Amazon Strategy 1|Page

Global Strategy and Sustainability

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Executive summary

The report aims to understand the external and internal environment of the company by
utilising different analysing tools. It has been summarised that the strategic management and
international marketing strategies have helped the company to become global leader in the e-
commerce industry. For the internal environment analysis, SWOT analysis and value chain
analysis is used and to analyse the external environment, the report contained PESTLE and
Porter’s 5 Forces. It will also help the learner to understand the competitive position of the
company in the e-commerce industry. At the end of this report, a few recommendations will
be given to maintain the sustainability and growth of the company in the global market.
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Table of Contents
Introduction..............................................................................................................................................4
Porter’s 5 Forces analysis....................................................................................................................4
PESTLE Analysis................................................................................................................................5
Internal environment analysis of the company........................................................................................7
SWOT Analysis...................................................................................................................................7
Value chain evaluation.........................................................................................................................8
Corporate Social Responsibility and Sustainability Analysis..................................................................9
CSR......................................................................................................................................................9
Sustainability Analysis......................................................................................................................10
Analytical Evaluation............................................................................................................................10
Global Development related recommendations.....................................................................................11
Sustainability relevant recommendations..............................................................................................12
Conclusion.............................................................................................................................................13
References..............................................................................................................................................14
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Introduction

For the continuous growth and development a company, it is important to adopt different
strategies to achieve leading position and attain sustainability in the organisational operations.
Amazon is one of the leading multi-technological companies and it was started with the
vision of founder and CEO Jeff Bezos. In the initial phase the company started business by
selling books and became the first online book selling company. Now the company deals in
e-shopping, cloud computing, drone based delivery, and other technologies to improve the
buying experience of the customers. By using different analysis tools the report will contain
external and internal environment analysis of the company to evaluate the strategic
management for ensuring company’s sustainability. For analysing the external environment
of the company PESTEL and Porter’s 5 Forces will be used. On the basis of value chain and
SWOT analysis the report will portrait the internal environment of the company. In this
report, critical analysis of corporate social responsibilities and sustainability of Amazon will
be portrayed. Also, it will include the possible changes and recommendations for global
development and sustainability of the company in today’s e-commerce industry. The report
will help the learner to understand different evaluation methods for analysing internal and
external environment.

External Environment Analysis for the Industry

Porter’s 5 Forces analysis

Threat of new entrants Amazon is an e-commerce company that has been serving
the market from years. As the technology is advance it is
easy to start a new e-commerce business but the new
entrants will have to face the competition with Amazon
because creating a brand that can compete against Amazon
requires a lot of investment, efforts, research and
development (Disruptivnation, 2019). Hence, the threat
from new entrants is a low force for the company.
Threat of substitutes There are a lot of e-commerce platforms that attract the
customers and it is possible to compare the prices, variety
and offers via internet. Based on their research, the
customers can choose other companies for placing their
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order. Also, the customers can choose to buy things from

local market. Hence, the threat of substitute is a moderate
force for the company.
Competitive rivalry Amazon is the leading e-commerce company in the global
market. However, the internet is full of online selling
companies and the customers like to research about the
pricing and other benefits to get the best deal that makes
Competitive rivalry a high force for the company (Smith et
al., 2017). As the company has a lot to offer like prime
service, fast delivery and more, it holds a huge market share
in the e-commerce industry.
Customer’s bargaining power Amazon holds a huge customer base and a lot of customers
are frequent buyers. As discussed above, the customers
prefer researching best deal for them and a lot of companies
enable them to decide whether to buy or not (Kenny, 2019).
Hence, the bargaining power of the customers is high for
Amazon.
Supplier’s bargaining power Being an e-commerce company, Amazon is a platform
where the retailers sell their products and they are the
suppliers for the company. It is mandatory for the company
to foster better relationship with the suppliers so that the
supply of products can be continued. Hence, the bargaining
power of suppliers is a high force for the company.

PESTLE Analysis
Political

With the advancement of technology the shopping style of the customers has changed. The
government of different nations prefer to promote the online transactions rather than cash
(Ioris, 2020). After the spread of novel corona virus, government of different nations
suggested to buy goods online to reduce the direct contact between seller and customer.
Since the company is a multinational corporation initiated in America, the American
government supports it.
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Economical

As the telecommunication industry is evolving and the price of internet is reducing, it has
enabled a lot of customers to shop online. However, there are several factors like inflation
and recession affect the company’s economic growth by affecting the average annual sales. In
the last few years, the e-commerce industry has registered a huge spike of more than 15% in
the year 2020 (Al-Marzooqi and Nobanee, 2020).

