Strategic Management Report: Amazon's Internal & External Analysis

This report provides a comprehensive strategic analysis of Amazon, examining its internal and external environments. The report begins with an introduction to strategic management and its application to Amazon, followed by an internal analysis that identifies the company's strengths (such as customer relationship management, financial stability, and a strong distribution network) and weaknesses (including thin profit margins and financial losses in some regions). The report then compares and contrasts Amazon's external analysis with that of eBay, using the PEST framework to evaluate political, economic, social, and technological factors. A comparative internal analysis is also conducted. Finally, the report discusses strategic options available to Amazon, such as diversification, exploiting developing markets, and product development, and concludes by summarizing the key findings and the implications for Amazon's competitive advantage.

Strategic Management

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
Internal analysis.................................................................................................................................3
Compare and contrast of external analysis.........................................................................................4
Compare and contrast the internal analysis........................................................................................6
Strategic options................................................................................................................................7
CONCLUSION.....................................................................................................................................8
REFERENCES......................................................................................................................................9

INTRODUCTION
Strategic management is defined as a process to achieve organisation objectives. This
report is based on the case study of Amazon Company in respect to its strategic management
approaches. Amazon Company was established in the year 1994. Company is engaged in
online retail trade. Henceforth, report emphasis on different strengths, weakness,
opportunities and threats associated with the Amazon Company. Comparison will also
summarise about the external analysis for Amazon Company. Comparative analysis will also
reflect over internal analysis on Amazon Company. Furthermore, report also critically
discusses different strategic option available for the company.
MAIN BODY
Internal analysis
Internal analysis comprises with different strengths, weakness, opportunities and
threats associated with the company.
Strength
 Amazon Company contains up with an excellent customer relationship management
system.
 Financial stability of the company.
 Well established delivery network of company.
 Strong supply chain management system.
 Diversified logistics of company.
 Well diversified products range.
 Cost friendly products.
Weakness
 Profit margins of Amazon Company are thin in nature.
 Company has also engaged with non fashionable products.
 Company’s profits are reducing every year which is the key weakness of the company
(Doyo, Okoyo and Lemma, 2018).
 In some geographical locations like India Company is facing financial losses.
 Cost structure of the company not keen to face the competitive pricing.

Opportunity
 Opportunity to grow business in developed economies like USA.
 Control cyber crimes with the government support.
 Business expansion opportunities.
 Increased purchasing capacity of customers in developed and developing economies.
 Product expansion opportunities.
 Improves faith of customers in online trade.
Threat
 Economic slowdown is a huge threat.
 Increased market competition.
 Increased cyber crimes.
All the above factors have indicated about the different strengths, weaknesses,
opportunities and threats associated with the Amazon Company.
Compare and contrast of external analysis
External analysis is denoted with the PEST Analysis. Comparative analysis on the
basis of external analysis tools can be summarised between Amazon and e-bay in the
following manners.
External analysis tool Amazon Company E-bay
Political Factor Government has been very
supportive to improve the
growth of the online
retailing.
Due to effective contribution
in economic development of
online retail sector
government all across the
globe frame policies to deal
with cyber crimes.
Government also promoting
e-commerce trade all across
the globe to improve the
Political support to online
retailing has been the major
strengths for all online retail
companies.
Political factor also promoted
government support for
dealing with online frauds
and data leakage.
Promotional campaigns run
by government in both
developed and developing
nations has improved
people’s interest towards

economic growth
(Mardiansyah, Gokniel and
Rapmeriah, 2019).
Government support also
leads to improved market
competition for Amazon
Company. Companies like E-
bay are giving tough
competition to Amazon
Company. Henceforth the
high brand value of company
enabled to deal with such
other competitors like E-bay.
Amazon has generated the
profitability of worth £ 4.26
Billion Pound.
online retail businesses.
E-bay is among the leading
organisation in online
retailing due to effective
policies and strategies like
discount.
Economical Factor Economic environment
reflect from the economic
stability of countries.
Economies like America and
Europe has provided
opportunities to the Amazon
Company to grow their
business.
Economic factor also
involves financial crisis that
creates huge threats for
Amazon.
Inflation in economic factor
creates diverse effect over
economic growth of
company as it restricts the
purchasing capacity of the
Economic factor indicates by
currency exchange rate,
inflation and other economic
aspects that create impact
over the purchasing capacity
of customers.
Economic stability in
strengthened economies like
America has improved the
competition for E-bay.
Companies like Amazon
have given tough competition
to E-bay.

