Running Head: ANALYSIS OF THE AMAZON COMPANY

ANALYSIS OF THE AMAZON COMPANY

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ANALYSIS OF THE AMAZON COMPANY

ANALYSIS OF THE AMAZON COMPANY

Amazon is arguably the leading corporate in e-commerce thanks to its diversified and

multifaceted approach in delivering content for its customers. Ranging from sales done through

its fifty centers across twenty-one States, Amazon boasts the best customer experience ratings for

goods and services rendered to its clients from the comfort of their gadgets. Amazon has a wide

range of goods, such as autonomous vehicles that have consequently received approval from

State Governments for operation.

The autonomous vehicles are more cost-effective as they operate as robotics. Clients can

comfortably operate the vehicles from their offices and homes, in goods delivering. The biggest

advantage is that it saves time from constant travelling, enabling one to perform other task which

would otherwise not be possible.

Customers are welcomed to purchase these autonomous vehicles available from all our fifty

centers across the twenty-one States. The vehicles’ prices are 7% less of the market value since

the company duly covers for taxation costs for the customer. Amazon uses strategy that is

referred to as collective diversification which is based on supporting technological capabilities

for business success and following a value leadership master plan which is directed at

contributing the optimum value of its customers at cheapest price possible as well as swaddling

its business around the shoppers where they are able to access the portal for online shopping

requirements.

However, this strategy has paid greatly as it is evident in the certitude that this online company

has grown to greater heights to a point of becoming world’s largest online retailer and has

constantly been in the forefront in the market sections in which it functions at. To sustain this

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strategy, amazon has laid several measures such as high discounts for its consistent shoppers,

there is ensuring of timely deliveries and renouncing off levied shipped goods. This company

also uses massive data inquiry as a instrument to investigate on shoppers behaviors where it uses

customers browsing history goods that one has purchased over time thus enabling it identify

what consumers want more and therefore modify its master plan appropriately.

PESTEL analysis refers to a strategic management instrument which is used to recognize the

external factors of a business which includes political, economical, social, technological,

ecological and legal factors that assists in creating conditions of the small or prominent

surrounding such as e-commerce firms. Through this analysis, the agencies rather the company’s

administrator can point out the most remarkable opportunities and threats deployed on external

factors in an enterprise. These factors also helps to disclose the importance performance

expansion much more merchandise to reinforce the worldwide broadening of online shopping.

These will help the company to overcome competitions which relates to large and great firms

such as Google and Microsoft.

Political factors are of the aspects of the PESTEL analysis model which functions alongside

governmental control, it centres on government pursuit and its consequences enterprises micro

and macro environments. External political factors that influences the functioning growth of

Amazon Company includes political welfare of developed nations such as United States, this

environment enhances a chance for the firm to enlarge its enterprises in already developed

nations. Such state aid helps the Amazon to continue increasing its facilities in relevant markets

as well as advancement in technological services and online growth and expansion of industries.

Therefore this is an opportunity.

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Another aspect considered in PESTEL analysis model are the economic factors. Amazon mostly

handles its services online and therefore its production depends on matters of the economies.

Economic solidity of grown markets mostly in Unites States is seen as an opportunity as it

increases the possibility of success of the firm. Although there is an opportunity in progress of

these markets as a result of firmness in these countries, there is also a threat especially when

there is possible economic slowdown for instance in China which has the largest markets that

Amazon is progressively wants to penetrate. This therefore poses a big threat in advancement

and spread of this firm.

Sociocultural changes are also causes of general performances of Amazon company as an online

seller and supplier of technology wares and services, these trends causes transformations of the

company to sable to supplies services that are well suit customers and online shoppers. These

changes leads increased riches discrepancy which leads to increasing gap between the weathier

and poorer in the country. This is considered as a threat as there is probable sluggishness of

expendable income levels. However additional level of trading creates opportunities for

developing the e-commerce enterprises as it expands potential success of growing markets

through internet as many customers prefer to buy or purchase products through internet due to

demographic factors. Therefore this analysis will help to indicate the advantages of orienting on

ways of market penetration and growth in most the developing nations.

Technology is one of the aspects that has led to growth of Amazon firm over a period of short

time as it has been the central proponent on its growth. These technological advancements

affects both small and large business environments though increased regulation of information

technology means. This is an opportunity though introducing of new computing technologies can

help boost internet supply productiveness and reduce operative cost. However, increased

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cybercrimes as a result of advancement in technology poses a major disaster as it threatens the

status of the shopper experience as well as the uprightness of the online retail firm. This calls for

a serious outlay of various ways and better ways to invest on technological plan that is

analytical to the company in long run despites automation-related issues in the industry.

