Corporate Strategy Report: External and Internal Analysis of Amazon

This report provides a detailed analysis of Amazon's corporate strategy, focusing on both external and internal factors impacting its business. The external analysis utilizes the PESTEL framework to assess political, economic, social, technological, environmental, and legal influences on the e-commerce industry. Porter's Five Forces are applied to evaluate the competitive landscape, examining the bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and the intensity of rivalry among competitors. The TOWS framework is then employed to identify opportunities, threats, strengths, and weaknesses, leading to strategic recommendations. The internal analysis delves into Amazon's resources, including human resources, brand image, customer service, and operational structure. The value chain and VRIO framework are used to assess the company's competitive advantages and core competencies. The report concludes with an evaluation of Amazon's strategic positioning and its ability to maintain a competitive edge in the e-commerce market.

Applied Corporate
Strategy Assessment

Table of Contents
INTRODUCTION...........................................................................................................................3
EXTERNAL ANALYSIS................................................................................................................3
PESTEL ANALYSIS..................................................................................................................3
PORTER FIVE FORCES ..........................................................................................................6
TOWS FRAMEWORK...................................................................................................................7
INTERNAL ANALYSIS.................................................................................................................8
VALUE CHAIN..........................................................................................................................9
VRIO FRAMEWORK..............................................................................................................11
EVALUATION..............................................................................................................................13
REFERENCES..............................................................................................................................16

INTRODUCTION
This report focuses on how external environment affects organisation functioning and
also how different factors of business environment affect organisation productivity and
profitability. External factors of business environment includes political, economic, legal etc.
these factors make direct impact on organisation operations and its functioning. Every
organisation focuses on carefully analysing these factors by the help of different framework and
models which assist organisation in making effective business decisions. These business decision
leads to formulation of effective strategies which help organisation in competing against
competitors and boosting revenues of organisation. This report is based on organisation Amazon
which is an E-commerce company and it is an marketplace to sell furniture, electronics, food,
toys etc. Amazon belongs to e-commerce industry where organisation sell all kind of products.
Retail is considered as Amazon primary source for generating revenues. E-commerce is
explained as buying and selling of products through internet which also includes transfer of
money. Amazon also considered as one of the largest E-commerce website across the globe.
Amazon strategy is to satisfy their consumer by providing them products which fulfil consumer
needs and wants. Amazon focuses on effective consumer services and focuses on providing
lowest prices of products.
EXTERNAL ANALYSIS
PESTEL ANALYSIS
PESTEL analysis is explained as external analysis framework which is used to analyse
key factors which affect business of organisation such as political, Economic, Sociological,
Technological, Environmental and Legal. Analysis of these factors help in understanding that
how these factors contributes in influencing business of organisation and help in understanding
how these factors impacting functioning of organisation (Ajdovec, Kovacic Batista and Vidmar,
2017). This analysis is based on E-commerce industry as it help in understanding how these
factors affect E-commerce industry.
Political Factor
In case of political factors there are not much threats for e-commerce industry but it does
faces some implication such as change in government structure which can affect access of e-
commerce websites in country or nation. E-commerce industry is also affected by change in

government or rivalry among two nations as e-commerce companies which belongs to targetted
nations might face problem in operating their business in rival country. Political stability also
affect e-commerce industry as political chaos can create disruption to business both physical and
online. Political factor does have impact on e-commerce and its growth. This factor is concluded
as “Threat” for E-commerce industry because political instability can make impact on
expansion of this industry and also affects functioning of e-commerce industry in terms of profit
and productivity. E-commerce industry can be affected by political and regulatory changes
across the globe and different countries focuses on understanding their tax structure in order to
ensure that it doesn't reduce their tax revenues.
Economic Factor
Economic factors plays vital role in every business and in every industry. Online and
physical both type of businesses are affected by economic factors. Economic factors make direct
impact on profits and revenues of business. E-commerce is also affected by this factor such as
recession have resulted in cost cutting for businesses and it directly affects E-commerce industry.
As different economic factors affect businesses at global and domestic level which affect
availability of products at online platform and it can make significant impact on E-commerce
industry and also affects its revenues. Higher economic activity is beneficial for E-commerce
industry and lower economic activity is not effective for E-commerce industry. Economic factors
have direct impact on E-commerce industry and this factor is considered as “Opportunity” for
E-commerce industry because an economy with higher economic activities is best for E-
commerce industry and can help in generating high revenues. Economic factors have deep and
direct impact on E-commerce industry which can help in maximizing productivity of E-
commerce industry (Cappa, Cetrini and Oriani, 2020).
Social Factors
Socio-cultural factors can affect E-commerce industry in several ways as these factors
have deep impact on industry. Cultural trends in foreign market can be challenging for E-
commerce industry as changing trends in society have huge impact on business of E-commerce
industry. Current trends in society use of digital gadgets have been increased and this is a plus
point for E-commerce industry as consumer can easily access products and services provided by
different E-commerce companies to their consumers. Digitalisation have made huge impact on
E-commerce industry as people these days use digital gadgets as for shopping and other

