MGT450 3

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ENVIRONMENTAL ANALYSIS

Amazon Inc- Environmental Analysis

Student’s Name

Institution

External Environment

General Environment

The external environment is made up of various elements, and the first element is political factors; Amazon benefits from the political stability of other nations, which gives it a chance to expand its operations. Political factors are an opportunity for Amazon to expand its operations. On the economic factors, the economic stability of developed nations and increase in disposable income are opportunities for expanding the business, and potential economic recession in countries like China is a threat to the business. Looking at social factors, a possible rise in online buying habits could increase the company's sales, but an increased wealth disparity could lower sales (Hitt et al., 2016). Technological obsolescence can be both an opportunity and a threat since it puts pressure on the company to advance but can also be a competitive advantage.

The environmental factors which affect Amazon include the rise of a carbon-free lifestyle which gives the business a chance to boost its image as a market leader in eCommerce. The carbon-free lifestyle is an environmental factor that aims to reduce pollution in the environment by reducing carbon emissions by businesses. Under legal factors, the changing import and export regulations allow the company to expand into nations with fewer trade barriers. (Hitt et al., 2016). The company is affected by the physical features in the transportation of goods since some mountainous regions are not accessible easily. Additionally, international trade allows the company to be a leader in the worldwide market by expanding into other countries under the global factor.

Industry analysis (Porter’s five force model)

The retailing industry can be analyzed by the five competitive forces proposed by Michael Porter. Amazon is in a very competitive industry and competes with retail giants like Walmart and competitive advantage because of good customer experiences and eCommerce. The rivalry within the company is a powerful force because of the aggressiveness portrayed by the firms in the industry, such as Walmart. They are increasingly improving their products and services to attract consumers ad stimulate sales. The company also gets competition from the highly available substitutes; for instance, many book stores offer a similar company. The customers of the company have high bargaining power because of the availability of information and substitutes. The customers have access to information regarding a wide range of online retailers, making it very easy for them to find alternatives and shift to other sellers. The bargaining power of the customers is a powerful force that cannot be ignored.

The suppliers control the supply of materials for the company and have a high bargaining power since there is a small population of suppliers. The suppliers are very few, and hence any changes in the pricing of the supplies could impact the business since they have no many alternatives (Onyusheva & Seenalasataporn, 2018). There is a threat of substitutes from other online retailers who offer similar products to Amazon at lower prices. The company is threatened by the low prices offered by competitors but can use that as an opportunity to provide affordable pricing for its products and services. There is a lot of competition in the industry. The industry is highly profitable and hence is very attractive for any other businesses who wish to get into the industry.

Strategy group Analysis

Amazon belongs to the technological leadership strategic group. The company has been able to harness the technology for its competitive advantage. The use of technology has helped the business lower its operation costs through streamlining costs such as fulfillment and shipping costs. It can use this strategic leadership to predict future demands in the economy and stay ahead in the market.

Internal Environment

Value Chain Analysis

The primary activities of Amazon include inbound logistics, operations, outbound logistics, marketing and sales, and services. The company does not have its products to sell, and hence suppliers can use the Fulfillment by Amazon (FBA) to store their products in the company's warehouses. In outbound logistics, the company uses various delivery methods such as DHL, UPS. Also, it has its planes and vans that give the company a competitive edge over its competitors. Amazon values customer service, which is the primary source of competitive advantage for the business (Hitt et al., 2016). The company thus markets its products through fast delivery, friendly prices, and good customer service.

The company also has other support activities that aid in producing its services, and the activities include infrastructure, human resources, technology development, and procurement. Amazon has put so much effort into the creation of an infrastructure that supports its e-commerce business. The Amazon Web Structure (AWS) infrastructure comprises edge locations, regions, and availability zones. Amazon has well-trained employees and uses its independent personnel and the temporary to rotate its workforce(Onyusheva & Seenalasataporn, 2018). The company also has policies that help recognize the efforts made by employees through rewarding them. The business uses technology in its day-to-day operations in eCommerce and updates its inventory in real-time using technology to match the count in the warehouses. The company keeps track of the inventory in warehouses and initiates a purchase when the inventory gets to a certain level.

Core competencies

Aamazon Inc has a few competencies which make it a preferred company by customers. One of the competencies is the ease of use and customer experiences; due to technological advancements, the company has offered its products on time. The customers that shop on Amazon on their online website do not have a lot of trouble navigating, and hence this makes it easy for them to add items to the cart and complete orders. The company also has fair prices compared to other retailers in the market. The firm's size gives it economies of scale that make it possible to sell at lower prices compared to the other firms competing with it in the market.

The firm's size is competency as well; the company can offer its products in different countries, which gives the company huge profits (D'Agostino, 2018). This makes customers prefer using Amazon because they can buy many items instead of ordering from different shops. Variety also makes sure that all economic classes are provided for in the products offered by the business. E-commerce helps customers get the products from the comfort of their homes and makes the business a preferred brand. Amazon’s brand image also helped the business have a competitive advantage since the business has been able to gain a competitive advantage.

Sustainable competitive advantage

References

Plan for the Future (Doctoral dissertation, University of Oregon).

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and

cases: Competitiveness and globalization. Cengage Learning.

COMMERCE AND DIVERSIFICATION TECHNOLOGY: THE CASE OF AMAZON. COM INC. The EUrASEANs: journal on global socio-economic dynamics, (1 (8)), 48-63.