BUS 301: Research Project on Amazon.com's Strategic Analysis

This project report conducts a comprehensive strategic analysis of Amazon.com, addressing its current challenges in the e-retail industry. The report begins with an introduction outlining the need for research, driven by increasing competition and financial performance issues. It then presents a detailed table of contents and outlines the research objectives, including understanding Amazon's internal and external environments. The project utilizes methodologies like McKinsey's 7s model, PESTEL analysis, and various data collection techniques to evaluate Amazon's strategic position and identify potential areas for improvement. The internal analysis examines Amazon's structure, systems, skills, staff, style, and shared values, while the external analysis assesses political, economic, social, technological, environmental, and legal factors. The report concludes with data interpretation, recommendations, and a discussion of factors affecting project outcomes, providing valuable insights for Amazon's strategic development.

Project on
Research Project

Table of Contents
LO1 Understand how to formulate a research specification...........................................................3
1.1Rationale of the Research...........................................................................................................3
1.2Background and principles of the Research project...........................................................................4
1.3 Literature Review..............................................................................................................................4
1.4 Research Methodology......................................................................................................................6
LO2 Be able to implement the research project within agreed procedures and to specification.....7
Resources required for the Research and analysis of research data according to the research question
and objectives 2.1 2.2 & 2.3....................................................................................................................7
Internal Research.............................................................................................................................7
McKinsey’s 7s Strategic Model................................................................................................................7
External Research..........................................................................................................................11
PESTEL Analysis......................................................................................................................................11
The BCG Matrix............................................................................................................................13
GE-McKinsey Matrix....................................................................................................................14
2.2 Data collection by appropriate techniques......................................................................................15
2.3 Data collection in appropriate format.............................................................................................16
LO3 Be able to evaluate the research outcomes............................................................................17
3.1 Factors affecting the achievement of the project.....................................................................17
3.2 Data interpretation..........................................................................................................................20
3.3 Recommendations based on findings......................................................................................20
Conclusion.....................................................................................................................................22
References......................................................................................................................................23

Introduction
The purpose of preparing this report is to support the online retailer amazon.com to solve its
current problematic situation where the organization is losing its grab in the e-retail industry due
to immense competition especially from eBay, Walmart, Tesco and BestBuy (Hall M 2014). This
online retail giant has been facing more expenses than revenues as they are expending more than
their profits. Stats show that in 2014, amazon has started losing investors because lack of profits,
and shareholders return. For Amazon's situation, this disappointment was driven by the Seattle-
based organization posting a second from last quarter loss of £437m (£290m). (telegraph.co.uk)
The company had a forecasted revenue of 13.40 billion USD but that also decreased to 12 billion
USD that year and the share prices dropped almost 9% which took the share prices from £194.44
to £177.31 (Letzing Stu, n.d.). In this situation amazon.com needs to conduct an intensive
research in order to develop a new strategy to cope with the shortcomings and lack in its business
strategy. Firstly, the report will include information about amazon.com; secondly a deliberate
discussion will be made on the overall internal and external business environment of the
company which will help to analyze the current situation and support to form a strategic method
for the company to overcome this situation by proper recommendations revealed from key
findings of this report.
LO1 Understand how to formulate a research specification
1.1Rationale of the Research
The core target of this research project is to analyze the strategic management analysis of the
online retailer amazon.com. Amazon.com; who has been one of the leading online retailer and
famous brand, at present amazon is facing some strategic issues in the markets due to strong
competition with its direct competitors. The report is designed to evaluate and analyze the
critical issues and problems that amazon is facing and prepare a report that will have proper
information to resolve these issues and problems. The strategic analysis has been divided into
two major part which are internal analysis and external analysis. The internal analysis part
includes McKinsey’s 7s Strategic Model and Porter's Value Chain analysisin order to analyze the
internal environment of amazon.com and the external analysis part includes PESTEL Analysis

