PESTLE Analysis of Amazon
It is known in the whole world that what exactly Amazon is. It is well known because it is the biggest online retailer in the market today and is obviously a pioneer in online space. It was started as a book store during the time of its inception it grew to be the largest retailer and became diversified because of its selling brands in clothing, gadgets, furniture etc. It now sells everything online. Now days Amazon has expanded globally and works all across the world via combinations of the local portals and globalized and logistic platforms (Amazon, 2018).
- Political Factors: Amazon is benefitted from the political stability point of view. This type of situation develops the chance for the firm to increase the business in countries which are developed.
- Economic Factors: It is very likely that Amazon would increase and grow in the developed countries and become stable in such markets. Such type of condition reduces the issues with respect to the economy in the macro environment and hence, reducing the risks for the firm to operate online and expand its business. Amazon also has growth options in the developing countries like Malaysia, India etc(Gupta, 2013).
- Social Factors: Wealth disparity increase means the gap between the rich and the poor in multiple nation increases. This is the situation which is a threat to the firm with respect to the possible stagnation of not reusable income stages and the avoidance of the macro environment for business done online. In case of the higher disposable level, it is feasible in rising up the revenues of the business in e-commerce industry. But anyway, the rising degree of consumerism developed new chances for the firm.
- Technological Factors: The firm has the threat of quick technical changes or it being obsolete due to which the firm faces pressure to regularly keep on developing new technical assets. This situation is like a chance in optimizing the industry and the business.
- Environmental Factors: The firm has the chance to progress the environmental effects in response to increasing interest in environment programs. The firm’s CSR could make some changes(Rastogi & Trivedi, 2016).
- Legal Factors: The rising up of the product regulation is foreseen as the outcome of the societal demands on industry and the firm. This factor develops chances for the firm for intensifying the hard work in decreasing the counterfeit sale online retail business website.
- Rivalry in business: The firms in retail business are usually aggressive and they are very competitive for each other. Amazon’s biggest rival is Wal-Mart which is expanding its e-commerce website too. Hence, Rivalry is high (Omsa, Abdullah, & Jamali, 2017)..
- Bargaining Power of buyers: The users have all the available ways from where they can get access to high quality products from the retailers who sell them. This can affect Amazon as the users can buy products from the other sites too like Wal-Mart. There are high alternatives available in terms of the substitutes. Hence, the buyer’s power is high.
- Bargain power of suppliers: Small population gives the power to the suppliers for imposing force on the firm’s business. Hence, the supplier power is also very high.
- Substitutes Threat: As discussed that Wal-Mart is one of the top rivals of Amazon, it is designing it website and expanding it business as well as the process on which it sells are very competitive(Tehrani & Rahmani, 2014).
- New entrants: E-commerce business is rising day after day as the users’ too wanted to buy each and everything online. There are a lot of new entrants in the market. Hence, Amazon is facing force day by day with the rise of the new firms online(Indiatsy, Mwangi, & Mandere, 2014).
The nature of competition if talked about, it is moderate for Amazon as it is already the biggest retailer across world. Yet, it has to maintain its pace so that Wal-Mart could not make it to the top as Wal-Mart is expanding itself and trying its best to top the charts.
Strategic Groups
Source: (Slideshare.net, 2013)
According to the diagram above, the strategic groups will have Amazon, EBay, Overstock.com, B& N.com and Target and Wal-Mart.com in the groups. There are so many competitors if Amazon is compared on a larger basis but these are the top rivals of the firm i.e. Amazon.
E-Commerce Sales
Source: (Fortune.com, 2016)
According to the diagram given above, Amazon is at the top these days but the competition in between these companies are moderate (McGee, 2014). Wal-Mart is coping up with the speed to match Amazon but is still behind whilst other companies are not near to the firm at all. Hence, it can be said that the major competitor of Amazon is Wal-Mart.
Porter Analysis of Amazon
It can easily be said that the E-commerce industry in which Amazon operated is very dynamic. There are a lot of trends which keeps on coming in the market as this is the industry which is growing day by day with many new innovation and changes. The consumers interact with the Artificial Intelligence in terms of technology when they buy things online. It is dynamic as it gives the customers the type of facilities which gives the users the huge satisfaction. People can buy from their mobile phones now days. They even get the products delivered on the same day.
In the recent studies of development and growth of E-commerce retail industry and sales, there were proofs of important demand side factors that help in explaining the structural changes in the e-commerce industry. The data of 1999 Quarter 4 to 2010 Quarter 3, the results which are econometric indicates the e-commerce sales elasticity of 9.36 and non e-commerce sales of 2.63. This displays more dynamic and competitive market in terms if internet and online. Evidence of more demand stability for e-commerce sales is also provided (Ramcharran, 2013).
Conclusion
In this report, the company named Amazon’s strategic Analysis is done. It mainly focuses on the PESTLE and Porter analysis which gives the idea of the macro environment and the competitive market analysis of Amazon. Later, the strategic groups are also discussed which states that Wal-Mart is the biggest competitor of the firm and the other firms are also trying to cope up in the market. In the conclusion, it can be said that Amazon operates in a very dynamic industry i.e. e-Commerce which will keep on growing with the use of internet day after day.
References
Amazon. (2018). Get To Know Us. Retrieved June 10, 2018, from https://www.aboutamazon.com/working-at-amazon/get-to-know-us
Gupta, A. (2013). Environment & PEST Analysis: An Approach to External Business Environment. International Journal of Modern Social Sciences , 2 (1), 34-43.
Indiatsy, C. M., Mwangi, M. S., & Mandere, E. N. (2014). The Application of Porter’s Five Forces Model on Organization Performance: A Case of Cooperative Bank of Kenya Ltd. European Journal of Business and Management , 6 (16).
McGee, J. (2014). strategic groups. Wiley Encyclopedia of Management .
Omsa, S., Abdullah, I. H., & Jamali, H. (2017). Five Competitive Forces Model and the Implementation of Porter’s Generic Strategies to Gain Firm Performances. Science Journal of Business and Management , 5 (1).
Ramcharran, H. (2013). E-Commerce Growth and the Changing Structure of the Retail Sales Industry. International Journal of E-Business Research , 9 (2), 46-60.
Rastogi, N., & Trivedi, M. K. (2016). PESTLE TECHNIQUE – A TOOL TO IDENTIFY EXTERNAL RISKS IN. International Research Journal of Engineering and Technology , 3 (1).
Tehrani, M. B., & Rahmani, F. (2014). Evaluation Strategy Michael Porter’s five forces model of the competitive environment on the dairy industry. American Journal of Engineering Research , 3 (5), 80-85.
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