Digital Business: Amazon's Strategic Analysis Report

This report provides a comprehensive analysis of digital business, using Amazon as a case study. It begins with an introduction to digital business, exploring its advantages and key trends such as augmented reality, artificial intelligence, big data, chatbots, and mobile shopping. The report then delves into Amazon's digital business operations, including its use of virtual business models and matrix organizational structure. Task 2 examines new and emerging digital business models like freemium, subscription, free offerings, marketplace, pyramid, user experience premium, and on-demand models, illustrating how Amazon leverages these to enhance its services. Task 3 focuses on collaborative relationships and strategic alliances, outlining their advantages and disadvantages and highlighting how Amazon fosters these relationships for mutual benefit. The report concludes with a summary of key findings and references.

Digital Business

Table of Contents
Introduction-.................................................................................................................. 4
Task 1-.......................................................................................................................... 4
Task 2-.......................................................................................................................... 7
Task 3-.......................................................................................................................... 9
Task 4-........................................................................................................................ 11
Conclusion-.................................................................................................................. 13
References-.................................................................................................................. 13
Executive Summary-

In this report, digital business is discussed. An Ecommerce company Amazon is analyzed. In
task one it is analyzed that what are the advantages and disadvantage of digital business it is also
discussed that how company is maintaining collaborative relationship and strategic alliance with
other companies. Ecommerce principle adoption within the organization is discussed. This report
includes all the key points which ecommerce companies used.

Introduction-
This report is based on digital business. As the name suggests, digital means creating new value
in the business models, customer experiences and internal capabilities which supports core
operations of the organization with the help of technology. It means transforming business with
digital technologies. There are various king of digital business such as affiliate marketing, selling
crafts online, selling crafts online, drop shipping and web design. In this report, Amazon is
analyzed. Amazon is multinational technological e-commerce company. It is one of the big five
companies. It was founded on 5th July, 1994 by Jeff Bezos. Initially it started selling books
online and later on, it expanded to sell electronics, software, video games, furniture, food, toys
and jewellery. Company is headquartered in Washington US. Products offered by Amazon are
Echo, fire tablet, Fire TV, Fire OS and Kindle. Revenue of company is $386.064 million till
2020.
Task 1-
Trends and advantages of digital business-
Virtual Business-
Virtual business means doing business by adopting technologies. When an organization uses
technology and use of internet as medium of communication for marketing, servicing, delivering,
buying and selling is known as digital business. Proper use of technology or good command over
the internet and technology is required. In digital business, Primary communication medium is
internet or technology. Digital business does not depends on physical location in order to
function business. In virtual business, optimization of financial resource utilization can be done.
Amazon is a digital business which provides products online to customers worldwide. Amazon
operates its business in US with separate website and several functions. Matrix organization
model is effective for Amazon. Now-a-days there are many digital business all over the world. It
is very important to manage digital business properly. Digital business can be managed by
defining work systems, multiple communication tools must be established, delivery of product

should be timely and professional work environment should be created in order to make business
successful. Features of digital business is as follows-
 It provides administrative services.
 It gives facility of telephone answering 24*7.
 Business address and telephone numbers are provided.
 Personalized voicemails are given by company.
Advantages of digital business-
Digital business is in trend now a days. As it increases profitability. Some of the key advantages
of digital business are as follows-
 Digital Presence- This is the main advantage. Digital business gives presence of the
company through internet. It uses tools such as online stores, social networks, blogs and
corporate pages. All these tools helps business in increasing its visibility and also
increases sales.
 Customer communication- It not only increases sales channel but it is new way of
communication with customers. Digital business interacts with customers through Email,
apps and social networks.
 Decision-making- With the help of digitalization, data can be managed in proper way.
Data provides the knowledge of the business. Knowledge means sales of business,
customer interaction and identification of potential market. It provides better decision
making power to the business.
 Efficiency and productivity- Business digitalization helps business in increasing
productivity and efficiency. It leads to reduce the cost. Technology and digitalization
helps business in handling data effectively so that productivity can be increased.
 Innovation- With the use of technology, innovation can be done which leads to offer new
trends. Faster innovation can be done among team members.
Key trends in digital business-
There are many changes faced by Ecommerce. Biggest trends are as follows-

 Enhancement of online shopping- Augmented reality Helps Company in changing the
online shopping. Through this technology, Customers can find the item easily what they
want. It helps customers in decision making. It enhances the shopping experience of the
customers.
 Artificial intelligence- Artificial intelligence and machine learning is very important for
digital business as it helps in giving personalized experience to customers. It helps in
increasing customer base which further helps in increasing the sales and profit margin.
 Big data- As many people are aware about the ecommerce and handling large customer is
not an easy job. In order to manage data big data technology is used. It also helps in
reaching new and potential customers.
 Chatbots- Interaction with online shoppers is necessary in order to make shopping
experience good. Chabot is customer care service which helps in maintaining customer
relation and also gives good shopping experience.
 Mobile shopping- Purchase from anywhere is trending. Mobile shopping allows
customers to purchase from anywhere. Digital payment of the product is also possible.
Customers can make payment online and companies offer discount for online payment.
Use of trends and advantage within organization-
Amazon is famous worldwide for its services and products. Company has large market capture
because company always focuses on digitalization and key trends in the market. Amazon is using
artificial intelligence which helps in creating large customer base. Customer base can be created
with the help of different technologies in the organization. Mainly cloud computing, artificial
intelligent, machine learning and big data is used for better customer experience. Advantages of
digitalization in the organization are taken. It helps in increasing efficiency and productivity of
the company. Innovations are important for the organization in order to remain competitive in
the company. Company is using different technologies to remain competitive in the market.
Company provides various types of products or services. Company is famous in the world
because it provides good quality product and services. Quality of the products make the company
popular. Organization uses Chatbot service which is customer care service. In case if customer is
facing any problem related to product and service then customer can use chatbot service. It helps