purposes. In some market E-commerce industry is seen as Westernisation which might have
affected E-commerce industry growth in foreign markets. This factor can be considered as
“Opportunity” for E-commerce industry as use of digital gadgets has been increased over the
time and current trends shows that digitalisation in society have influenced use of E-commerce
websites more frequently and E-commerce industry use it as opportunity to expand and engage
more consumers with their products and services.
Technological Factors
Technological factors are very crucial in E-commerce industry as this industry relies on
technology as it effectiveness and efficiency depends upon technology. In E-commerce industry
everything depends on technology from retail to sales. This industry dependency on technology
is very high as advanced technology contributes this sector in achieving efficiency as technology
help in making transactions and maintaining consumer service. Technology also help E-
commerce industry in boosting its profits and managing consumer experience. Different E-
commerce website focuses on using advanced technologies for their growth and development.
This factors can considered as “Opportunity” for E-commerce industry as technological factor
contributes in growth and development of E-commerce industry and by using advanced
technologies industry can boost their profits and productivity. This factor also contributes in
engaging consumer and maintaining their experience (Faria, 2020).
Environmental Factors
Environmental factors also have impact on E-commerce industry as direct of impact of
this industry on environment is low but it does affect environment in different ways. E-
commerce industry which invests heavily in technology does affect environment. During
packaging and manufacturing of products, polythene bags are used which are non-biodegradable
and it does harm environment in several ways. E-commerce companies such as Amazon have
invested in technology to improve sustainability and also invested in using renewable resources
but other than Amazon there are few companies which focuses on using renewable resources.
This factor can considered as “Threat” for E-commerce industry because use of polythene
during packaging can harm environment and generally many e-commerce organisation uses
polythene due to its cost and durability.
Legal Factors

Legal factors are important for every industry as legal factors defines rules and regulation
which should be followed by every industry when conducting their business. E-commerce
industry have to make sure that during business every rules and regulations are followed. E-
commerce industry have more pressure to comply with legal factors as there is no physical
contact between consumer and organisation. Non-compliance can result in losses in terms of
finance and also affect goodwill of whole industry in market. Rules and regulations differ from
country to country and organisation which operates in E-commerce industry have to comply with
rules and regulations. This factor can considered as “Threat” for E-commerce industry as non-
compliance to any rules and regulations affect goodwill and revenues of industry.
PORTER FIVE FORCES
Porter five forces is explained as framework for analysing and understanding
environment in which organisation operates. This framework is based on E-commerce industry
and how different forces affect E-commerce industry.
Buying power of consumers(Strong Force)
E-commerce industry have made its impact in every market in last few years and
digitalisation and increase in growth of technology have contributed in growth of E-commerce
industry. Both small and big brands are available for consumers and there is not much switching
cost for consumers. Digitalisation have enabled consumers to understand about products and
services offered by different brand and it has enabled bargaining power of buyers as consumer
also have alternatives in terms of products. This force is considered as “Strong Force” in this
scenario as consumers have many options and choices in E-commerce industry and can buy
product according to their needs and preference (Gruszczyński, 2018).
Power of Suppliers(Moderate Force)
In E-commerce industry there are few suppliers which can fulfil demand of E-commerce
organisation such as Amazon and Flip-kart. E-commerce industry does affected by change in
prices of equipment or technology used by suppliers because it affects operational cost of E-
commerce company and industry. Despite the increasing number of E-commerce company in
industry suppliers have limited options which make this as “Moderate Force” in E-commerce
industry.
Threat of New Entrants(Moderate Force)

Entry of new firms in E-commerce industry does pose threat over existing companies in
industry but brand development in E-commerce is the key to growth and development of
company. Companies such as Amazon have huge brand image which have been developed over
the time and brand development also requires high amount for investment. Brand development is
identified as key in E-commerce industry and it is very difficult for new companies to enter into
industry and thus, it make this force as “Moderate force” in E-commerce industry.
Threat from Substitutes(Strong Force)
Consumer have different alternatives for product in E-commerce industry as consumer
generally buys product which have attributes according to their need but have low price. E-
commerce industry consists of different companies which provides substitute products which
have low prices in comparison to product which have same attributes but with high prices. As a
result, different companies focuses on providing products at low prices and it makes this force as
“Strong Force” in E-commerce industry (.Juevesa, Juevesa and Juevesa Jr, 2020).
Threat from Competitors(Strong Force)
There are several companies in E-commerce industry which have competitive rivalry
among each other. There are numerous domestic and global brand in E-commerce industry
which makes competition fierce and intense in industry. Consumers play vital role in success of
company and help in achieving competitor advantage over competitors. Due to various
competitors and variety of products provided by them, this force is considered as “Strong
Force” in E-commerce industry.
TOWS FRAMEWORK
Basis Strengths Weaknesses
Opportunities  Human Resources
 Brand Image
 Operational Structure
 Product Line
 Amazon Inbound
Logistics
 Amazon Operations
 Amazon Outbound
 Customer Service

