Unit 32 Business Strategy: Analysis of Amazon's Strategic Environment

This report provides a comprehensive analysis of Amazon's business strategy, focusing on its macro environment, internal capabilities, and competitive forces. It begins with an introduction to Amazon, an e-commerce and cloud computing giant, and outlines the objectives of the report. The analysis employs frameworks such as PESTLE to assess the political, economic, social, technological, environmental, and legal factors influencing Amazon. SWOT and VRIO analyses are used to evaluate internal strengths, weaknesses, opportunities, and threats. Porter's Five Forces model is applied to understand the competitive landscape and identify strategies for improving market position. The report also delves into strategic planning theories and models, culminating in the development of a strategic management plan. The conclusion summarizes the key findings and recommendations for Amazon's continued success.

UNIT 32 BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Use proper framework which analyse the impact and influence of the macro environment.1
M1 Analysing macro environment for determining strategic management decisions................3
P2. Internal environment and capabilities analysis by using appropriate frameworks...............3
M2 Evaluate Internal environment for assessing strength and weaknesses................................5
TASK 3............................................................................................................................................5
P3 Use Porters five force model in the context of organisation..................................................5
M3 Strategies for improving competitive edge and market position.........................................7
TASK 4............................................................................................................................................8
P4 Theories, concept and model for strategic planning..............................................................8
M4 Develop a strategies management plan................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
A business strategy include different sets of actions which help in achieving specific
business objectives. In other words this is consider as the master plan that manage the company
implementation to secure a competitive position in the market and carry out the operational
activities effectively. The present report is based upon Amazon which is an E- commerce and
cloud computing company(Akter and et. al., 2016). Company was founded in year 1994 and its
head office is located in Seattle, United states. Here it will be discussed about impact as well as
influence of macro environment with determining the different information strategic decision.
Apart from this, it is crucial for the company to analyse strength and weakness by using skills
and techniques. porter five force models is taken under consideration which is used for
evaluating various competitive forces to gain competitive edge in marketplace.
TASK 1
P1 Use proper framework which analyse the impact and influence of the macro environment
Macro environment is the condition which exists in the organisation as a whole rather
than in a particular region or sector. This include different aspects such as GDP , inflation and
spending. In the context of Amazon this is essential for the management to figure out the
changes in market and implement effective strategies to gain business in market. The analyses
and impact of macro environment is explained below:
Pestle analyses:
Political factor: This factor include government rules and regulation, policies which has
adverse effect on the business and other activities which are important for the company. In UK
the government is stable which is beneficial for the company to expand the business for
betterment and growth (Ansoff and et. al, 2019). In the context of Amazon, manager of the
company should identify the changes in outer environment and implement those changes which
aid in smooth functioning of the company. The governance of the company is beneficial for the
Amazon which improves the positing of the organisation for longer time duration.
Economic factor: It include GDP, inflation, per capita income and recession. The effect
of economic trends and changes may impact the performance of the company in a effectively
manner. In regards of UK it is a developed nation and people with high income can spend more
on products which is a major advantage for the company. Along with this, it has been revered
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that Amazon has the way of capitalism is being the key factor for the productivity to maintain
demand and supply.
Social factor: This consist of different culture, traditions and background of individual.
The increasing trend of buying online has changed the way of doing business and it also provide
Amazon to capture large market share effectively(Burlton, 2015). The manager of Amazon
should conduct proper analyse and identify the needs and wants of consumer to provide better
quality product and services to end users. Furthermore, the high disposable income level of
individual increase the e commerce revenue. The government of UK is trying to improve the
lifestyle by using new bills and changing how firm manage to operate business activities
effectively.
Technological factor: Technology has made Amazon one of the most profitable
company in the globe. The company is focusing on technology in terms of cloud computing to
satisfy the customer and provide better experience for the company. With the assistance of the
technology company is now delivering new package to consumer using aerial vehicle for a fast
delivery. Beside this, company is working with the technical officers to comply the requirements
and create a new method for offering new services to respective clients. The organisation is
investing huge in technology which creates competitive edge in business world.
Environmental factor: As there is been rise in industry the environmental factor has
been effected the most by these large enterprises. The government makes changes and implement
new laws in order to save environment. The management of Amazon should focus on developing
sustainable business strategies such using green energy for logistic and supply chain process this
will facilitate firm to reduce carbon emission effectively. Apart from this company must also
work upon wastes management as well as energy consumption.
