Competitive Strategy of Amazon: Internal and External Analysis

This report provides a comprehensive analysis of Amazon's competitive strategy, examining both its internal and external environments. The internal environment analysis delves into Amazon's organizational structure, business capital, brand value, and workforce strength, culminating in a SWOT analysis. The 7s framework is then employed to further dissect the internal dynamics. The external environment is assessed through a PESTLE analysis, evaluating the political, economic, social, technological, legal, and environmental factors influencing Amazon's operations in Australia. The industry environment is scrutinized using Porter's Five Forces. The report identifies competitive pressures from existing rivals and new entrants. Finally, the study offers strategic recommendations based on the identified issues, aiming to enhance Amazon's competitive position and achieve its business goals.

Running head: COMPETETIVE STRATEGY
Competitive Strategy
Name of the student
Nam of the university
Author note

1COMPETETIVE STRATEGY
Executive summary
In order to survive in the current competitive business industry, the importance of developing
business strategy has increased. The external environment of Amazon has been highlighted
by discussing the macro and industrial environment. It has been identified in this study that
due to excessive competition in the market, the company has faced various organizational
issues. Integral model has been introduced in the study. It has been identified that Maslow
Motivational Theory and leadership management strategy will be helping in the case of
develop in the company for achieving its goal and objectives.

2COMPETETIVE STRATEGY
Table of contents
Introduction................................................................................................................................3
Analysis of internal environment...............................................................................................3
Analysis of external environment..............................................................................................7
Macro environment....................................................................................................................7
Industry environment...............................................................................................................10
Recommended strategic direction............................................................................................12
Conclusion................................................................................................................................15
Reference list............................................................................................................................16

3COMPETETIVE STRATEGY
Introduction
In order to survive in the current competitive business industry, the importance of
developing business strategy has increased (Black, O'Loughlin and Wilson 2018). Here the
study has highlighted the inter environment of the company named Amazon. In this study, it
has been identified that how the strategic planning of a business organization gets influenced
by its internal and external environment. The external environment of Amazon has been
highlighted through discussing the macro and industrial environment. At the end of the study,
depending on the identified issues, the study has provided some recommendations, which will
be helping in the case of developing the effective business strategy in this organization.
Analysis of internal environment
Depending on the internal environment of an organization, the future business plans
are being developed. In order to understand the opportunities and threats in the international
market, internal environment analysis is being done.
Organizational structure
Organizational structure has the higher level of impact on its business development.
In the case of Amazon, as it has become one of the popular retail organizations, therefore, the
rate of employment is also increasing. From the report of 2017, it has been identified that
there is the total number of 566400 employees, who are serving the Australian people
(Amazon.com.au, 2018). It has been identified that the inner organizational structure of
Amazon can be considered as an effective organizational structure in the current business
industry. The hierarchical management of the organization reflects its healthy organizational
culture. It has done many efforts for encouraging its employees towards achieving goals and
objectives. On the other hand, it has maintained transparent payment policies with the
employees, which has helped to implement the suitable organizational plan.

4COMPETETIVE STRATEGY
Business capital
Business capital reflects the financial stability of an organization. It is influenced by
the liquid capital of the company. If the business revenue of Amazon will be analysed, it will
be identified that the growth rate of its net income is gradually increasing. In the year 2017,
the business revenue was US$177.86 billion (Amazon.com.au, 2018). Net income of Amazon
was US$3.033 billion in the same year. Therefore, this can be said that within 23 years it has
established its strong financial position in the international business industry
(Amazon.com.au, 2018).
Brand value
As stated by Allen (2017), Brand value is the very important factor for analysing the
current business condition of an organization. On the other hand, this can be said that brand
value is very important in the case of grabbing the attention of the customers. This can be
said that the company has established its strong brand image in the international ecommerce
industry. Within the year 2006 to 2017 the brand value of Amazon has increased. It has been
identified that in the year 2017, the brand value of Amazon was 139.29 billion US dollar,
which is almost same as per the global revenue of the company in 2016 (Amazon.com.au,
2018). It has been identified that the company has established its strong brand image in the
market by providing good quality of products in the market.
Worker strength
According to Higgins, Milne and Van Gramberg (2015), Workers are considered as
the backbone of every organization. Therefore, this can be said that depending on the
workforce strength, the rate of production of the company can be analysed. It has been
identified that the employee strength of Amazon is increasing. It has also been identified that
in order to increase the performance of the employees the company has started introducing