Logistics
 Amazon Services
 Amazon Marketing &
Sales
 Social Factor
 Technological Factor
 Economic Factor
 Threat of New Entrants
 Power of Suppliers
Threats  Social Factor
 Technological Factor
 Economic Factor
 Threat of New Entrants
 Power of Suppliers
 Threat From
Competitors
 Threat From
Substitutes
 Buying Power of
Consumers
 Legal Factor
INTERNAL ANALYSIS
In this part of report resources of chosen organisation Amazon has been analysed and
how these factors plays crucial part in organisation success. Internal resources of Amazon are
mentioned below:
 Human resources – Amazon focuses on hiring skilled and talented employees which can
assist them in achieving their goals and objectives. Amazon human resources plays vital
role in satisfying consumer by providing them appropriate products and services by
understanding their needs and preferences. Human resources of Amazon is considered as
“Strength” of organisation because it contributes in growth and development of
organisation.
 Brand Image – Amazon have created strong brand image by delivering quality products
to its consumers and satisfying needs of consumers. Amazon have made huge investment
for building an effective brand image. Amazon brand image have helped them in
retaining existing consumers and engaging new consumers with their products and

services. This is also considered as “Strength” of Amazon because effective brand
image contributed in organisation high revenues (Machado and et. al., 2018).
 Customer Service – Amazon is one of the largest E-commerce organisation globally and
it have huge market share but sometimes Amazon lacks in maintaining consumer
experience with products and services provided to consumers. Many consumer have
experienced issues with customer services provided by organisation after purchasing the
product and this is considered as “Weakness” of Amazon because consumer
dissatisfaction can make negative impact on productivity and brand image of
organisation.
 Operational Structure – Effective operational structure help in making effective decision
for organisation which contributes in achieving desired goals and objectives. Amazon
focuses on developing and maintaining operational efficiency in organisation by
developing high performance culture in organisation which contributes in developing
effective communication and achieving high productivity. This is considered as
“Strength” of Amazon because it contributes in achieving operational efficiency and
also help in developing high performance culture.
 Product Line – Amazon product line have different products such as Alexa TV remote,
Alexa Echo Dot Smart speaker etc. These products have made their own place in market
and create huge demand for these products. Amazon focuses on providing products
which can satisfy consumer. This is considered as “Strength” for Amazon because
organisation focuses on providing their own products which are productive and effective
(Sumantri and et. al., 2019).
VALUE CHAIN
Value Chain analysis is explained as framework used for identifying and understanding
business activities that create value and competitive advantage to business. Amazon value chain
analysis is mentioned below:

Amazon Primary Activities
 Amazon Inbound Logistics – Amazon doesn't have any kind of permanent arrangements
with vendors to ensure availability of products. Amazon focuses on using
FBA(Fulfilment by Amazon) for organisation owned retail business. Amazon focuses on
providing products with help of Amazon prime shipping where they provide free
shipping.
 Amazon Operations – Amazon focuses on using cloud storage and cloud compute for
their own resources and in order to make their business operations effective and efficient.
Amazon Web services are one of the effective approaches which includes services
offered to start-ups, government agencies etc.
 Amazon Outbound Logistics – Amazon focuses on using robotic technology to
effectively manage receipt, stowing and shipment of products. Amazon also provides
products and services which can be downloaded from website. Amazon have focused on
improving their logistics systems by announcing Amazon Prime Air and Amazon Flex.
 Amazon Marketing and Sales – Amazon focuses on marketing their product line which
focuses on effective products and services also offers attractive prices and customer
services. Organisation also focuses on using print media for advertising and events,

public relations etc. These channels are used to communicate marketing message to
consumer segment targetted by Amazon (Tasgit, Şentürk and Ergün, 2017). Amazon Service – Amazon focuses on providing outstanding service which help in
creating value for organisation. Amazon focuses on providing different programmes to
seller which help in understanding about how to set prices of product, how to avoid out-
of-stock etc. It help Amazon in satisfying their consumer and people which are associated
with organisation.
Amazon Support Activities
 Human Resources – Amazon focuses on hiring employees which contributes in growth
and development of organisation in long-term scenario.
 Technology Development – Amazon focuses on using advanced technology to gain
competitive advantage and to improve efficiency of business.
 Procurement – Amazon focuses on creating network with large number of integrated
suppliers.
 Firm Infrastructure – Amazon focuses on expanding its business and developing its
infrastructure in different market to maximize its productivity and profitability.
VRIO FRAMEWORK
It is explained as strategic analysis to understand organisation resources and capabilities
which can help organisation in achieving long-term competitive advantage. VRIO analysis of
Amazon is mentioned below: