Capstone

7

External and Internal Environments

Belinda King

Strayer University

BUS499 Business Administration Capstone

Doc

11/15/2020

External and Internal Environments: Amazon Corporation

Part 1

Both external and internal environments highly influence Amazon corporation in their daily operations. PESTEL analysis summarizes the elements of the general environment that affect Amazon company, just like any other given organization, and this paper will focus on two segments of the analysis; Economic and Technological segments. The above segments rank the highest in influencing the company, as discussed below.

Economic Segment

Amazon has worked relentlessly to boost the world’s economy by introducing new production methods through technology to create more job opportunities. Continued use of technology creates more jobs compared to laying off workers who depend on traditional methods of production, as argued by critics. “There has been the creation of additional jobs recently in both the USA and UK at new Amazon facilities” (Onyusheva, I., & Seenalasataporn, 3). Amazon’s diversity and expansion to the grocery sector created more jobs and heightened the stock market uncertainty to stabilize the global economy and compete with organizations such as Walmart, whose share price in the stock market had dropped drastically. The company’s way of capitalism has greatly influenced the future productivity in growth since the company seeks to reinvest the profits and create new markets through research and innovation.

Technological Segment

Technological factors greatly influence Amazon’s operations by enhancing the effectiveness and efficiency in service delivery. The corporation depends on technology to provide quality products and services to customers and effectively deal with the highly globalized and interconnected supply chain’s demands. Technology boosts the operations of Amazon Company in their logistical operations, such as the introduction of the ‘Hub’ in 2017, a locker system to ease the dropping off of services and products to customers even in their absentia. Continued use of technology has influenced Amazon’s research and development and is a key factor in maintaining innovation and retaining the company’s competitive advantage. Technology expanded the company’s workforce in the UK to more than 24,000 staff by 2018, and a recent announcement hints the workforce would double the by 2020. Critics argue that the influence of technology led to the loss of jobs, but this can’t be justified. Amazon seeks to increase its technological proportions to create more jobs, enhance effectiveness and efficiency in service delivery, and offer maximum satisfaction to its worldwide customers. 

Part 2

The most significant forces of competition in Amazon Corporation are the competitive rivalry or competition and bargaining power of buyers or customers. Competitive rivalry forces emanate from both smaller retail stores and large multinational corporations like Walmart. The global market trends of the e-commerce industry expose Amazon to severe competition from all over the world; thus, the company must remain focused on providing quality services to customers to maintain its top slot in the global market. The competitive force encourages Amazon to invest much in technology and innovation to compete with rivals. Competition in the company is brought by the high aggressiveness of competitor firms, high availability of substitutes, and low switching costs. The company addresses competitive rivalry forces by capitalizing on competition strategic priority to guarantee the firm’s long-term competence. 

The bargaining power of buyers’ competitive force influences the larger part of activities in the organization by focusing on customer satisfaction every time. According to the company’s mission statement; “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience” and vision; “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online,” customer-centricity is key. To address the buyers’ issues, Amazon produces high-quality information to customers to increase consumer trust by giving quality information and switched low costs to accommodate all the customers’ needs regardless of the socio-economic status (D’Agostino, 2).

Part 3

Addressing the issue of competitive rivalry in the organization, Amazon might improve the existing products and services and clarify its brand and messages to customers to maintain uniqueness in the market. The company might also introduce new unique products in the market to ease competition from business rivals. Focusing on the customers and employees’ needs would be vital in improving the company’s service quality. Lowering the price of products and services would influence the buyers’ bargaining power and improve the company’s ability to address the five forces of competition shortly. 

Part 4

The external threats facing Amazon Corporation include aggressive competition from other firms such as Walmart, cybercrime, and imitation of products and business models. The most severe threat is cybercrime because the growing global technology use increases the chances of cyber-attacks and loss of organization’s data and information to fraudsters. Business rivals partner with cybercriminals to alter information and access the company’s crucial data and business hence producing similar products. Amazon’s opportunities include external strategic factors that the company can employ to improve competitiveness against giant organizations in the e-commerce industry. The company can expand physical stores to increase coverage, improve technological measures and organizational policies, and embrace self-driving technology. The acquisition of other e-commerce firms is an opportunity Amazon should invest in. Amazon should deal with cybercrime by investing much in cybersecurity and employing experienced and professional staff conversant with technology to manage and maintain a high cybersecurity level in the organization.

Part 5

The corporation’s most significant strengths include the strong brand name, customer-oriented and differentiation, and innovation. The strategy the company should invest in to take maximum advantage of the strengths is to be solutions-focused. Being solutions-focused means the company will always strive to provide solutions for the challenges that may arise, and the company crew should not be afraid to take risks when looking for solutions. A solutions-Focused strategy would enable the organization to put more energy and focus on the strengths rather than weaknesses, thus attaining organizational goals and objectives. The most significant weakness is an easily imitable business model through cyber-attacks and the commonality in its dominance in the digital world. The company’s tactic to avoid imitation of the business model is to encourage differentiation and invest in producing unique products. 

Part 6

Amazon Corporation is rich in resources, including qualified and experienced professionals and Information Technology experts who offer exceptional services to the customers to ensure that the company remains a market leader in the e-commerce industry. Other company’s resources include the assets that facilitate service deliveries to customers. The corporation’s capabilities include offering a wide variety of products and services by prioritizing customers’ needs and preferences. Amazon operates an efficient supply chain to fulfill orders and provide maximum satisfaction to customers by providing recommendable customer service. The core competencies of Amazon are; distribution, creating platforms, and tools for people as specified in the organization’s mission statement of being “Earth’s most customer-friendly company” (Brevini & Swiatek, 1).

Sources

1. Brevini, B., & Swiatek, L. (2020). Amazon: Understanding a Global Communication Giant. Routledge.

2. D'Agostino, J. L. (2018). The Impact of E-commerce on Brands: An Analysis of Amazon and a Plan for the Future (Doctoral dissertation, University of Oregon).

3. Onyusheva, I., & Seenalasataporn, T. (2018). Strategic Analysis of Global E-Commerce And Diversification Technology: The Case Of Amazon. Com INC. The EUrASEANs: journal on global socio-economic dynamics, (1 (8)), 48-63.