in solving problems of the customers. Customer can exchange the product or return the product if
it is not fulfilling expectations. Hence, it is said that Amazon is using technology in proper way.
Task 2-
New and emerging digital business models-
Definition-
Digital models are defined as a model that uses technology in order to improve several aspects of
an organization. From how organization increase customer base to product offer to customers. In
digital business model technology helps in enhancing the value proposition. Emerging business
models are describes as current issues that business leaders and professionals are facing as well
as development in digitalization. As innovations and breakthroughs are increasing and it is
disrupting the traditional businesses. There are three main components of digital transformation
which are overhaul of processes, overhaul of operations and overhaul of relationship with
customers.
Traditional business models involve direct sales, franchising, advertising, brick and mortar
stores. Business models are very important for the organization as it leads to growth of the
business. If business model is created in proper way then it helps in increasing the profit margin.
Profitability is sign of success of the company. Company should adopt innovations in order to
remain competitive. Innovations are done with the help of technology. All the Ecommerce
companies use technology for making successful its business. Hence, it is said that correct
business model is necessary for business to grow.
New emerging digital business models-
There are some important business models which are important for the company. Many
successful companies combine various business models for different part of company. Business
achieves success if there is right combination of product and business model. Following are the
business models-

 Freemium model- This model is for low cost products. Offering free version of the
product automatically grabs the attention of the customers. It helps in upselling more
services.
 Subscription model- Main objective of this model is to provide long term services into
monthly recurring payment. Many companies use this model for the growth of the
business.
 Free offerings- Free offerings meaning company is providing services for free and
generating revenue by other sources of advertising.
 Marketplace model- One or two sided marketplace models are very famous internet
models.
 Pyramid model- Pyramid models are used by many companies. These models are builts
around affiliate systems.
 User experience premium- According to this model, product with higher prices offers
better experiences to the customers.
 On demand model- It includes cloud computing services. It is bought on demand. In this
resources are monetized according to demand of the customers. It is very popular in
digital business for growth purpose.
Use of emerging business models in the organization-
Emerging models are very important for organization. Company uses these models in order to
increase the revenue and profit margin. Amazon is an online store which offers wide rand of
products and services. Amazon uses pyramid model which is Amazon affiliate. Amazon also
provides services like Netflix on Amazon prime video. It follows subscription model and user
experience model. Combinations of these models are taking Amazon to new heights. In this
model customers can take free trial of the service and after that according to the customer
satisfaction, they can take subscription of the service. Company was able to attract the large
customer base because of this model. In other words, it can be said that combination of these two
models was fit for Amazon prime video.
Company also uses on demand model it means it gives facility to customers to pay after delivery
of product. It creates satisfaction among customer. Efficient use of every model is necessary in
order to maintain the growth. It also increases the productivity. Improvement of productivity and

efficiency is very essential for the company. Emerging models are the needs to today’s market.
Hence, it is said that company is using all the emerging models very efficiently.
Task 3-
Collaborative relationships and strategic alliance-
It is defined as work practice where individuals of group of people work together in order to
meet the objective of organization. Achieving goals is most important for the business if it wants
to survive in the market. With the help of collaborative approach company can make itself
successful. People are agreed and disagreed in some cases of a certain process. It make work
more satisfying. It provides wide range of ideas. Collaborative relationships can be created by
following points-
 Cause should be clear and compelling.
 Expectations from work should be communicated clearly.
 Setting a goal.
 Strength of team members.
 Innovation must be encouraged.
Strategic Alliance-
It can be understood as an agreement between two companies. In agreement companies decided
to share resources in order to achieve mutually beneficial project. It allows two companies to
work on common goals. There are three types of strategic alliances which include joint ventures,
equity strategic alliance and Non-equity strategic alliances. Company should choose strategic
alliance according to the competitive goals and needs of organization. Strategic alliance often
fails due to lack of shared vision or disconnected expectations. It leads to cut the benefit of both
the parties. So communication between parties must be clear related to alliance. Hence, it is said
that collaborative relations and strategic alliance play important role in profitability of the
organization.