and Porter’s Five Forces Model to evaluate the external aspects of amazon.com. The total
structure of this report is formed to find out the reasons behind the struggle of amazon.com due
its competitors and try to recommend possible strategies that help to resolve the issues with
proper implementation.
1.2Background and principles of the Research project
This report is prepared with the core objectives of resolving some very critical issues and
evaluates recommendable strategies that are stated below:
 To collect proper information about the current status of amazon.com.
 To evaluate and examine the current internal and external environment of amazon.com.
 To select the best market strategy for amazon.com in current competitive situation.
Research Questions:
1) What are the potential reasons for conducting market research of Amazon.com?
2) What factors are affecting this research project?
3) What are the strategies and research specifications of this research project?
4) How this research is going to be helpful for the strategic development of Amazon.com?
1.3 Literature Review
1.3.1 McKinsey’s 7s Model
 Strategy
Strategy of a firm leads the firm to have e properly established plan that is effective enough to
gain competitive advantage in the market.
 Structure
Structure of an organization is the method of organizing the different departments and sectors to
have a properly managed strategy.

 Systems
Systems are the strategic procedures, decision makings, processes and approach to attain the
target of an industry.
 Skills
Skills are the efficiency of completing a task with expertise and firm abilities.
 Staff
Staffs are the core element of a firm’s human resources that creates strong workforce to perform
and attain organization goals.
 Style
Style is the policy of how the top level of an organization operates their duties and
responsibilities and methods of maintaining the organization.
 Shared Values
Shared values are the major element of McKinsey’s 7s strategic model and is constructed by the
standards of both the employees and employer’s actions and approaches towards the
organization.
1.3.2 PESTEL Analysis
 Political
Political environment of an organization is very critical due to the relation to specific rules-
regulations, legislation, standards and policies, laws and tariffs and etc.
 Economic
The economic environment of an organization has vital effect on the betterment of that
organization by the balance of supply according to demand.
 Social
The social environment of an organization usually refers to the facts that surrounds the society or
is frequently used in the society.

 Technology
An external element that affects ecommerce the most is technology. Technology is the current
pioneer of the world of internet and ecommerce.
 Environment
Positive environment is required to reach to the specific goals. It is the harmony of the physical
surroundings and the individuals which drives the individuals to a specific course of action.
 Legal
Ecommerce trades and business are run in the UK according to the Electronic Ecommerce
Regulations 2002 and is implemented by the ECD 2000 regulations formed by European Union.
1.4 Research Methodology
Research design of a study is a basic strategy to the method of answering the research questions.
It is a general structure which lies on the concept of conducting research. It contains data
collection, measurement of data and also the data analysis. Research design of a study also
includes the elements such as surveys, questionnaires etc. for the collection of data where survey
is a tool to data collection by asking a specific number of questions just like questionnaire
(Creswell JW 2014, n.d.). There is a common confusion about the accuracy of the data collected
through surveys and questionnaires is the reliability of results evaluated from the surveys and
questionnaires, the solution of this problem can be ensuring the collection of data from unbiased
and trusted source of data (Osborn DR 2014, n.d.)
Methodology used in this research:

 Primary Data:
- Surveys
- Questionnaire
- Interviews
- Case Studies etc.
 Secondary Data:
- Focus Groups
- Internet data
- Experiments
- Content analysis etc.
LO2 Be able to implement the research project within agreed procedures
and to specification
Resources required for the Research and analysis of research data
according to the research question and objectives 2.1 2.2 & 2.3
Internal Research
In this phase of the report, aspects of internal analysis are evaluated to examine the internal state
and capabilities of amazon.com and also discuss the strategy of amazon.com in creating value for
its customers(Ihsan Y 2012).
McKinsey’s 7s Strategic Model
McKinsey’s 7s strategic model is a very powerful model that helps to analyze the total picture of
the internal environment of the organization(Peters T 2011). In order to analyze the critical
internal issues of amazon.com, application of McKinsey’s 7s model is a must.
Figure: McKinsey’s 7s Model
 Strategy
Amazon.com performs its activities in the basis of low cost strategy that gives it an edge over the
competitors and fulfills the target of aggressive investment in newer products and increase brand
awareness but this also creates problems in increasing revenues(Hoium Travis, n.d.).