Social

The online shopping is becoming popular and the customers now prefer to buy things online.
The society prefers researching online before buying anything that has provided an
opportunity for the e-commerce platforms. However, there are mixed review for Amazon and
other e-commerce companies as a lot of people don’t feel comfortable in shopping online
because they miss the personal touch of shopper.

Technological

For attracting more customers and understanding their buying behaviour, Amazon and similar
companies integrate latest technologies like artificial intelligence. Changing or evolving
technology plays a vital role in the transformation of buying pattern of the customers (Majed
et al., 2018). As the e-commerce platforms are now available on mobile apps, it has become
easy for the buyers to place and track their orders on their smart phone.

Legal

For regulating the e-commerce platforms there are no specific rules and policies. Due to that
a lot of scams and frauds are registered by the customers every year. However, the customers
can still use their customer rights for preventing any sort of issue. Improper policies and
guidelines lead to the unethical activities and losses of the customers.

Environmental

In today’s time, Amazon and most of the other e-commerce companies are focusing to shift
on eco-friendly material for the operations like packaging and storing. Decreasing the usage
of plastic and using corrugated boxes have helped the companies to sustain the environment.
Controlling the rate of pollution and contributing to environmental sustainability is the
responsibility of the companies.
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Internal environment analysis of the company

SWOT Analysis
Strength

Serving in the industry for more than 2 decades has helped the company to build rapport in
the international market. The company provides a lot of products and services like video
streaming, same day delivery, pantry, and more that are the strength of the company.
Competitive pricing, variety of products and high rate of advertisement help in attracting
more customers. Having its own transport service ATS (Amazon transport service) makes it
easy to control the delivery time and fast delivery.

Weakness

For retaining the customers and suppliers, the company operates on a small margin. It
increases the chances of facing the break-even point or sometimes loss too. Also, it is
challenging for Amazon to reduce the cost and investment as the company focuses on
delivering high quality service.

Opportunities

Technology is getting advanced and the prices of internet and electronic devices are reducing
rapidly which has made a lot of people to afford buying them. Every year a lot of new users
are introduced to the power of internet and these new users are potential buyers for Amazon
(Kuniko et al., 2019). The company can integrate more tools and technology to understand
the buying behaviour that will help in developing strategies. Also, work to enrich the
customer experience by ensuring better and fast delivery to them.

Threats

The company depend on the network of multiple sellers and suppliers worldwide due to
which the company can face major challenges in implementing new technology and policy.
As the company deals in a lot of market places it has to manage the cultural differences as
they can make a huge difference in the rapport or market image of the company. Also, the
dependency on sellers and suppliers for the products increase the threats of being controlled
by the suppliers for the operational work and decision making.
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Value chain evaluation

Support activities

These are the activities that support the operational work and ensure the growth and
development of a company. In Amazon, some of the major business supporting activities are;
technological development, procurement and human resource department. It is the
responsibility of HRM to protect the payroll details, and maintain a healthy and competitive
environment. Since the company is well known for the product and service, it critically
focuses on maintaining the uniqueness.

Primary activities

Inbound and outbound logistics

For the delivery of products, the company outsource the logistic service from multiple service
providers. Depending on the requirement and serviceability of particular areas the packages
are delivered by choosing different third-party services like FedEx, delivery and more. The
company launched the service of Fulfil by Amazon (FBA) (Hahn et al., 2018). The sellers
can utilise the FBA service for storing and delivering the products to the customers. FBA is
the internal logistic of the company that ensures the fast delivery and reduced dependency on
the third party service (research-methodology, 2020). The inventory can be stored in Amazon
Fulfilment Centres by paying a small amount as inventory handling charge.

Operations

Amazon is an American company whose operations are divided in two regions that are North
American regions and overseas. The company majorly depends on Amazon Web Service
(AWS) for handling the operational work and for storing the data of customers and the
company sales, the company uses its own cloud based system that facilitates a huge storage
space that can be accessed any time (Smith et al., 2017). Also, the cloud based system has the
features that ensure the data security which is very important for the company to sustain in
the market.

Marketing and sales

For the marketing and sales the company focuses on both conventional and unconventional
mediums of marketing. Some of the major conventional sources of marketing are TV ads,
radio, newspaper and magazines (Virdi and Shah, 2017). On the other hand, the
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unconventional modes of marketing are social media marketing, affiliate marketing and other
sort of digital marketing.