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training and development programs. With the increasing rate of business revenue, the
company has introduced various job opportunities in the market. It has introduced modern
technology for increasing the efficiency (Soosay et al. 2016). On the other hand, reward and
recognition offers of the company are transparent.
SWOT analysis on Amazon
Strength
 It has established the strong brand
image in the online retail industry in
Australia (Nikolaou and Lean 2017).
 It has efficient employees who play
an important role to increase its
productivity.
 Amazon has established the healthy
relationship with its customers,
which has helped the company to
establish its large customer base
(Ruviaro, Barcellos and Dewes
2014).
 Amazon has introduced software and
hardware in order to increase its
sales rate.
 The company has the strong
financial backup (Dinh et al. 2014).
Weakness
 With the changing preferences,
demands and shopping trends of
customers has changed. This has
created pressure on the organization
to introduce unique ideas in the
market (Johnson, Parker and
Maguire 2018).
 Conflict among the employees in the
organization, influencing the internal
culture.
 Before purchasing any products,
customers are getting various
options in the market. This has
created competition in the retail
industry (Sweeney, Armstrong and
Johnson 2016).

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Opportunities
 In the international market, the
company has already grabbed the
attention of a large number of
customers. As its result, it has
positive future in the online retail
industry (Patchell 2017).
 As the industry is growing,
therefore, this can be said that rate of
employment in this industry will
also increase.
 Due to changing lifestyle,
ecommerce has become very popular
among the customers, therefore, in
the long run, availability of
customers in this industry will
increase.
Threats
 In the global online retail industry
many organizations have developed
their business. Therefore this can be
said that the competition has
increased (Greenberg 2017).
 Availability of substitute products in
lower ranges has created pressure on
Amazon.
 It has been identified that the
increasing rate of new entrants in the
market has created challenges for the
company to maintain its unique
image on customers’ mind (Wardle
2015).
The 7s framework
In order to understand the internal environment of the organization, the study has
introduced the 7s framework, which was developed by Robert H. Waterman and Tom Peters
(Forrester and Ipsen 2018). This is considered as an effective business model by which the
internal environment of an organization can be analysed. In the 7s framework, shared value,

7COMPETETIVE STRATEGY
staff, system, skills, style, structure and structure of an organization is being analysed. In the
case of Amazon, this can be said that the company has developed an effective organizational
structure, which has influenced its productivity. The company has adopted cost leadership
strategy in order to develop its business in the Australian market (Meuser et al., 2016).
Amazon follows a wide range of systems. The systems of Amazon can be developed in
orientation and team development, selection and recruitment, customer relationship
management, knowledge management system, transaction system, business intelligence
system and many more. As Amazon has the wide range of employees, therefore in order to
provide them job satisfaction the company has introduced various reward and recognition
policies (Nelson et al. 2018).
Analysis of external environment
Macro environment
The macro environment of an organization depends on the economic condition of a
country. Depending on the political and technological influences, the macro environment of
an organization is being analysed. In order to analyse the macro environment of Amazon, the
study has focused on PESTLE analysis.
Situation Analysis
Political As stated by (Zakaria et al. 2014), the political situation of a
country highly impacts on its business growth. If the political
situation in Australia is being analysed, it will be identified that
this country is being considered as the peaceful country in the
world. The government of Australia is also very supportive in
the case of introducing any kind of development in the market.
In this situation, this can be said that it will be very influencing

