Nelson College Business Strategy Report: Macro & Internal Analysis

This report provides a comprehensive analysis of business strategy, addressing the impact of the macro environment, the assessment of an organization's internal environment and capabilities, and the application of Porter's Five Forces model. The report begins with an introduction to business strategy and its importance. The main body includes an examination of the macro environment using PESTLE analysis, specifically focusing on Amazon. It then delves into the internal environment and capabilities of Amazon using SWOT analysis. The report further evaluates the competitive forces within a given market sector using Porter's Five Forces model. Finally, it applies various theories, concepts, and models to interpret and devise strategic planning. The report concludes with a summary of the key findings and recommendations. References are provided using the Harvard referencing system.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO1..................................................................................................................................................3
P1 the impact and influence which the macro environment has on an organisation and its
business strategies..................................................................................................................3
LO2..................................................................................................................................................5
P2 Internal environment and capabilities of a given organisation using appropriate
frameworks.............................................................................................................................5
LO3..................................................................................................................................................8
P3 Porter’s Five Forces model evaluate the competitive forces of a given market sector.....8
LO4................................................................................................................................................10
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
..............................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy is the formulation of effective plans for a pre decided period of time,
which makes a business competitive at the marketplace. Business strategy play a major role in
planning and development of a business which provides great support to a business. Business
strategy also helps in achievement of desired goals in an organisation which helps in long run, it
is necessary for a business to formulate effective strategy in the market in order to effectively
carry major operations. Most of the successful organisations use business strategy and get a huge
success at the marketplace. In this report influence of the macro environment on a given
organisation and internal environment and capabilities of an organisation is covered. In this
report Porter's Five Forces model is covered along with theories and concepts to assist with the
understanding interpretation of strategic directions available to an organisation using different
models.
MAIN BODY
LO1
P1 the impact and influence which the macro environment has on an organisation and its
business strategies
Macro environment in a business impacts a business strategies of an organisation in a
precise manner. There are a lot of factors present in the external environment of a business which
play a crucial role in the development of a business. In order to survive in the market and to
formulate an effective business strategy, an organisation has to keep in mind all the macro
environment factors. Macro environment analysis majorly impact on feedback from the
customers and effects the quality of goods and services provided by a business (Agustina, 2019).
In order to better analyse impact and influence of macro environment in business strategies it is
necessary to conduct PESTLE analysis of Amazon. PESTLE analysis contains major
environmental factors such as political, economical, social, Technological, legal and
environmental which impacts on the operations and performance of a company. PESTLE
analysis of Amazon is given below:
 Political factors- Political factors impact a business in many ways especially when a
company conducts business operations in the global market. Amazon is a multinational
online E-commerce platform which is present in major countries of the world . So, there

are different governments present in every country which formulate and implement
various rules and regulations related to business operations at the marketplace. Amazon is
driven by different policies and regulations imposed by government present in different
countries so the company faces many hurdles in performing business functions at the
marketplace. Every country has different tax policy, export import regulations and trade
policy rules which impact performance of a business. Amazon deals with different
governments present in every country by deploying professional management in the
business.
 Economical factors- Economical factors has a major impact on every business as it
directly impacts revenue generation in a country as well as they also play a crucial role in
impacting financial performance of a company. Amazon performs global market
operations in different countries so each country has different inflation and deflation
rates. Amazon has hired major economists in every country to develop a business strategy
which is helpful in forecasting of the market trends.
 Social factors- Social factors are present in every country and they are the most
important factors in order to determine social performance of a business. Social factors
includes factors which are related to population and demographic situation in a country.
These factors play a crucial role for Amazon in major countries, Amazon analyses
various elements present in every country and perform its business operations according
to the needs of society.
 Technological factors- Technological factors include use of information and technology
in conducting business operations. Amazon is an E-commerce giant company so it is
impacted mainly by technological factors (Bhattacharyya, 2020). It is essential for
amazon to use latest technology in the business in order to improve its functioning in the
market. Amazon tries at best level in order to achieve various goals and objectives by
using various technological models and methods. Technological factors present in
Amazon includes use of 21st century in operations of the company to improve efficiency
and to cope up with the various challenges coming the business. Adaptation of modern
technology also helps the company to grow more in the market as well as it enables the
business to gain a competitive advantage in the market.

