Discuss about the Amazon Company.
Amazon is one of the largest American multinational companies. The company provides various products like clothes, grocery, and many products. The products that are offered by the company are of cheap price that enhances the satisfaction level of the customers. Amazon was founded by Jeff bozos in 1944 and headquarter is in Seattle. It is one of the marketplaces where people sell and purchase various types of products and services.
The mission of the company is to enhance the shopping experience for the customers so they can feel satisfied and happy. Fast delivery services were introduced by the company that helps to increase the overall sales of the company. The product line of the company is more than 22 segments with more than 136 billion revenue. The biggest competitor of the company is Alibaba who sell same products as Amazon in the market (Amazon, 2015).
The activities of the organization are conducted by considering three segments like North America, international and web services. Customers are the main assets of the company. Various discounts and benefits are offered to the consumers so that they can be attracted towards the products and services offered by the company.
Political factors
It is seen that there are many international policies which become a hurdle for the growth. To expand in various countries it is difficult for the company as there are many online policies that should be considered. Many rules and regulations also interfered in the e-commerce shopping. The Internet is one of the biggest sources for shopping and consumers are also so much engaged in online shopping. The government gives assistance towards the online industry. Due to the high competition and many companies conducting the same activities gives major threat to Amazon. For the company, the opportunity is that the government policies are many but easy to conduct the activities through online (de Almeida Rocha, Pinto, Boubli and Grelle, 2015). The government also imposed many rules and regulations on cyber security.
It is an opportunity for the industry to enhance the business in digitally secured payments and also public feel safe to purchase through online (Cozzolino and Rothaermel, 2018).
Economic factors
There are many problems that are caused due to the fluctuation in currency. As the company is based IN US then the major share is of US dollars. The economy of scale of the company is low and is improving so that sales and revenue can be enhanced. The disposable income of the population is increased that gives a chance to the company to penetrate the market easily. The recession in China is also one of the major concerns for the company as China is the largest market and Amazon also wants to penetrate but this causes a great threat to the company.
Socio-Cultural factors
In many areas, it is seen that the ethical factors and regional values have restricted that limit the sale of the products. Just because of the mobile technology and digital technology the sales have been enhanced. Many buyers are having mobile phones to purchase the products. The change in the demographics of the consumers also affects the e- retail sector (Chopra, 2017). The high-income group people want the best products and also the delivery should be on the door. So this type of convenience is provided by the company to its customers. Amazon gain advantage from the changing consumer demographics. The high-income range also creates the gap between the income groups; this causes a great threat to the company.
Legal factors
To enhance the activities in the global market it is important to consider legal compliances. It is essential for the company to remain compliant with the laws. The company gives emphasis on making separate teams so that the legal issues and challenges can be analyzed and evaluated easily. Enhancement of the rules and regulations also affects the growth of the society and it offers an opportunity to the company to enhance the sales and revenues. The company also enhanced the goodwill by considering cooperate social responsibility (Newcombe Rath, Zhang, Munteanu, Brooker and Deardeuff, 2015).
Technological factors
Technological advancement has given a major role to increase overall sales and revenue of the company. Innovation in technology has given success to the company. The company conducts the activities on the online platform. The company searches for innovative ways to compete with the competitors. But increase the in the cyber-crime is the threat to the company as it helps the customers to spend online. So by this factor, the impact is seen in the overall sales and revenue of the company (Ruiz, Winter, and Amatte, 2017).
Environmental factors
Amazon gives cloud storage that reduces the risk of the storage device. Sustainability is one of the major factors that are present in every country. To increase the goodwill and image in the market the company sues CSR activities (Salam, 2016).
Competitive rivalry – High
It is analyzed that the rivalry in the online retail industry sector is high. This is due to many players prevailing in the market. Traditional brands are also offered an online sale that helps to compete in the competitive environment. The competitors of the company are Alibaba, flip kart and eBay. For Amazon, it is not just that many competitors are giving tough competition but also many online stores are fighting to grab the market share (Stratopoulos, 2016).