Legal factor: This factor include international trade law, product regulation, tariffs and
export, import laws. Such kind of factor are introduce in a business to reduce theft and
uncertainty present in the market. In the context of Amazon manager should follow all the rules
and regulations regarding business as it result for a smooth function of the organisation
effectively. Due to rising product laws may increase the pricing of the company which result in
consumer issues which slow down the performance of the company.
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M1 Analysing macro environment for determining strategic management decisions
Macro environment help entity to improvise the management strategies and aid in
improving decision-making skill of individual(Chaffey, Hemphill and Edmundson-Bird, 2019).
For making proper plan this is crucial for Amazon to conduct Pestle analyses which provide
clear of external environment and company can make changes for as per the trend to achieve
desire gaol effectively. With the proper analysis of such elements one cam make proper
conclusion for it organisation. In this scenario, Amazon has to figure out each and every factor
and improvise in department in order to increase revenue and profitability in shorter time span.
P2. Internal environment and capabilities analysis by using appropriate frameworks
Internal environment basically refer to those components that exist inside the company
like physical resources, financial resources, information resources etc. Internal environment
analysis is organised by a company to analyse the strengths, weaknesses, opportunities and
threats. It is internal look at the firm operations to find out the areas where it can make
improvement. In Amazon, the management of the company use SWOT analysis for it and the
description of it as follow:
Strengths Weaknesses
 Amazon is a world's leading online
retailer and have string brand image
and position in particular sector.
 This company has a strong worldwide
network of sellers that help in operating
its business across the world(Chen,
Eshleman and Soileau, 2017).
 The management of Amazon using
effective logistics and distribution
systems and this has resulted in
deriving rivals benefits over its
competitors.
 In Amazon, cause of extensive network
& price wars, margins of respective
company are shrinking. This is
resulting in even losses.
 The weakness of the company is that
some of its products are flop like fire
phone and Kindle fire.
 There is limited penetration in
developing markets which is affecting
the overall profitability of the group
that provide outcomes in term of high
debt.
Opportunities Threats
 To adopt growth opportunities, the  This company operate its business
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respective company can come up with
its in-house brands in diverse product
aggregation.
 Amazon has an an another growth
option in term of expanding its
international presence and open more
sites in the future markets which help in
providing various competitive benefits.
 By making acquisition with e-
commerce organisations, it can
minimise the level of competition.
globally so when national authorities of
different nations make changes in their
laws and regulations then it create
threat.
 There are number of companies which
are also operate their business in that
specific industry, in which Amazon
operate, it create competition for its
business.
 Rivalry in prices is another threat which
highly affect profit and economic
condition of the company.
Vrio model
Resources Valuable Rare Imitable Organised
Brand image ✓ ✗ ✗ ✗
Global presences ✓ ✓ ✗ ✗
Technology ✓ ✓ ✓ ✗
Human resource ✓ ✓ ✓ ✓
Valuable: The are some resources which are valuable for the company to such as Brand
image and global presence. In order to reach on such level company has to provide effective
services along with the quality to build the brand image. For Amazon this is crucial for company
to maintains such brand image by continuous improvement in offering product and services.
Apart from this technology is consider as valuable because it aid firm to expand and grow in a
well define manner. Human resource are consider as valuable assets because they provide
efficiency and productivity to organisation(Cusumano, Gawer and Yoffie, 2019) .
Rare: Brand image cannot be rare as there are different company which have similar
brand image in the market. Global presence of Amazon is rare because they provide high quality
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services to the consumer. However technology which is used by firm is rare as they are
providing drone delivery services to can change the way of doing business.
Imitable: This refers to the process which cannot be copied or cheated from other
organisation as the brand image of the company is unique in every aspect(Ghauri, Grønhaug and
Strange, 2020). Apart from this ,global presences and technology can not be imitable as Amazon
has different technology and innovation which help in expansion and growth. Human skills and
abilities are unique and different in every aspect which cannot be imitated by other person.
Organised: It define those resources which need to be organised in order to fulfil the
requirement of workers. In this case human resource can be maintain by having proper structure
for smooth functioning of the firm.
