Amazon Inc Strategic Analysis: PESTLE, Porter's Five Forces & Groups

This report offers a strategic analysis of Amazon Inc, focusing on its macro environment through PESTLE analysis and competitive market position using Porter's Five Forces model. It identifies key political, economic, social, technological, environmental, and legal factors impacting Amazon. The report assesses the intensity of rivalry, bargaining power of buyers and suppliers, the threat of substitutes, and new entrants in the e-commerce industry. Strategic groups are analyzed, highlighting Wal-Mart as a primary competitor. The dynamic nature of the e-commerce industry is discussed, emphasizing trends, innovations, and the increasing role of artificial intelligence. The report concludes that Amazon operates in a highly dynamic industry with continuous growth driven by internet usage and technological advancements.

Running Head: Strategic Management
Strategic Management
Amazon Inc

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Strategic Management
Contents
Introduction.................................................................................................................................................2
Pestle Analysis.............................................................................................................................................2
Five Forces Model........................................................................................................................................3
Strategic Groups..........................................................................................................................................4
Dynamic Industry: E-Commerce..................................................................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7

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Introduction
It is known in the whole world that what exactly Amazon is. It is well known because it is the
biggest online retailer in the market today and is obviously a pioneer in online space. It was
started as a book store during the time of its inception it grew to be the largest retailer and
became diversified because of its selling brands in clothing, gadgets, furniture etc. It now sells
everything online. Now days Amazon has expanded globally and works all across the world via
combinations of the local portals and globalized and logistic platforms (Amazon, 2018).
Pestle Analysis
 Political Factors: Amazon is benefitted from the political stability point of view. This
type of situation develops the chance for the firm to increase the business in countries
which are developed.
 Economic Factors: It is very likely that Amazon would increase and grow in the
developed countries and become stable in such markets. Such type of condition reduces
the issues with respect to the economy in the macro environment and hence, reducing the
risks for the firm to operate online and expand its business. Amazon also has growth
options in the developing countries like Malaysia, India etc (Gupta, 2013).
 Social Factors: Wealth disparity increase means the gap between the rich and the poor in
multiple nation increases. This is the situation which is a threat to the firm with respect to
the possible stagnation of not reusable income stages and the avoidance of the macro
environment for business done online. In case of the higher disposable level, it is feasible
in rising up the revenues of the business in e-commerce industry. But anyway, the rising
degree of consumerism developed new chances for the firm.
 Technological Factors: The firm has the threat of quick technical changes or it being
obsolete due to which the firm faces pressure to regularly keep on developing new
technical assets. This situation is like a chance in optimizing the industry and the
business.

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 Environmental Factors: The firm has the chance to progress the environmental effects in
response to increasing interest in environment programs. The firm’s CSR could make
some changes (Rastogi & Trivedi, 2016).
 Legal Factors: The rising up of the product regulation is foreseen as the outcome of the
societal demands on industry and the firm. This factor develops chances for the firm for
intensifying the hard work in decreasing the counterfeit sale online retail business
website.
Five Forces Model
 Rivalry in business: The firms in retail business are usually aggressive and they are very
competitive for each other. Amazon’s biggest rival is Wal-Mart which is expanding its e-
commerce website too. Hence, Rivalry is high (Omsa, Abdullah, & Jamali, 2017).
.
 Bargaining Power of buyers: The users have all the available ways from where they can
get access to high quality products from the retailers who sell them. This can affect
Amazon as the users can buy products from the other sites too like Wal-Mart. There are
high alternatives available in terms of the substitutes. Hence, the buyer’s power is high.
 Bargain power of suppliers: Small population gives the power to the suppliers for
imposing force on the firm’s business. Hence, the supplier power is also very high.
 Substitutes Threat: As discussed that Wal-Mart is one of the top rivals of Amazon, it is
designing it website and expanding it business as well as the process on which it sells are
very competitive (Tehrani & Rahmani, 2014).
 New entrants: E-commerce business is rising day after day as the users’ too wanted to
buy each and everything online. There are a lot of new entrants in the market. Hence,
Amazon is facing force day by day with the rise of the new firms online (Indiatsy,
Mwangi, & Mandere, 2014).

