Business Strategy Report: Amazon's Macro and Internal Analysis

This report provides a comprehensive analysis of Amazon's business strategy. It begins with an executive summary and then delves into the macro environment, utilizing PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors impacting Amazon. The report also examines Amazon's internal environment, employing SWOT and VRIO models to evaluate its strengths, weaknesses, opportunities, and threats, as well as its core capabilities. Furthermore, it applies Porter's Five Forces model to analyze the competitive landscape and assess the industry's attractiveness. The report concludes by discussing the application of various models, theories, and concepts to interpret Amazon's strategic direction and make recommendations for future success. The document includes an introduction, table of contents, and references.

Business strategy

Executive Summary
As per the above report it can be summarises that Business strategy is most important for
all business concern as it help to make further plans to run a business successfully. The main
purpose of strategy to analysis the business performance and improve if is required. The report is
about Amazon that provides online and offline services by making business strategy. It is
prepared by the responsible person of business entity to make the effective business decision.
The PESTLE analysis is uncontrollable factor which help to state that how it impacts on business
strategy where as SWOT analysis help to state the strength and weakness of business industry.
Porter's elements will help Amazon to compare the business with other organisation in order to
expand the business activities. It has been recommended that without business strategy a
organisation can not run in competitive market as it need to make planning to face the
competition.

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1 Macro environment that impact on business enterprise.........................................................1
Task 2...............................................................................................................................................4
P2 Abstract thought of internal environment and capabilities of the company..........................4
..........................................................................................................................................................6
Task 3...............................................................................................................................................7
P3 Evaluation and application of Porter's five force model........................................................7
Task 4...............................................................................................................................................8
P4 Application of models, theories and concepts.......................................................................8
CONCLUSION..............................................................................................................................11
REFERENCE.................................................................................................................................13