 Legal factors- Legal factors include rules and regulations imposed by various authorities
in a country. They are the major factors which helps a business to conduct legal functions
in the market. Legal factors also covers various policies and procedures which are
imposed on Amazon by different authorities. In order to avoid heavy penalties and fines
Amazon has developed a professional management which follows all the major policies
and rules which are imposed by local authorities.
 Environmental factors- A business consists of internal and external business
environment which play a major role in impacting a business. Internal and external
environment of Amazon consists of several factors which includes climate, weather,
geographic location, warehouse location and office location. As the company performs
global marker operations, it is a major task for Amazon to maintain its environment as it
has diversity in the business environment.
LO2
P2 Internal environment and capabilities of a given organisation using appropriate frameworks
Internal environment of a business is made up of various factors like employees,
production process, management, inventory management and managerial functioning of a
business. Thus, internal factors in a business defines its strength. Internal environment of a
business plays a dynamic role in defining key role of the management. Amazon's internal
environment is wide in sense and many factors impact it in major sense (Brown, 2019). In order
to better understand the internal environment and capabilities of Amazon SWOT analysis play a
crucial role in influencing capacity of business. SWOT analysis stands for elements that are
present in the business which impacts it performance these factors are namely Strength,
weaknesses , opportunities and threats in a business. SWOT analysis of amazon is given below:

Source:(Competitive pay of Amazon to lead the business,2020)
 Strengths- Strengths are important for a business as they provides competitive advantage
to a business and helps a business to overcome various challenges at the marketplace. As
Amazon is a giant global company it has various strengths that helps in development of
its business operations. Major strengths of amazon are:
1. Transportation- Amazon has best transportation which helps in quick delivery of its
products in the market. Amazon is one of the best global companies which provides
fastest delivery of its products in the market. Amazon prime, which was launched in
2007 in three major countries namely Japan, Germany and United kingdom helps
customer to get one day delivery of purchased products.
2. 24*7 Customer support- Amazon provides effective and efficient customer support
to its customers in the market which basically provides the company to attract more
number of customers. Amazon has hired professional and talented employees in
order to solve customer related queries in a professional manner.
Illustration 1: Amazon pay to workers

3. Global products- Amazon provides global level of products to the customers and
help customers in choosing from wide range of products and ensures good quality of
products are delivered to its customers.
4. Tie up with retailers- Amazon has good number of retailers and sellers in the
market which provides a good amount of profit to the company, it also helps in
providing different quality of products and services to the customers.
5. Capitalization- Amazon is a big company with huge investment in the E-business
market of around $ 1 Trillion. Huge capitalisation helps the company in conducting
easy financial operations.
 Weaknesses- Several weaknesses are present in Amazon which impacts on its operations
in a direct manner. Weaknesses of Amazon are mentioned below:
1. Product launch failures- Amazon has launched various products in the market of
USA like kindle (E-Book Reader) and Fire phone, both of the products gained failure
in the market.
2. Unsafe products- Amazon has been accused of selling pesticide and harmful
products on E-commerce platform by US environmental bodies.
3. Employee handling- Amazon has large number of professional employees and
workers, so it is difficult to manage such a large workforce.
4. Tax policy- As Amazon operates in 200 above countries, it becomes hard for the
company to follow tax policy and to conduct financial operations at the marketplace.
 Opportunities- There are various opportunities for amazon in the market which can help
amazon in development of its business (Chen, 2017). Amazon identifies opportunities
available in the market from time to time and tries to develop its business at the
marketplace. Different opportunities available to Amazon are explained below:
1. Expansion- Amazon has an opportunity to expand its operations in the global
marketplace, expansion opportunities available to Amazon can help in developing its
business operations.
2. Launching new products- Amazon has a global opportunity to launch new products in
the market, Amazon basics is a personal brand of Amazon company which delivers
quality products to the customer, company can further launch more products in the
market.