Therefore its necessary that a firm such as Amazon to have refinements of its technologies to

ensure security of the shoppers who purchase commodities or require services through the

internet.

Although Amazon is an online enterprise, it is also influenced with natural environment. These

relates with ecological changes over different regions geographically. Ecological factors

showcases several opportunities such as increased attentiveness in environmental plan where it

has chances to raise its environmental influence in reaction to the increased interest in these

schemes. Expansion of approval of low-carbon situation has also created an opportunity to the

this firm as it improves its common outlook as an administrator in the e-commerce industry.

Through this the company can implement considerable energy saving strategies in its

performance for this motive. Increased importance on firm feasibility is as well an opportunity.

Higher feasibility excellence can help to better environmental impact and build up the Image of

the company.

Another external factor is legal factor that influences the development and growth of internet

based retail firms such as Amazon it the United States. These factors includes increased product

adjustments which is an opportunity for a firm like Amazon to enhance and have growth.

Increased goods management is brought about as a result of social demands on buyer security.

Through this Amazon Company have a chance to grow through sharpening of efforts to

minimize fake selling of goods on its online shops. Another legal external factor that may help

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firms such as Amazon to grow is through changes in import and export directive. This can be

done through increasing its worldwide operations to obtain the expanding potential of suppliers

to access foreign sellers.

However there are forces that causes the business environment to be so competitive and which

can lead to high profits. These are factors that when looked upon can help have a perfect rivalry

with competitors thus leaping competitive advantage. These forces include; competitive rivalry,

this focuses at the firmness of the competitors as well as the number of opponents the firm has.

When there is aggressive rivalry, the firm is forced to sell commodities at hostile price cuts as

well as creating huge impact on supplies campaign. Although there is high rivalry in marketing

of goods among different competitors ,there can also be there high profits and greater strength if

the competitive rivalry becomes minimal between the firms where no enterprise want to sell

what the firm is selling. Through this a firm such as Amazon can really do well on markets and

in return grow it popularity worldwide. This can be assessed as high rivalry.

Secondly, supplier power is also another force in business management that also help to enhance

and increase profitability in the most of the firms. This force is decided by how peaceful it is for

distributors to hike their prices of the products they are selling, how distinctive the product or a

service is. Through this firms such as Amazon who might have uniqueness of their products are

more likely to have an advantage over the rivals as they have stronger position and ability to

reach to the consumers through online marketing and advertisements of their products due to

high linkages and knowledge on how switch to various prices and retain their consumers, for

example, the firm provide their products and services at discounted price for their mutual

customers thus ensuring that the customers remain loyal to the supplier rather than shifting to

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other firms for a similar commodity or services. This is a moderate force as it doesn’t create stiff

competitiveness.

Consumer power, is another form of force in management of an enterprise. A firm which has

many customers has more power and therefore more profits are gained in comparison to the

rivals. An enterprise which has few consumer, they are able to control the prices for the goods

and services they receive thus little profits obtained. These customers too can switch to other

firm which has the products and services but a cheaper price. This cause losses. In Amazon

company, due to high number of customers for their commodities therefore there is high profits

since buyers can’t dictate the prices for the services. This causes an advantage in such firms

which run their services online over other firms. This force is rivalry.

Threat of replacing also is a force used in the management. This involves the uniqueness of the

services by a firm and which cannot be substituted manually as this may weaken the position and

pose threats on effectiveness of the firm. Threat of new entry is also a type of force in a firm

which is determined by the time and cost of entry, the expert’s knowledge, cost advantage over

different products and services as well as barriers to entry where if a firm has powerful and long

lasting blockade to entry may have advantageous position over other firms.

Internal analysis refers to comprehensive inspection of a firm’s internal constituents, both

physical and untouchable, such as resources and assets. Firms such as Amazon has strengths

which makes it competent in business, this resources include organizational resources where it

has friendly linkages in the internet with customers. This online buying has made the company to

be more steps ahead than its rivals and has made the firm to be able to answer to its customers

more efficiently and effectively. Also, there is well grounded infrastructure, low cost design

which has resulted to reduced prices with which the combination with wider variations has led in

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good consumer experience, unbiased sellers where Amazon arbitrators who sell their products

through its sites and mostly offer goods that are present on the platform retail part.

Firm competence refers to set of certain capabilities and understanding that sets a company away

from its rivals .These competences allows a firm to excel in the market part and largely outdo its

rival in terms of income and buyer contentment. These core competences changes a company

from its contention and generates a firm’s competitive advantage on the market. These refers to

set of skills in some pursuit either corporal or financial benefit (Y Zhang, 2016). Some of these

competences of a firm include compatible high standard, Amazon remains consistently high due

to its high network connection globally as it easy to use and there is better organizational options

for the new buyers in the platform which makes the firm to be a level higher than its competitors,

unparalleled value where most of firms use outlay for easy and simple file split this not because

it makes these jobs easy but because its cost is largely seen as unbelievably good for its services.

