its
website in regional language for the ease of buyers. With this, they are able to get acceptance in
new market place that is crucial to enhance business at wide level.
Product Development: In this, new products and services are launched among exiting
group of customers. It is analyzed that product development is proved as more crucial strategy
for Amazon. It has been started as online book selling website and now provides a wide range of
products almost all range of products are available at the website. So, this large portfolio of
products provide higher competitive edge to company.
Diversification: It refers launch new product among group of customers. It is considered
as a risky strategy but provides great opportunities of growth and future success. In reference of
Amazon, company is working in diversify fields such as entertainment, media, finance as well as
retailing which make them enable to target more number of customers.
M1) Analyze external environment to determine decision of strategic management
External environment comprise ample of factors which put a great impact over business
and its efficiency. Here, it includes all outside factors that can b macro and micro such as
suppliers, customers and political, economical and social conditions. There are certain models
such as PESTLE, Asoff and more are applied to assess external environment of company.
Therefore, managers are required to analyze impact of external factors while preparing strategies
and taking necessary business decisions.
TASK 2
P2) Discuss internal environment and capabilities of entity by using appropriate tools
Internal environment is related to internal resources, capabilities of organization that
strengthen market position of company. It is made with strengths of organization which make
them different from other competitors. On other side, it also comprise weak points which need to

improve with the help of appropriate strategies. For this purpose, different tools that are used by
company are given as under:
SWOT analysis
Strengths Weaknesses
 It is monitored that Amazon has strong
brand value and presence at global
market place which strengthen its
position in market (Abugre and
Anlesinya, 2020).
 Here, company is highly innovative and
ahead in the use of innovative and
creative approaches to serve customers
effectively.
 It is stated that business model of
Amazon can be easily imitate by others
so it is for new firms to enter into
existing market place.
 Company has also surrounded with
controversies of Tax aversion in Japan,
UK and US which negatively affected
its brand image.
Opportunities Threats
 There is opportunity to expand physical
stores to sale products to customers by
having personal interaction.
 Currently, Amazon is working within
15 countries so there is scope to explore
business in more countries.
 Change in government rules and
regulations in countries in which
Amazon is operating business may
create higher business threat for
company.
 Rapidly increasing cybercrime is also a
big threat for organization.
Mckinsey’s 7S model
Strategy: It is one of the crucial component of model in which strategies are prepared for
future growth and success of company. It is analyzed that strategies need to be effective and
formulate by having long term vision. In context of Amazon, managers prepare appropriate
strategies, plans by undertaking necessary anticipations about future. By this way, they are able
to sustain in competitive market place for longer run.

Structure: It refers the way in which different activities, divisions of business are
organized with an aim to attain predefined goals and objectives. It depicts reporting relationships
between different individuals at work place (Yucel, 2018). In simple words, it represents
hierarchy of various positions within organization. In regards of Amazon, they undertake
functional organizational structure in order to carry out different business functions effectively.
Systems: It includes procedures that are used for daily activities within company. Here,
the way that is used to undertake business decisions is also determined. It helps to carry out all
the business functions in predefined as well as systematic manner. In reference of Amazon, all
business related decisions are taken by higher authorities. In addition, they assign roles and
responsibilities to all individuals in order to undertake different organizational activities in an
efficient manner.
Skills: These are the abilities and competencies to perform assigned task in better way.
Here, skills are needed to perform different business functions. In reference of Amazon, they
recruit knowledgeable as well as credible personnel’s so that they can significantly contribute
towards organizational growth and enlargement. Besides this, they also arrange necessary
training & development program to enhance productivity and efficiency of work force.
Staff: It is concerned with number of employees who will required by organization to
attain desired goals. In addition, it also included methods of recruitment, selection, motivation
and more. It is monitored that Amazon undertakes several approaches to hire a competent
candidate (Garcia-Swartz and Campbell-Kelly, 2019). Further, they also provide motivation
through monetary and non monetary techniques so that employees perform task with higher
efficiency. Managers also provide rewards, acknowledgement and recognition to work force to
facilitate their consistent efforts for betterment of organization.
Style: It demonstrates the way in which top level managers, leaders manage work force
within entity. It depicts interaction between superiors and subordinated that is vital to bring
collaboration at work place. In context of Amazon, managers and leaders adopt democratic style
with an aim to facilitate participation of employees in organizational activities and functions.
Here, managers encourage them to come up with meaningful suggestions for development of
organization.