3. Business policies- Amazon has a good opportunity of implementing effective business
policies and programmes in its operations in order to increase the value in its business
operations.
 Threats- Threats are present in the market for major global companies which can cause
harm to Amazon. Threats in market to Amazon are following:
1. Competitors- Many global e-commerce platforms like AliExpress, JD.com, Ebay,
Shopify and walmart are threat for Amazon. Increased competition in the E-commerce
marketplace is a major threat for Amazon.
2. False products- False and fake products are available on the E-commerce platform
which increases customer dissatisfaction for the products sold.
3. Monetary policy threats- Amazon faces various monetary policy threats in the business
as global trends related to Inflation and recession impacts performance of the company.
LO3
P3 Porter’s Five Forces model evaluate the competitive forces of a given market sector
Porter's five forces model is important in identifying various threats available in the
environment of a business. These forces impact the operations of Amazon in a precise manner
and it is necessary for the company to manage various threats in order to maximise level of
output from the business (Fraser, 2019). Porter's five forces model includes five major elements
namely bargaining power of customers, bargaining power of suppliers, competitive rivalry, threat
of substitutes and threat of new entry in the market. Analysis of Porter's five forces model in
context of Amazon is given below:
 Bargaining power of customers- Amazon has high number of buyers and the
company tries to deliver good quality of products to the customers at lowest
prices. Still customers of Amazon have high bargaining power as major
competitors like Walmart are available to the company which provides a large
number of choices to the customers. Customers have major information regarding
products and services due to spread of information and technology in the market.
This creates a challenge for the company to survive in the market, companies also
try to expand their business in the e-commerce market which is a major threat to
Amazon.

 Bargaining power of suppliers- Bargaining power of suppliers includes the
strength of suppliers in a business. For Amazon, bargaining power of suppliers
play a crucial role as it affects the performance of supply chain management.
Bargaining power of suppliers and third-party sellers is low as compared to other
E-commerce platforms which is an advantage for the company. Change in
bargaining power of suppliers is often observed in the company due to low
number of suppliers which means that company has to deploy professional
operational management in its selling process in order to achieve sales objectives.
 Threat from substitutes- There is a threat of substitutes as Amazon faces off
stiff competition from giant e-commerce companies in the market. Several
choices are available to the customers at the marketplace which means that
Amazon faces a challenge in order to compete with its competitors. Low prices
products are also available in online market which proves out to be a major threat
to the company (Kong, and et. al., 2020). Threat from substitutes acts as a strong
force for Amazon which also majorly impact business operations of the
company.\
 Threat of new entry- Threat of new entry is present as a weak force for Amazon
at the marketplace, as global e-commerce platform requires huge capital
investment and high number of operations, less companies are likely to enter the
marketplace. Threat of new entrants is low for Amazon but dealing with the
current competitors is a major task for the company. However, acquisition in the
market could be a threat to Amazon as many global companies are planning to
expand their business.
 Competitive rivalry- Amazon has major competitors in the market which
directly impacts on the revenue generation of the company. Competitive rivalry is
a strong force in e-commerce market as many giant global companies like
Rakuten, Aliexpress, JD.com gives a tough competition to amazon in the market.
Also the supportive government policies in major countries motivates various
companies to perform heavy operations in the market (Madhushree, 2018). High
competition increases chances of decreasing revenue for the business but Amazon
efficiently deals with competitive rivalry by using professional management.

LO4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
In order to apply appropriate strategic planning in an organisation, it is important to apply
specific models for achieving optimum results. There are various model used in Amazon, for
effective and efficient strategic planning which plays a crucial role in business development.
Some of the common concepts and models are explained below:
 Strategy Map- A business strategy map is established in an organisation to facilitate
communication in a strategic plan and eventually achieve high end business goals. It is a
type of balanced scorecard which offers different ways to Amazon to communicate
effectively with its managerial functions and to pass high level of information in a precise
format (Martínez, 2021). Strategy map is often used by famous organisations in order to
pass necessary information to different levels of management. Strategy map offers
various advantages to Amazon which are mentioned below:
 It facilitate functions of Amazon and provides a visual representation that can be easily
accessed by management.
 Strategy map provides identification of key goals of every individual in the organisation
in order to facilitate direct working.
 Strategy map helps in analysing how business objectives of Amazon affect other
competitors.
 It provides a key role to every employee in identification of a task that has to be
performed.
 Strategic Gap planning- Gap planning is an effective business strategy tool, it states the
difference between the current position of a business and desired position of business.
Gap planning is used by Amazon to effectively distinguish between current and desired
objectives, with the help of gap planning effective strategy in an organisation can be
formulated (Rehman, 2019). It helps Amazon in pointing out internal drawbacks and
deficiencies in the operations. Gap planning helps in changing agenda of Amazon and
helps it in closing the gap which is present in the business. The advantages to Amazon
while choosing this strategic tool are given below:
 It helps in increasing sales of Amazon and helps in achievement of business development
goals.