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The nature of competition if talked about, it is moderate for Amazon as it is already the biggest
retailer across world. Yet, it has to maintain its pace so that Wal-Mart could not make it to the
top as Wal-Mart is expanding itself and trying its best to top the charts.
Strategic Groups
Strategic Groups
Source: (Slideshare.net, 2013)
According to the diagram above, the strategic groups will have Amazon, EBay, Overstock.com,
B& N.com and Target and Wal-Mart.com in the groups. There are so many competitors if
Amazon is compared on a larger basis but these are the top rivals of the firm i.e. Amazon.

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E-Commerce Sales
Source: (Fortune.com, 2016)
According to the diagram given above, Amazon is at the top these days but the competition in
between these companies are moderate (McGee, 2014). Wal-Mart is coping up with the speed to
match Amazon but is still behind whilst other companies are not near to the firm at all. Hence, it
can be said that the major competitor of Amazon is Wal-Mart.
Dynamic Industry: E-Commerce
It can easily be said that the E-commerce industry in which Amazon operated is very dynamic.
There are a lot of trends which keeps on coming in the market as this is the industry which is
growing day by day with many new innovation and changes. The consumers interact with the
Artificial Intelligence in terms of technology when they buy things online. It is dynamic as it
gives the customers the type of facilities which gives the users the huge satisfaction. People can
buy from their mobile phones now days. They even get the products delivered on the same day.
In the recent studies of development and growth of E-commerce retail industry and sales, there
were proofs of important demand side factors that help in explaining the structural changes in the
e-commerce industry. The data of 1999 Quarter 4 to 2010 Quarter 3, the results which are

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econometric indicates the e-commerce sales elasticity of 9.36 and non e-commerce sales of 2.63.
This displays more dynamic and competitive market in terms if internet and online. Evidence of
more demand stability for e-commerce sales is also provided (Ramcharran, 2013).
Conclusion
In this report, the company named Amazon’s strategic Analysis is done. It mainly focuses on the
PESTLE and Porter analysis which gives the idea of the macro environment and the competitive
market analysis of Amazon. Later, the strategic groups are also discussed which states that Wal-
Mart is the biggest competitor of the firm and the other firms are also trying to cope up in the
market. In the conclusion, it can be said that Amazon operates in a very dynamic industry i.e. e-
Commerce which will keep on growing with the use of internet day after day.

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References
Amazon. (2018). Get To Know Us. Retrieved June 10, 2018, from
https://www.aboutamazon.com/working-at-amazon/get-to-know-us
Gupta, A. (2013). Environment & PEST Analysis: An Approach to External Business
Environment. International Journal of Modern Social Sciences , 2 (1), 34-43.
Indiatsy, C. M., Mwangi, M. S., & Mandere, E. N. (2014). The Application of Porter’s Five
Forces Model on Organization Performance: A Case of Cooperative Bank of Kenya Ltd.
European Journal of Business and Management , 6 (16).
McGee, J. (2014). strategic groups. Wiley Encyclopedia of Management .
Omsa, S., Abdullah, I. H., & Jamali, H. (2017). Five Competitive Forces Model and the
Implementation of Porter’s Generic Strategies to Gain Firm Performances. Science
Journal of Business and Management , 5 (1).
Ramcharran, H. (2013). E-Commerce Growth and the Changing Structure of the Retail Sales
Industry. International Journal of E-Business Research , 9 (2), 46-60.
Rastogi, N., & Trivedi, M. K. (2016). PESTLE TECHNIQUE – A TOOL TO IDENTIFY
EXTERNAL RISKS IN. International Research Journal of Engineering and Technology
, 3 (1).
Tehrani, M. B., & Rahmani, F. (2014). Evaluation Strategy Michael Porter's five forces model of
the competitive environment on the dairy industry. American Journal of Engineering
Research , 3 (5), 80-85.

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