 Structure
The structure of amazon.com’s business is immensely based on low cost and products are sold
on lower prices as possible so that it can be an advantage in the e-retail industry. But this low
cost structure is causing harm to the profits(Mourdoukoutas Panos, n.d.).
 Systems
Amazon has recently upgraded their core database system into oracle and adopted the latest
technologies which is good for the system but increases the expenditure(Novak Jake, n.d.).
 Skills
In the context of skills, amazon.com recruits skilled workers for its database management system
but 53% of the recent customer queries show that the amazon website faces problems, 28% of
the queries are related to logging in and 17% of check-out(downdetector.com, n.d.).
 Staff
The organization is also repeatedly reported to have unhappy staff as their workers are paid low
in rate but also have complaints that they over-work (Young Angelo, n.d.).
 Style
The CEO’s managerial style is very much central and he is the ultimate disrupter of this
organization. Centralized style of amazon is working well enough, there is no such problem in
this aspect.
 Shared Values
In the context of shared values, amazon.com is behind Walmart. Researchers say that the biggest
problem of amazon.com is Walmart. Recently amazon.com have acquired twitch to increase
their shared values but still Walmart is ahead.
Gantt chart for activities which has to be done in this project

Cost and resource required of project according to activities
Activities Resource required Cost
Developing research
aims and objectives
Old Research Project
(Information resource)
100
Literature Review Published articles,
journals and books
(Information resource)
300
Determination of RM Experts suggestions
(Human Resource )
150
Questionnaire Web links (Financial
resource)
250
Data analysis Experienced person
(Human Resource)
200
Total Cost 1000 Pound

External Research
The External analysis of an organization basically means the evaluation of those aspects of the
environment that affect the organization from outside. It is also called as the analysis of the
macro-environment (Saunders R 2001).
PESTEL Analysis
PESTEL analysis is a strategic pattern that identifies the political, economic, social,
technological, environmental and also legal aspect of the business environment which influences
the organization. This framework is widely used to determine the macro factors in the business
environment of an organization (Ihsan Y 2012). In this report, PESTEL is analysis is very much
required to access the macro factors that are affecting amazon.com and creating problems in the
e-retail market.
Figure: PESTEL Analysis
 Political
Amazon.com is greatly influenced by the ecommerce legislations of European Union (Politics
And The Amazon, n.d.). The EU have formed some rules and policies for ecommerce e-retail
business all over the world and the e-retailers has to follow them which reduces the possibility of
abusive business structure and enforces or allows firms to be developed without any dominance
from others (Research and M 0009). The World Trade Organization also affects the ecommerce
aspects by the proper classification of the products and some specific rules and regulations which
facilitates the e-retailers and makes the international trade processes very simple.
 Economic
E-retailers like amazon.com who are struggling in increasing profits definitely have to focus on
both the international and national situations of economy. But also the ever-growing situation in
the use of internet in the UK is enlarging the scope of e-retail business and this growth is creating

better opportunities for amazon.com to compete with its competitors (Financial Statements -
Businessweek, n.d.).
 Social
Amazon.com along with other e-retailers has been using these social networking websites as
their major source of customers (Ihsan Y 2012). With the ever-growing population all over the
world, the scope of ecommerce is growing radically and loads of new customers and online
businesses are forming day by day which is a good element for amazon.com to use to expand
itself (Marc Gunther).
 Technology
From 2011 to 2012, broadband internet connections in the UK has increased more than 6% and
most of the internet users also have tabs, smartphones or androids that’s shows the effect of
technology all over the UK. Amazon.com is expanding their market and spending huge
investments in the technology aspects which are increasing the expenses but don’t improving
revenues (Venkatesh, n.d.).
 Environment
Amazon.com can take these environmental issues under their consideration so that they cope
with the present struggling situation better where the organization should save energy resources,
reuse or recycling of wastage products and also follow corporate social responsibility.
 Legal
Ecommerce regulations are established with the target to building strong customer confidence
towards their products. Amazon.com is fully followed by these regulations which clears the legal
issues of this organization and supports amazon to build their business all over the UK with
better consumer confidence (Grove Jennifer and googleplus, n.d.).