 Gap planning helps the managerial body of Amazon to identify different elements which
are creating obstacles in a business.
 It facilitates business growth and business development for Amazon, gap planning also
helps in effective strategic business development.
Source: (Explanation of strategic gap planning,2021)
 VRIO framework- In order to focus on vision statement of Amazon, VRIO framework
is used. VRIO stands for value, rarity, Imitability and organisation (Wadström, 2019).
VRIO framework helps in gaining competitive advantage for Amazon. Explanation of
different elements in VRIO framework is given below:
Illustration 2: Strategic Gap planning

 Value- It states the ability of current organisation to use a particular resource and to
minimise threat from outside to a business.
 Rarity- Rarity states the present capacity of a business to control use of a particular
resource by analysing various competitor's capacity to handle a particular resource.
 Imitability- It defines strength of the competitors of Amazon to catch Imitability of
products or services.
 Organisation- It gives a brief idea to Amazon about how organised its activities are when
they are compared to other e-commerce platforms.
 Objectives and key result model- This is a major strategic tool used by many
organisations and it is one of the most straight forward strategic tool used in Amazon
which majorly consists of two major elements which are explained below:
 Objectives- Objectives define the desired goals Amazon wants to achieve within a
specific time period. This model states to choose three to five basic objectives of the
company and achieve them in a precise manner.
 Key results- Key results under this model states the techniques how Amazon measures
its objectives and defined targets. It is essential for Amazon to to measure key objectives
according to passage of time (Yuan, and et. al., 2020). Measuring key results using
different tools and techniques is essential for Amazon to achieve business development.
CONCLUSION
From the above stated report, it can be concluded that business strategy is the backbone
of every business which helps in a systematic flow of operations in a business. Business strategy
plays a key role in planning for future operations for a company. It can be also concluded that
Amazon has to improve its internal and external business environment in order to expand its
global market functioning and generate higher level of revenue from the marketplace. This report
also states that how important SWOT, PESTLE, Porter's five forces model are in developing a
good strategic planning for a business. It also concludes various legal hurdles Amazon has to
overcome in order to perform sustainable business in the market.
REFERENCES
Books and Journals

Agustina, K. and Karyono, O., 2019. Developing A Superior Business Strategy Through
Industrial Environment And Resources In Manufacturing Smes In West Java
Province.Budapest International Research and Critics Institute (BIRCI-Journal):
Humanities and Social Sciences,2(4).pp.433-442.
Bhattacharyya, S.S., 2020. International business strategy: development of an integrated
framework and typology.Review of International Business and Strategy.
Brown, N. and Brown, I., 2019. From digital business strategy to digital transformation-How: A
systematic literature review.Proceedings of the South African Institute of Computer
Scientists and Information Technologists 2019.pp.1-8.
Chen, Y., Eshleman, J.D. and Soileau, J.S., 2017. Business strategy and auditor
reporting.Auditing: A Journal of Practice & Theory,36(2).pp.63-86.
Fraser, J., 2019. Creating shared value as a business strategy for mining to advance the United
Nations Sustainable Development Goals.The Extractive Industries and
Society,6(3).pp.788-791.
Kong.D. and et. al. 2020. Business strategy and firm efforts on environmental protection:
Evidence from China.Business Strategy and the Environment,29(2).pp.445-464.
Madhushree, R.R., Kumar, A. and Aithal, P.S., 2018. Business strategy of top Indian IT
company: Mindtree.International Journal of Case Studies in Business, IT and
Education(IJCSBE),2(1).pp.22-36.
Martínez Hernández, J.J., Sánchez‐Medina, P.S. and Díaz‐Pichardo, R., 2021. Business‐oriented
environmental regulation: Measurement and implications for environmental policy and
business strategy from a sustainable development perspective.Business Strategy and the
Environment,30(1).pp.507-521.
Rehman, A.U. and Anwar, M., 2019. Mediating role of enterprise risk management practices
between business strategy and SME performance.Small Enterprise
Research,26(2).pp.207-227.
Wadström, P., 2019. Aligning corporate and business strategy: managing the balance.Journal of
Business Strategy.
Yuan.Y. and et. al. 2020. Business strategy and corporate social responsibility.Journal of
Business Ethics,162(2).pp.359-377
Online
Competitive pay of Amazon to lead the business.2020.[Online]Available
through:<https://bstrategyhub.com/swot-analysis-of-amazon-amazon-swot/>
Explanation of strategic gap planning.2021.[Online]Available
through:<https://www.iedunote.com/strategic-planning-gap>