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for the business growth of Amazon in the Australian market
(Price, Bailey and Pyman 2014). Therefore, this has been
identified that political situation in Australia is in favour of
Amazon.
Economic The economic condition of the country is developing. In the
year 2016, the GFP in Australia was 1.2 lakh crore USD
(Wardle, 2015). From the increasing GDP rate, this can be said
that Australia has become world’s happiest country among the
developed countries. With the economic strength, the rate of
employment in this country is also increasing. Therefore, this
can be said that Australian market is suitable for Amazon,
developing its business in large scale.
Social As opined by Sutton-Brady, Kamvounias and Taylor (2015),
the social condition of a country reflects on the living standard
of the citizen. In this study, it has been identified that the most
of the people in Australia are brand fascinated and the living
standard is moderate. People have become addicted to the
online shopping. This can be said that as the company has
decided to provide its products in the lower range, therefore,
the company will be easily accepted by the local people in
Australia (Soosay et al. 2016). After analysing the study, this
can be said that the social environment of the country will
impact strongly in the company named Amazon.
Technological If the technological environment in Australian is being
analysed, it will be identified that after the different initiative

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was taken by the government, different software and hardware
have been introduced in the business industry. On the other
hand, after the development of IT, the business industry has
also adopted technological development in the workplace
(Greenberg 2017). Therefore, this can be said that the
technological environment of Australia is in the favour of
Amazon.
Legal Rules and regulation of a country impacts on the business
environment in an effective way. If the legal situation in
Australia is being analysed, it will be identified that the
government has introduced various international and national
rules and regulations in the business industry, which are very
helpful for the organizations who want to develop their
business in the Australian market (Patchell 2017). However, it
has been identified that the competitive laws introduced by the
government are not in favourable condition for the large
organizations. Hence this can be said that legal environment in
the country is in moderate position for the company.
Environmental Depending on the environmental situation the waste
management strategies of the organization are being developed
(Sweeney, Armstrong and Johnson 2016). It has been
identified that the Austrian government is very much conscious
about the carbons=emission and environmental pollution.
Therefore the government has introduced different
environmental rules. Depending on this the company needs to

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bring the changes in its waste management functions. It needs
to focus on its packaging material and control the carbon
emission. Therefore, this can be said that the environmental
condition of the country is in the favourable condition for the
company.
Source: created by author
Industry environment
Porter’s five forces
Situation Analysis
Existing rivalry In the Australian retail industry, there are various large
organizations such as Woolworths and Harvey Norman are
creating the higher level of competition for Amazon (Patchell
2017). It has been identified that these organizations have
already established its strong brand image in the market. The
customer base of these organizations in the Australian market is
also very high. Therefore, this can be said that these
organizations are the biggest threat to Amazon in order to
increase its market base.
New entrants in the
market
As the study has repeatedly discussed that the economic
condition of Australia is growing, therefore this can be said that
this has brought huge opportunities for the new-comers, who
want to develop their business in the Australian market. By
getting the financial advantages, the new organizations have

11COMPETETIVE STRATEGY
started grabbing the attention of the customers (Johnson, Parker
and Maguire 2018). As the customers are getting attracted by the
new entrants, therefore this can be said that this has created
challenges for Amazon.
Bargaining power of
the supplier
As the study has repeatedly discussed the availability of retail
organizations in the Australian business industry, therefore, this
can be said that it increases the pressure on the company named
Amazon. On the other hand, it has also been identified that due
to the limited number of suppliers in the market, the suppliers
get many options (Greenberg 2017). This indicates the
increasing bargaining power of the suppliers in the Australian
market. As its result, Amazon faces various challenges in the
industry.
Bargaining power of
the customers
Australia is a low populated country. However, in the current
scenario, the large number of people from foreign countries has
migrated to this country (Wardle 2015). As the customers are
limited and availability of competitors in the market is high.
Therefore, this can be said that before purchasing any products
from the market, the customers get various options. This
influences the buying behaviour of the customers. It has been
identified that bargaining power of the customers is high.
Substitute products in
the market
Due to the availability of competitors in the market, the rate of
substitute products in the market also increases (Forrester and
Ipsen 2018). This can be said that the company named can face
various challenges in the market as the new entrants are