Advantages and disadvantages of collaborative relationship and strategic alliance-
Collaborative relationship
Advantages-
 Time is a precious resource in the organization. Centralization of resources and
documents helps the company to save time. Employees do not need to search document
of ask for information.
 It enhances flexibility and creativity. Challenges can overcome with the help of
collaborative approach.
 Relationship among employees is improved with the help of collaborative approach.
Work can be done in efficient way if there is no conflict among employees.
 Knowledge, talent and skills can be contributed.
Disadvantages-
 When collaborative approach is used within the organization some of the employees
assume themselves as leader.
 When unique personalities work together, conflict can be created due to different
working styles.
 It creates instances of group thinking.
 If large numbers of employees are involved in collaborative efforts then it is very costly
for organization.
Strategic Alliance advantages-
 Goals can be achieved faster as two or more companies are working together. Presence of
targeted market can be expanded.
 It is helpful in increasing the customer base as customers who are loyal to brand of other
company will be automatically attract towards your company.

 Innovations can be done at higher level as there are more resources which can be utilized.
Innovation helps in increasing the profitability.
 It provides positive brand awareness.
Disadvantages-
 When there is an alliance between companies, both the companies are at risk and it leads
to employees crossover.
 Conflict is created among employees because of right issues.
 Cultural clash is also a disadvantage in strategic alliance.
 Implementation is delayed.
Use of collaborative relationship and strategic alliance through digital technology-
Amazon also has strategic alliance with its suppliers. This alliance is made by company because
suppliers are not competitors and durability of this alliance is more than others. Win-win
situation is enjoyed by Amazon. Previously Amazon had partnership with FedEx, UPS and
USPS. Currently company is investing in cargo jets, Trailer trucks and related companies in
order to help supports its prime fast shipping program. Amazon is collaborated with Goldman
sachs, kohl’s and JP Morgan. Thus, it is observed that collaborative approach and strategic
alliance of the company are very strong. By maintaining proper relationship with other
companies company is now successful.
Task 4-
E-commerce-
Ecommerce is defined as buying or selling products and services with the help of internet. It
consist of wide range of data, systems and tools for customer’s buying and selling purpose. It
also includes mobile shopping and online payments. There are three main types of ecommerce
which includes business to business, business to consumer and consumer to consumer. Amazon
uses business to consumer ecommerce. Ecommerce term was first given by Robert Jacobson.
Ecommerce is online marketplace. Here online buying and selling is done. Three areas are
included in Ecommerce such as online retailing, electronic market and online auctions.

Principle of E-commerce-
Some of the principles of ecommerce are discussed below-
 Web based business- Business which uses internet in order to sell its product and service
is known as Ecommerce. It includes four business processes which are as follows-
 Information dissemination
 Data capture
 Promotions and marketing
 Transacting with stakeholders
 Information dissemination- It is used to publish the relevant information about the
product or service. If company is facing crisis then it can be used. It is also helpful in
indentifying the worst case and also provide the details.
 Data capture- As the name suggests, data capture means recording the data and
management of it. This data is related to customers. It is useful for business. Data can be
captured with using two methods such as manual input or automated. Data management
is very important for the business in order to know the potential customers in the market.
If data is not managed properly company may lose its customer base.
 Promotion and marketing- This is the main principle of Ecommerce. It includes banner
advertising, Affiliate programs, registration with directories and traditional marketing.
Banner advertising means graphic display that stretches across social media. Company
can use website, mobile games or social media in order to promote its company. Main
purpose of banner advertising is to get the visitors on website. Company also provides the
affiliate program. Company can hire an affiliate and pay it for sending traffic on the
website. Directory registration is a marketing tool and it is free for all. It is very simple to
use. Marketing which is not online is know as traditional marketing. Direct mail,
advertising and phone calls involve in traditional marketing. It is also known as forced
marketing. When customer does not want to purchase product then showing ads again
and again is considered as forced marketing. It also helps companies in reaching to
potential customers.

 Transacting with stakeholders- In this cross selling is implemented and website is also
customized. It gives reaction to competition. It also helps in maintaining the relationship
with the customers.
Ecommerce principles used within organization-
Company uses many tools and techniques in order to market its products. As above discussed
company uses banner advertising and affiliate programs in order to increase its sales. Many SEO
tools are also used within the organization for marketing of product or services. Amazon is top
leading company because it is using its marketing tools and techniques wisely. Banner
advertising is used by company. Company’s ads pop up on other websites for promotion of its
products so that company can increase its sales or growth. There are many other tools and
techniques such as data management. Company is managing its data efficiently in order to target
the market so that it can grab the attention of the customers and after that it can filter the
potential customers. Google provides facilities to company to advertise their product online. As
this is era of internet and company is also using internet wisely for promotion of its products.
Hence, it is said that company is efficiently using ecommerce principles.
Conclusion-
In the report, it is observed that digital business is very useful. Amazon is analyzed in above
report and company is at new heights because it used right innovative products and right
emerging models. Company gave competition to Netflix. It is also considered as an achievement
for the company. From the above report it is also concluded that collaborative relationship and
strategic alliance are also necessary to run the business. In the last task of the report ecommerce
principles are discussed. It includes data management and marketing tools and techniques and it
is observed that company is using it efficiently in order to make it productive. Hence, it is said
that Amazon is managing its digital business properly.

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