INTRODUCTION
Business strategy is the planning which is used by business concern in order to
accomplish organisation's goals or objectives. A person make plan and run a business by using
the planning that help to attain long term goals of organisation. Every business concern uses
strategy to meet with expectation that help to sustain a competitive advantages in different
market place. The main aim of this report is to understand that why business strategy is
important for all company and how it help in growth and development of business (Akter and
et.al., 2016). To understand this Amazon has been selected. It is multinational technology
company which was founded in 1994 to provides variety of products through online and offline.
This is world's largest company that focuses on cloud computing, digital streaming and e
commerce by building number of business strategy. This report will emphasis on different topics
such as macro environment, internal environment and its capabilities, porter's five forces model
that help to compare and states suitability. Moreover, report will will discuss about model,
theories and concepts to assist and interpret the strategic direction.
Task 1
P1 Macro environment that impact on business enterprise
Business strategy is solid planning which is used by all person who want to expand a
business at different market. This is the master plan that help to secure a competitive position in
market by operating the business successfully. Such as Amazon's manager built number of
business strategy that help to achieve desired goals or objectives. It is important for all company
such as it suggest what should do and when should do to complete the task (Amran and et.al.,
2016).
Macro environment: This means external and uncontrollable factors that influence
entity's decision making in order to perform well within organisation. It includes macro factors
like political, economical, social, technological, legal and environmental factor which impact on
business.
PESTLE analysis: This is a structure which is used by large size of organisation to
know the impact on business industry. It also help to grow the trade by changing in macro
environment. The PESTLE analysis of Amazon is defined as:
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Political: There are number of international policies that act as a barrier for Amazon
growth. To enhance the business activities in many country is difficult for Amazon because
online policy which is using by Amazon not matching with political policies. Additionally,
different rules and instability of government impacts negatively because it pays advance tax that
reduces its profits (Anwar and Hasnu, 2016).
 Advantages: It help Amazon to grow fast by using internet that is more adorable
for customers. Government also support to run a business across UK by using
different rules and policies. By using international and government policy amazon
allows client to get in touch and buy products online through websites.
 Disadvantages: If government is not stable then tax rate and policy will be
change that will be difficult for Amazon to expand the business in different area.
Economical: It involves inflation rate and currency fluctuation that impacts on Amazon.
Such as increasing in inflation rate or currency fluctuation reduces number of customer in
Amazon because company is based out of US that all are dealing in dollars. If the currency has
been changes then customers with prefer to other industry. Additionally, if inflation rate has been
increased then Amazon has to pay more import and export duty in order to sell the product or
services.
 Advantages: Amazon is multinational company that needs number of employees
within organisation which declines unemployment rate and high economic growth
of developing country. So it may be an opportunity for Amazon to increase more
revenue by increasing economic growth rate.
 Disadvantages: It may be drawback for Amazon like if labour cost is increasing
in different countries then it has to pay more money on hiring the employees.
Social: It contains demographic characteristics, culture, fashion and values of population
that affect entity's operations. If any changes come in competitive market then Amazon need to
introduced from new product that help to achieve goals (Bockenand et.al.,2016).
 Advantages: The demand for Amazon online shopping is increases due to changing the
culture of people. It gives variety of products and other equipment at reasonable prices
that help to attract customers.
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 Disadvantages: Some time it is not easy to accept the different culture so marketing
manager of Amazon research deeply and find the fashion and culture of people that
consume high cost of industry.
Technological: As Amazon is an online platform that offers number of products to
customer through new technology. It help to provide and find new innovative method that help to
face the competition and expand the business across UK. It uses new technology to introduce
new products and promoting the product through new technology which help to develop country.
 Advantages: It impacts positively such as it provides by using technological factor it
develop the mobile app and other internet facility. In other words, it give an opportunity
to increase the sale through online shopping.
 Disadvantages: It may be difficult for organisation such to there is need to arrange more
funds and experienced employees who can adopt the new technology easily. So Amazon
may face low profitability situation in order to hire technical or experienced person.
Legal: It involves specific laws like discrimination law, labour law, customer protection
law and copy right which impact on business. Such as Amazon is following consumer protection
law and labour law that help to provide protection to customer and increase the number of
customers.
 Advantages: It may an opportunity for Amazon such as it can increase customer base
and loyalty by providing better quality of product that increase number of customers.
 Disadvantages: If organisation does not focus on legislation then it may be a threat for
Amazon like less number of customers and lack of best technical and experienced staff.
Environmental: Amazon is international company that is using technology to offer
cloud storage. Cloud storage help to eliminate the risk for storage device or hardware device for
mass production that processed to save environment (Chang, 2016).
 Advantages: Amazon provides online shopping facility which eliminate the travel time
and distance that lead to less pollution. So it impacts positively that help to save the
environment. Moreover, Amazon is looking ways that provides green shipping solution.
 Disadvantages: It may be drawback for Amazon such if climate will be change then
organisation has to face the challenges such as it has to bring new product according to
climate that consume more time.
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Task 2
P2 Abstract thought of internal environment and capabilities of the company
Internal environment: This is the collection of factors which are available within business
industry. The manager of organisation focuses on internal factors that help to define the strength
and weakness of entity. It involves SWOT analysis which states how a business can develop and