target customers.
Social Factor Society has faced the major
transformation due to
technological up gradation.
Online shopping is also
among the major change
society has witnessed which
catered scope to online retail
companies like Amazon to
grow in the market.
Fashion is also the key factor
impact the business of
Amazon Company.
Social factor play crucial role
in the business operations of
the E-bay Company.
Social factor impacts over
trends and other social
aspects that influences
company’s operations.
Technological Factor Technological factor
involves technological
advancement and up
gradation.
Increased internet
connectivity across the globe
has improved the business
development opportunity for
Amazon.
All technological
advancement is a part of the
technological factors.
Due to technological
advancement company has
expanded its business.
Compare and contrast the internal analysis
Internal analysis can be summarised in the following manners.
Internal analysis factor Amazon Company E-bay Company
Distribution network Amazon has the strong
distribution network that has
supported company in
improving the growth
potential.
Distribution network of the
company is stronger than
E-bay carry the strong
distribution network that has
supported company in
conducting business
operations (Sholihah and
et.al., 2016).

other competitors like E-bay.
Financial stability Amazon company is well
strengthened due to its
financial stability.
Company has generated the
profits of £ 4.26 Billion
Pound which indicates about
the strong financial
capabilities of company
(Huong, 2017).
Financial position of the E-
bay is strong but not in
comparer to other
competitors like Amazon.
Cost structure Amazon is known for its cost
friendly approaches.
Cost structure of the
company enables Amazon to
deal with heavy competition
in market.
Cost structure of the E- bay
is effective but still company
channelizes more effective
discount strategies.
Strategic options
Strategic options available for the Amazon Company can be summarised in following
manners.
Diversification: Diversification strategy enables company to restrict the risk in the market.
Amazon is implementing diversification strategies to achieve the economic growth in the
market (Pesce and et.al., 2018). In this approach company will launch new products to create
a unique brand image. This strategic tool will support company in establishing a strong brand
image in target market.
Exploiting developing market: Economies like South America, Asia and Africa caters huge
opportunities to Amazon to expand its business development. Company is framing strategy to
channelize aggressive marketing and promotional strategies to improve the brand presence in
such markets.
Product development: Product development is also an effective strategic tool Amazon is
channelizing. In this company will cater more qualitative products. Company will offer more
brands to improve the choices for customers.

CONCLUSION
Amazon Company carries the strengths like strong financial capabilities, effective
distribution channels and other strengths. Company also associated with weaknesses like
inflation, thin profit margins and other weaknesses. Market development and product
development is a huge opportunity available for company and the competition in the market
is a huge threat for company. Comparative analysis between Amazon and EBay has also
concluded on the basis of different external factors like political, economical, social and
technological and also on the basis of internal factors like distribution networks and other
factors.
REFERENCES
Books and Journals
Doyo, D. K., Okoyo, E. N. and Lemma, T., 2018. Livelihood diversification strategies among
the Borana pastoral households of Yabello District, Oromia Region, Ethiopia.
Huong, H., 2017. The Maker: An Innovative Artisan Apparel Brand and Retail Partnership.

Mardiansyah, A., Gokniel, K. H. and Rapmeriah, J. M., 2019, September. The Utilization of
AFAS on Indonesia's Retail Service Expansion to ASEAN Markets. In International
Conference on Trade 2019 (ICOT 2019). Atlantis Press.
Pesce, M. and et.al., 2018. SWOT Analysis of the Application of International Standard ISO
14001 in the Chinese Context. A Case Study of Guangdong
Province. Sustainability. 10(9). p.3196.
Sholihah, P. I. and et.al., 2016. The Strategy of Starbucks and it's Effectiveness on its
Operations in China, a SWOT Analysis. Asian Journal of Business and Management
(ISSN: 2321–2802) Volume.