M2 Evaluate Internal environment for assessing strength and weaknesses
This is essential for each and every organisation to identify the strength and weakness
because it improve the working condition along with profitability of the firm. In order to figure
out the internal environment SWOT analysis is useful tool as it provide overall overview of
entity and manager should make changes and implement strategies for gaining excess market
share. In context of Amazon has to focus on distribution network and reduce cost as it create a
sustainable business model for longer time duration.
TASK 3
P3 Use Porters five force model in the context of organisation
This is tool which is used to understand the competitiveness of the business environment
and identify the potential by which company can expand the business effectively(Hassanien and
Dale, 2019). Along with this, it aid in creating effective method for company to alter the
performance and create effective strategies for improving positioning in marketplace. There are
different steps which are explained briefly:
Competitive rivalry: This include different pricing strategies and competition present in
the market. Amazon operates in different countries and company has to face various challenges
from other companies such as eBay and alibaba(Hiekkanen, 2019). There are certain industry
and entry barriers which include economy of scale as well as expected retaliation by the
company. The management of Amazon should improve the distribution channel to reach
untapped markers effectively. Further firm has to improve there excellent service which tend to
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reduce competition from the markets. There are different kind of rivals which act as an barrier
for the company which slow down the performance and ability to provide timely services to
consumer. In this scenario company has to use low cost strategies which impose the strong
effect on other companies and it will help in attracting larger audience effectively.
Bargaining power of customer: Due to various option present in the organisation
customer has wide variety of options to choose from. Hence this increase the bargaining power
of individual(Johnson, 2016). This is important for the Amazon to analyse market trends and
conduct proper research regarding the needs and wants of the buyer as to provide satisfactory
service. As buyer are price sensitive so in this case administration should focus on minimize the
operational cost which directly reduces price of commodity. This is process buyers demand low
price due to strong barging power otherwise there are various option present where consumer can
switch easily.
Bargaining power of suppliers: Suppliers control the ability of supplies and other raw
material present in the market. The company faces moderate intensity of the bargaining power of
suppliers so this is important for the Amazon to have different contracts from the suppliers which
help in reducing the barging of supplier. This mainly occurs when there are small or less
suppliers in e commerce business. This is crucial for the company to maintain supply which aid
in maintaining proper flow goods and services in the market. It effect directly to the company as
suppliers may switch to other organisation if priced increased by the rivals.
Threats of substitute: There are ample amount of substitute present in the business
which slow the sales of a company. For Amazon management this is vital to improvise the work
and improve the productivity to capture large market share. In order to avoid such threats
company has to focus on the customers need by taking proper feedback and implement changes
to provide better services and quality product to end user. Apart from this, firm has to figure out
the strategies of rivals such as E bay and Wall mart and implement new policies which help
organisation to expand and grow in a given time frame(Kamariotou and Kitsios, 2019). Beside
this company has to focus on their pricing strategies and services which is important to create a
brand image in the minds of consumer. This threat to substitute arise when company fails to
provide satisfactory services to user as to avoid such situation company to focus on quality and
help to strong image in the market.
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Threats of new entrants: This is competitor can enter through different channels in the
business which create the barriers for the existing company. As this for the organisation to enter
as its require low amount of capital to enter in the new market. There are some other factor such
as company do not posses patent, trademark or do not establish brand image which is consider as
threat of new entrants. As per Amazon management should focus on external environment and
develop effective strategies to avoid uncertainties of rivals(Kourdi, 2015). However the high cost
of brand development in online retail weakens the influence of new entrants on the performance
of Amazon. Administration should take effective measures and make use of technology which
help in achieving the desire goals and objectives in a well define manner.
M3 Strategies for improving competitive edge and market position
There are different strategies which help organisation to create a larger market base and
and improve the productivity of the company to meet the requirement of the individual in a well
define manner. Here are some strategies which are explained briefly:
Product Strategy: In this kind of strategies company focuses on product quality and
make sure that final user is satisfied by the service and the quality of the product. For
organisation like Amazon manager to improvise the operational activities of the company and
emphasis on implementing new technology and features to increase the product
efficiency(Mendelson, 2019). Further company has to focus improving the skills of employees
which directly increase the productivity of firm.
Promotional strategies: In order to capture large market share company has to focus on
promotional techniques which aid to capture large market share in a well define manner. In the
context of Amazon the marketing department has to come with unique ideas and promotional
strategies to capture the attention of respective audience(Moseley III, 2017). There are various
promotion strategies such as TV advertisement and news paper promotion. Apart from this
company can use social media as promotional tool for marketing of goods and services
effectively.