grow in different market place (Chen, Eshleman and Soileau, 2016).
SWOT analysis: This is a effective tools which is used by an entity to identify the
strength, weakness, opportunity and threat that relates to business competition (SWOT analysis of
Amazon 2019.). The SWOT analysis of Amazon is given below:
Strength Weaknesses
 Amazon has strong background and
high profits by selling the variety of
products
 Large number of customer
 Strong value chain
 High distribution network and well
structured organisation
 Low internet facility in rural area that
reduces sale
 High debt that reduces profitability
 More competitors against Amazon
 High spending on research and
development programme
Opportunity Threat
 It has an opportunity to grow business
by using new technology
 Provide more online facility that
attracts people
 E commerce industry that help to
expand business in global market
 To open more physical and online store
in order to offer more products
 Increase customer base and loyalty
 Brand image and integrity
 Low entry barriers in global market
 Tough competition
 Number of government regulation that
need to follow
 Changes in customer's choice and
fashion
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VRIO model: This is a effective tools which is used to analyse the capability of running
industry. It contains following aspects such as valuable, rare, inimitable and organised. The
VRIO analysis of Amazon are follows as:
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Illustration 1 : VRIO model, 2016
(Source: VRIO model, 2016)
Capabilities Valuable Rare Inimitable Organised
Channel
management and
sales force
Yes No No No
Brand awareness Yes Yes No No
Customer service Yes Yes Yes No
High technology Yes Yes Yes Yes
Valuable: Amazon has four valuable elements such as channel management and sales
force ,brand awareness, customer service and high technology. All the valuable aspects which
help Amazon to increase sale and number of customer by using new technology. Moreover, these
sources help Amazon to make capable by utilizing sources properly (Evans and et.al., 2017).
Rare: Channel management and sale force is not rare for Amazon because other
company can built channel management and also can increase sale by providing attractive
product and services in same sector. Brand awareness and customer services is rare because
Amazon is multinational company which provides variety of product according to fashion that
help to create a brand image which is not possible for other competitors. And it provides best
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customer services such as it solve customer query that help to maintain customer base.
Additionally, adoption of high technology is not possible for all organisation because it need
well experienced people so it is rare for other company.
Inimitable: Brand awareness is not inimitable for organisation because other competitors
can bring brand awareness through different sources in marketplace. High technology and
customer service are inimitable because it is difficult for other organisation to find talented and
well experienced employees who help to increase the production and profitability.
Organized: Customer service is not organised in Amazon because it mainly focused on
selling the product instead of solving the problems of customers. High technology is organised
within organisation because Amazon has well talented and skilled person who adopt new
technology in order to attract customers (Ghemawat, 2016).
Task 3
P3 Evaluation and application of Porter's five force model
Porter's five forces model: This model was propounded by Michael E. porter in 1979 that
help to analysis the competitive market and suggests what action should be taken for accepting
the challenges. This model also help to understand the needs of business and provide a suitability
business activity. The competition analysis of Amazon is follows as:
Existing rivalry among competitors: There are number of competitors in market who
are selling variety of products like Amazon. The competitive rivalry of Amazon is high because
there are number of competitor like Flip cart, Snap deal and Myntra who are looking for an
opportunity to capture the market share of company. So Amazon need to built solid strategy that
help to compete the competition in well manner (González-Rodríguez and et.al., 2018).
Bargaining power of supplier: In online shopping industry bargaining power of supplier
is low because there are many suppliers in this sector that help Amazon to select the feasible
supplier who sales products at low prices. So this is an opportunity for Amazon to pay less for
raw material or finished goods by selecting supplier.
Bargaining power of buyer: The bargaining buyer is very high under online shopping
industry which impacts on Amazon's profit negatively. Such as there are many competitors
against Amazon who sales products at cheap prices that attract customers. So it may be threat for
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company to sell the products at low prices in order to influence the customers (Hart, Sharma and
Halme, 2016).
Threat of new entrants: It is not easy for all person to enter in to new market as it
requires huge amount of money and investment to use new technology and set up the business. It
is beneficial for Amazon that no one can enter easily as result it can increase productivity and
profitability by offering number of products. Additionally, it help to survive in competitive
market (Holotiuk and Beimborn, 2017).
Threat of substitutes: This means use another product instead of original products. The
threat of substitute for Amazon is high because there are number of competitors who are selling
same kind of products and services that reduces Amazon's sale. So Amazon need to take copy
right and trademark that will help to sell the substitutes of products. As result Amazon can
sustain in competitive market by focusing product quality and copyright.
Task 4
P4 Application of models, theories and concepts
Ansoff matrix: This matrix was introduced by H. Igor in 1957 that help an enterprise to
define its product and marketing growth strategies. Moreover, it states which strategy is best for
organisation in order to growth and development of business. The Ansoff matrix for Amazon is
defined as:
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Illustration 5 : Ansoff matrix, 2019
(Source: Ansoff Matrix, 2019 )
Market Penetration: This is growth strategy that contains existing product in existing
market. Many industries built number of strategy that help to increase the number of share by
modify the existing products. If Amazon uses this strategy then it need to make planning to bring
changes in existing product by considering customer taste and fashion that help to gain market
share and also help to grow the business activities at different market place.
Product development: This means new product in existing market that help to grow and
develop the business activities. Amazon can adopt this strategy by introducing new product in
market place. For introducing new product Amazon should make solid planning that help to
develop new product in order to attract customers. For this Amazon need to use new technology
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