These has led to growth of Amazon Company in both developed countries and developing

nations thus high development on e- commerce. Continuous innovation has led Amazon to

dominate the online firms which carryout inline or internet marketing and supply of their

products. These leads to total competence model that makes it outstanding. Triumphant

marketing, where buyers can access abundance of different products and services at the comfort

of their home as these online marketing firms such as amazon has improved their services which

makes them more accessible to the customers. Great customer services, Amazon is conceivably

the highest online brand globally, and its success comes in greater part from its unique capacity

to supply superb customer services.

The VRIO Analysis on Amazon

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The VRIO analysis complements the PESTEL analysis. The VRIO is commonly used by

organizations and enterprises to make an evaluation of their situation within the operations of the

company or the enterprise. The resources that the company possesses, the type of competitive

avenues that the company is situated and the possible mean through which the company can be

improved is also evaluated through the VRIO analysis. The resources used in the VRIO analysis

are vitally important as it helps the department responsible for the analysis develop data based on

the findings from their analytical approach. This kind of approach allows for the company to

develop the bigger picture in their strategic development. Notably, the same has been employed

within the Amazon company. This has been seen through. According to Lesley (2019), Amazon

has been able to employ the VRIO analysis thus cementing its position in the global market. This

has consequently enabled the global giant to ward off competition from other related businesses.

This VRIO analysis, commonly associated with Jay Barney due to his assertions on the interior

analysis of a company has been effectively operated within the setup of Amazon company. The

major stakeholders within Amazon have been able to run their in-house operations through

laying goals and setting strategic objectives on how to better the company services as well as

improve the bar in as far as their avenues for customer satisfaction is concerned. This has

enabled the company to compete against global players such as Costco, Walmart, Google,

Microsoft and Apple (Lesley, 2019). The latter institutions have a strong customer base around

the world. However, the strategic plans outlaid by Amazon has enabled them to go toe-to-toe

with the rest of the global masters.

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Figure 1.1: A comparative chart demonstrating Amazon’s use of the VRIO analysis.

From the data provided above, Amazon ticks highest in the following areas; high global brand

quality, high market capitalization, international network of the affiliated members through and

expanded international market and artificial intelligence capabilities. The latter has been hailed

as one of Amazon’s greatest achievement. This has largely been attributed to the noble

inventions that the company has embarked on. The transformation of autonomous vehicles has

been at the helm of the technologically advancing world. Amazon has recently approved the use

of artificial intelligence in developing AI-powered cameras on delivery vehicles. This is a big

gain for the company as well as the other business avenues. The primary advantage in this case is

the security enhancement made by AI. Musil, (2021) avers that the AI cameras whose

development can be traced from the transportation management or department within Amazon

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startup is Netradyne who issued a warning about the potential safety issues. This guarantees the

safety of goods delivered thus maximizing on the profits.

The TOWS analysis.

The TOWS analysis or simply the TOWS matrix has been deemed as an extension of the SWOT

analysis. The latter has been extensively discussed in this paper above. The TOWS analysis

concentrates larger on the strengths and weaknesses that a company has. In Amazon’s case, the

company has the latter four issues addressed in the VRIO analysis forming its strong pillars. The

artificial intelligence perspective has been outstanding within the development of Amazon. This

is a field related to technology that has been embraced by the global family.

TOWS MATRIX External Factors

Opportunities Threats

Internal factors

Strengths Strengths/Opportunities Strengths/Threats

Weakness Weakness/Opportunities Weakness/Threats

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Table 1.1: The TOWS Matrix

Inbound logistic Operations Outbound Marketing Services

logistics and sales

infrastructur

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REFERENCES

Get Lucidity (2020): An introduction to TOWS Analysis. Retrieved from

https://getlucidity.com/strategy-resources/an-introduction-to-tows-analysis/#:~:text=A

%20TOWS%20Analysis%20is%20an,and%20the%20Threats%20with%20Weaknesses.

On 15th April, 2021.

Musil, S. (2021): Amazon plans to install AI-powered cameras in delivery vehicles. Retrieved

from https://www.cnet.com/news/amazon-plans-to-install-ai-powered-cameras-in-

delivery-vehicles/ on 15th April, 2021.

White, L. (2019): Amazon VRIO Analysis – Competitive Advantages, Core Competencies.

Retrived from https://www.rancord.org/amazon-vrio-analysis-competitive-advantages-

core-competencies on 15th April, 2021.

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