Shared value: In this, values, policies, norms, standards are included which govern
behavior, attitude as well as actions of employees within company (Halpern and Graham, 2018).
These are the foundation of organization and prepare by managers to guide staff towards right
direction. In regards of Amazon, managers formulate vision, missions, and values in order to
alien efforts of work force in an appropriate way. This will help in attainment of organizational
objectives.
VRIO Analysis:
Competencies Value Rare Inimitable Organized
Marketing Yes No No Yes
Customer
Loyalty
Yes Yes No Yes
Customers
experience
Yes Yes No Yes
Brand Value Yes Yes Yes Yes
Valuable: It included those resources that are valuable for company and help to exploit
opportunities. Resources are considered as valuable if they provide value to customers. For this,
it is crucial to analyze value of resources on regular basis to make necessary improvements in
internal capabilities. It is monitored that brand value, customers experience, loyalty are valuable
resources for Amazon that will help to get competitive edge for a stipulated period of time.
Rare: Under this, those resources are included that are rare to find in any other company.
These kinds of resources may provide temporary competitive edge to organization. In regards of
Amazon, their brand values, customer experience, are considered as rare competencies that is
crucial to have an upper hand in market place (Trevisan, 2016).
Inimitable: It is really essential to have inimitability in resources so it cannot be copied
by other firms. It provided higher edge to organization over other competitors. In context of
Amazon, its brand value cannot be imitate as well as replace by any other company as they have
already build a strong image at market place that is crucial to maintain large customer base.

Organized: Resources will not be able to drawn any value to company so it is imperative
to organized resources in proper manner. Here, managers need to require to manage process,
policies, structure in an appropriate way for attainment of predefined goals. In reference of
Amazon, managers make sure to organize resources in an efficient manner for betterment of
company.
With above discussion, it is stated that brand value of Amazon, is its core competency
which will provide long term competitive edge to company. Here, it is valuable, rare and not
easy to imitate by other competitors as customers have great faith & trust over brand. It will lead
organization towards higher growth and success.
M2) Evaluate internal environment to assess weakness and strengths of internal capabilities,
skills of organization
It is stated that internal environment consists several positive as well as negative aspects
regarding performance of company in market (Pramanik, Maiti and Maiti, 2018)
. Here, different models such as SWOT analysis, Mckinsey 7 S and more are applied to
asses internal environment of organization in an effective manner. In context of Amazon ,
strengths and weakness of entity are given as under:
Strengths: It is a global brand having a large customer base that is loyal towards brand.
They provide better services in affordable price range which give higher edge to company over
other competitors. In addition, Amazon is really ahead form its competitors in terms of
technology and innovation thus able to meet with needs & requirements of buyers in timely
manner.
Weaknesses: There are several controversies prevailing in market against organization
which harm its existing brand image. Due to offer products at lower price, they are not able to
earn sufficient amount of profit and sometimes incurred losses.
Therefore, Amazon has great internal capabilities, skills that sometimes provide strength
to organization to enlarge business. However, there are some adversities which need to be
overcome in order to earn enormous profit margin.

TASK3
P3) Apply Porter’s five forces model to evaluate competitive forces for organization
Porters’ five forces model
This is a framework to analyze competitive positing of organization in market. Here,
competitiveness of business is examined on the basis of five forces that are related to external
business environment. Further, this framework really helps to prepare appropriate strategies for
attainment of organizational goals and objectives. Five forces of Porter’s model are given as
under:
Threats of new entrants: It comprises probabilities of entrants of new firms in existing
market place. It moreover depends on entry barrier present in market place (Priem, Wenzel and
Koch, 2018). These barrier are related to government policies, customer’s behavior and more. In
reference of Amazon, threats of new entrants is lower as it is a large ecommerce giant that have
been crated extremely positive brand image among customers. So, it is not easy for any new firm
to compete with company. It will required huge investment in warehousing, distribution and
logistics which is not possible for a new company. Therefore, it is quiet difficult for new entities
to stand in competition of organization.
Bargaining power of buyers: It is monitored that there is higher competition prevailing
in market so bargaining power of buyers is also high. They can purchase products to other
competitors of Amazon such as Flipkart, EBay and more. Customers of company are highly
price sensitive so that they can easily switch over other brands where they can find products at
lower price.
Bargaining power of suppliers: For Amazon bargaining power of suppliers is really high
due to higher dependency over them. In retail business, companies more depend on vendors to
supply necessary materials (Aluchna, 2018). However, Amazon has strong brand value in global
market so suppliers also have to obey their rules and regulations. Therefore, managers need to
maintain better relationship with suppliers in order to meet with requirements of customers on
timely basis.