Pricing strategies: This is most important factor for any business to expand and grow in
the market. The company must understand the market and buying capabilities of consumer which
help organisation to implement proper pricing policy to attract more customer. Apart from this,
company has focus on the competition pricing strategies and keep the pricing strategies low
which help Amazon to improve the market share effectively.
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Focus strategies: As the name suggest, this strategies is applied only to specific market
with the specialised needs. The target market has a unique need and it cater these needs which
firms focus on to provide better product and services to end user. In the context of Amazon
company has to focus on particular segment as this provide better quality product to increase the
market value and profitability of the company.
TASK 4
P4 Theories, concept and model for strategic planning
Strategic planning is an art of formulating business strategies, implementing them and
evaluate there impact based upon the organisation objectives. These concept focus on integrating
different business to achieve the desire aims and objective of the company(Romadhon and
Ahmar, 2020). The term strategies planning is similar to management as it aid in managing and
controlling the operational activities of the firm effectively.
Bowen strategic clock mode:
This is the model which is used to explore the strategies positioning of the company. In
the context of Amazon company can use such model which help in using effective strategies
which are beneficial for expansion.
Low price and Low value added: This is consider less competitive position for the
company. In this case product in not separated or differentiate from the customer perspective. So
Amazon should focus on the needs and wants of individual which help in adding some value to
the product.
Low price: This is the strategy where organisation tend to keep there price low in order
to capture large market share. Amazon should focus on pricing strategies and keep there price to
the minimum from the rivals present in the market.
Hybrid: As the name suggest is is used to add some value of the product in a well define
manner. In the context of Amazon management should emphasis on product differentiation as
this make goods and service highly valued in the minds of customers.
Differentiation: The companies focuses on introducing new product line in order to
create differentiation in the industry. Hence this strategy help in capturing new market share with
the unique strategy.
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Focused differentiation: This is applicable to the respective customer needs . This
comes when customer wants specific product with the high quality. Amazon should identify
those target and provide exclusive product to final user.
Risk high margin: The companies using this strategy from the model charge high prices
for the products that are perceived as mediocre in value by the customers. Amazon should not
increase the margin as it is consider as risky to charge high price.
Monopoly pricing: This is only done when the company charge high price with the
unique product line. In the context of Amazon there must be different product which aid in
reducing the fear of competition in the market.
Loss of market share: It means company is not able to offer the product or service as
per the customer needs and wants. So company should use proper strategies and method in order
to avoid loss of market share.
From the above discussion this has been analysed that, company should focus on low
price as this will help in capturing large market share as well as increase the profitability of the
company in given time frame.
Strategic plan:
Mission: The mission is to provide is to provide high end product and services and target
every individual by timely delivery.
Vision: To attain the sense of future and also guides in decision making strategies which
help in providing better services to the company.
Objective: The objective of the company is to improve the sales by 10% in 5 years.
Strategies: By using low pricing strategies company can able to attract more customers
and minimize the risk and threat from the rivals. Hence the company can untapped the market by
using these kind of strategies for expanding business effectively.
M4 Develop a strategies management plan
The management plan help the organisation to achieve the goal effectively. The process
begin by identifying the mission and vision of the company and make sure that management
focus to achieve those target in a well define manner(Thompson, Strickland and Gamble, 2015).
Further it assist in successfully managing the resources which enables firm to reach the common
goal in specific time. Management planning promotes team building and the spirit of cooperation
to improve the positioning of the company.
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CONCLUSION
From the above defined content it can be summarise that the influence of macro
environment are describe clearly and how they impact these environment. The analyse the
strengths and weakness of the internal environment, SWOT analysis is used. To monitor the
capability of the business, VRIO framework is explain in effective manner by considering its all
components. The Porter's five force model is discuss for determining marketing competition and
the promotion channels promote goods and services or minimise level of competition. As
mentioned by pre-defined information, it can be analysed that promotion of products and
services assist in growth and development of the company in specific market. The entire
productivity proportion of company is based on effectively that company can hold on for the
development of organisation. The process and activity of strategic planning is explained clearly
and concentrated on various types of market within a product can attain profit and success.
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