Services

The company’s vision is to sell everything and become earth’s most customer centric
company. For achieving the target and mission, the company focuses on delivering the best
possible service to the customers. To reduce the chances of error and dependency, the
company took initiative and established its own network of logistic and the idea got
successful. Also, Amazon tries to attract more customers by providing multiple deals and
discounts.

Corporate Social Responsibility and Sustainability Analysis

CSR
Carroll's pyramid can be used to measure and assess Amazon's CSR. Carroll created a system
that can be used to assess a company's contribution to CSR. It must be broken down into four
distinct forms of duties:

Philanthropic duties

These actions do not convey in capital or benefits to the organisation. Volunteering, funding
institutes, and giving to non-profit groups such as NGOs are all examples of this (Marom and
Lussier, 2020). Amazon offers support to underprivileged children in the fields of schooling,
safety, and related necessities.

Ethical duties

Since beliefs are not enshrined in legislation, corporations are required to adhere to social
ethical standards. Since there are limited numbers of laws or legislation regulating
psychological and ethical standards, it is vital for Amazon to develop an ethical working
environment. Owing to a spike in illegal practises including internet buying and distribution
of goods, the governments of several countries have adopted laws and guidelines to resolve
these concerns but still maintaining consumer interests.

Legal duties
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Despite the fact that ecommerce firms have their own economic and organisational systems,
they are expected to obey local rules and guidelines in all of their target markets. It is
Amazon's duty to obey the laws and standards defined by local governments in the countries
where the organisation conducts business.

Economical responsibilities

Corporations hire a large number of employees who are in charge of producing profitable
merchandises or provided related profitable services. Amazon offers job and career openings
to people as labor in the tech industry. Economic responsibility encompasses all functions
related to a company's economics or liquidity.

Sustainability Analysis
The company spends heavily around the world to reduce carbon criterion and allow the flora
and fauna to use clean energy sources to satisfy its energy needs. The firm, on the other hand,
does not report its carbon and other injurious particle emission levels. The organisation is
engaged in practises that specifically lead to biodiversity and monitor environmental
improvements or deterioration, thanks to the vision of founder and CEO Jeff Bezos. For
example, Amazon decreased the use of non-biodegradable materials and began using low-
cost, environmentally sustainable materials for product packaging (Polacco and Backes,
2018). Furthermore, the organisation optimises the distribution pattern to minimise fuel
consumption, which assists in the elimination of greenhouse gas emissions such as CO2,
CFC’S, and others. Instead of asking consumers to play a role in waste generation or
treatment, it is significant for manufacturers to consider their role in the production of
hazardous particles during the production of their products.

Analytical Evaluation

The appraisal showed that Amazon places a high emphasis on stakeholder profitability. In a
provisional or everlasting basis, the organisation hires over 700,000 people worldwide. The
ideal is perfect for evaluating a company's CSR and long-term profitability (Anderson, 2019).
Amazon has been chastised for evading taxation laws and regulations in selected
marketplaces, which has damaged the company's corporate image. In the grounds of
regulatory obligations, it is revealed that the organisation constantly works on finding
loopholes by doing business in compliance with the countries' legal guidelines.
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Many consumers have complained about the company's ethical actions over the past decade.
Many consumers have indicated that the amounts on Amazon's product pages differ based on
how frequently they visit and where they are located, which is determined using different zip
codes. The company is among rare tech firms in Seattle which does not give anything back to
the city. The organisation, on the other hand, has concentrated on assisting businesses in
using green energy sources to fulfil their power needs.

Global Development related recommendations

Inexpensive arrangement

The company should take advantage of its Inexpensive organizational arrangement to

improve sales and productivity. It would assist the company in optimising liquidity and costs
on a global scale. The cash will be used to create various technologies as well as bring new
goods or services to the marketplace (Galloway, 2017). Since the organisation runs several
warehouses and distribution locations, it must concentrate on optimising the costing of its
activities in relation of packing, shipping, and return inventory selection.

Capitalizing in tech

Capitalizing in evolving technology and introducing technical innovations will help increase
the quality and productivity of a business's operations. Packaging and transporting items can
be achieved easily using robotic equipment and mobile devices. That would reduce both the
amount of hours working and the expense of labour spending at the same time (Flamand et
al., 2020). Capitalizing in machine learning and the Big data analytics will support the
organisation in analysing consumer buying habits, as well as their preferences and dislikes,
which will aid in marketing breakdown and the formulation of global business strategies.

Minimise feebleness

The business has had trouble in recent years due to escaping of legal policies on taxes and
foreign trade. The organisation should concentrate on aligning its activities with the judicial
laws of the countries or markets in question. Since the business is an online website, direct
interaction with consumers is minimal, which can be changed by opening physical shops.

Decreasing the risk of alternates and cyber invasions

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The business should concentrate on developed markets, where there are more prospects for
development and monopoly. By adopting anti-cybercrime initiatives, the organisation will
protect its financial records as well as the data of its clients. It will assist in the growth of
consumer trust and allow using Amazon's services for both frequent and daily transactions.
Can competitive advantages and widening the gap between service excellence and value will
help retain consumers for longer periods of time.

Sustainability relevant recommendations

Capitalizing in agricultural estate

Amazon, as a global company with includes highest net worths, should emphasise
environmental stability. This can be achieved by engaging in waste control firms and
empowering workers to partake in tree planting. It would also assist the company in building
relationship and will be free of charge.

Recycled material

The use of recycled materials for wrapping and other types of labor can help to reduce
harmful particle emissions. The organisation should put an emphasis on full dependability
and dependence on environmentally sustainable products. It can also look at polythene and
related forms of plastics as substitutes for transporting products.

Encouraging paperless billing

Promoting paperless invoicing will help the business save money by reducing the amount of
paper required. It is possible to promote the digital prints for all credentials or flyers to be
sent to customers' registered electronic mail accounts. Switching to corrugated boxes for
goods transportation can also help Amazon keep its operations running smoothly.

Electric automobiles

Substituting to electric cars for product distribution will help cut back on carbon emissions. It
would also help Amazon's long-term economic viability. Taking the lead in various covered
market for the deployment of e-automobiles will aid the company in reducing its fuel
consumption.

Conclusion
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Amazon is one of the leading tech companies in the global market that uses different
strategies and planning to increase sales and profitability. To increase the market share
holding and sustainability in the business it is essential to understand the market needs. The
report has concluded that the company has to face competitive environment because there are
a lot of businesses that provide e-commerce facility. Also, it has been summarised that the
company has advantage in terms of technology and advertising strategies. The report will
help the learner to understand the implementation of different tools of analysis in the context
of Amazon.
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References

Al-Marzooqi, M.B. and Nobanee, H., 2020. Financial Analysis of Amazon. Available at
SSRN 3647442.

Amazon Value Chain Analysis, 2020. [online]. Available through: <https://research-

methodology.net/amazon-value-chain-analysis-2/>. [Accessed on: 1 March 2021]

Anderson, S., 2019. Success Secrets of Amazon. Jaico Publishing House.

DRIVE BUSINESS STRATEGY & COMPETITIVENESS WITH PORTER’S FIVE

FORCES, 2019. [online]. Available through:
<https://disruptivnation.com/2019/11/17/porters-five-forces/>. [Accessed on: 1 March 2021]

Flamand, O.J., Wisher, A. and Riley, S., 2020. Strategic Plan: Amazon.

Galloway, S., 2017. The four: the hidden DNA of Amazon, Apple, Facebook and Google.
Random House.

Hahn, Y., Kim, D. and Youn, M.K., 2018. A Brief Analysis of Amazon and Distribution
Strategy. The Journal of Distribution Science, 16(4), pp.17-20.

Ioris, A.A.R., 2020. Frontier Making in the Amazon: Economic, Political and
Socioecological Conversion. Springer Nature.

Kenny, S.E., 2019. Strategic Audit of Amazon. com, Inc.

Kuniko, M., Tou, Y., Watanabe, C. and Neittaanmäki, P., 2019. Co-evolutionary Coupling
between Captured and Uncaptured GDP Cycles: Cross Learning from Amazon and Finland
Models for Sustainability. International Journal of Managing Information Technology, 11(2).

Majed, S.Z., Nuraddin, S.H. and Hama, S.V.S., 2018. Analyzing the amazon success
strategies. Journal of process management. New Technologies, 6(4), pp.65-69.

Marom, S. and Lussier, R., 2020. Corporate social responsibility during the coronavirus
pandemic: An interim overview. Business and Economic Research, 10(2), p.250.

Polacco, A. and Backes, K., 2018. The amazon go concept: Implications, applications, and
sustainability. Journal of Business and Management, 24(1), pp.79-92.
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Smith, A.D., Rupp, W.T. and Offodile, O.F., 2017. Amazon. com, Inc.: Retailing Giant to
High-Tech Player?.

Virdi, I.K. and Shah, M.K., 2017. The Role of Advertising in Decoding the Digital
Consumer: A Case of Amazon and Myntra.