There are various online retailers that give emphasis on targeting particular segment products like daily products, electronics, and apparels. There is a high availability of the substitutes in the market. All of this has given an intense rival competition to the company
Bargaining power of customers – High
Amazon is known as a customer-centric company and gives emphasis on enhancing the satisfaction level of the customers by offering quality products. The company sees that the products should be delivered on time and also the replacement should be done on time so that the buyers are satisfied with the services offered by the company. Buyers have a strong bargaining power as there are many other substitutes or competitors present in the market. Customers think to switch easily by purchasing products form retail store as every product is available in retail outlets (Haucap and Heimeshoff, 2014).
Bargaining power of Suppliers – Low
The company always has the hand over the suppliers. There are many suppliers available for the company and they also follow certain rules and regulations. The company ensures that the suppliers should conduct the activities under certain ethical working principles.
The supplier has no right to take forward integration. The sale of the product increases as there are large numbers of suppliers that are ready to supply the products of the company to the consumers. The network of the company is strong that helps to control the bargaining power of the suppliers (Kantor and Streitfeld, 2015).
Threat of substitution – high
In the company, the threat of substitution is high as there are many firms who offer same products to the consumers like Wal-Mart and flip kart. The threat of substitution is high for Amazon as there are many substitutes available for the customers and also the switching cost is low for the consumers.
All the factors give impact on the threat of substitutes as the company has a strong force. If the customer faces any bad experience then it will drive the customer’s away from the retailers. At the same time, there are many people who prefer to purchase products from retailers as compared to online to satisfy their needs. This all factors give high substitution for the company (Kang, 2015).
Threat of new entrants – low
It is seen that to create an online store is not difficult, but to reach on the level of the company is difficult as it requires a lot of investment and time. The growth in the digital sector has brought a drastic change in the retail sector as consumers can purchase the products by sitting at home. There are various brands that have entered into the retail segment. Many international and domestic brands have emerged.
It is seen that there are many brands that can enter the market but will not be able to take over the company. It requires a large investment in warehousing, marketing, logistics and various other factors. Also, there are many factors like brand and time image that is difficult for every organization to enter the market so that the large market share as compared to Amazon can be grabbed. This threat of low entrants is low for Amazon (Peer, Vosgerau and Acquisti, 2014).
Social activities
Amazon is one of the largest companies’ globally. It is seen it is important to take into consideration social activities so that the goodwill can be maintained in the market. The company helps to attract many customers if the company considers social activities. The company should use predictive and sentimental analysis so that the target segment can be attracted towards the products and services of the company. It is important to target the customer on the basis of attractive online activities of the organization (Farrell, Grenier and Leiby, 2016).
Web services
The company web services were established on a small cloud platform that gives assistance to the online information of the company. In the present scenario, the web services that are provided by the company is large than google. The company should give emphasis to maintain the cloud system so that the information of the customers can be maintained in a secured manner. If proper management is considered to manage cloud system then the company can enhance the services in an effective manner. Proper internet connection should be there so that the customer can purchase products easily (Dolata, 2017).
Offer value for money
The company has many reasons for attaining success in the business environment. The services that are offered to the customers should be value for money as it helps to enhance the satisfaction level of the customers. Customer avail the services of the company as they trust the products and services offered by the company. The company should also consider innovative approaches so that the customer’s satisfaction level can be enhanced. Amazon should give emphasis on offering value for money so that trust can be maintained by the customers towards the products and services of the company (Dallas, Ponte, and Sturgeon, 2017).
Adopt the latest technology
The company gives emphasis on developing the technology so that the customers can purchase the products and services easily. It is essential for the company to consider the latest technology as all the activities are conducted on the online platform. If there is no proper technology adopted by the company then the negative impact can be seen in the sales and revenue of the company. Innovative technology helps to operate the activities in a smooth manner (He, 2015).
Conclusion
By evaluating the report it is concluded that the company has attained a large market share and it is important to consider innovative technologies. Innovative technologies help to enhance the sales and revenue of the company. The current market environment gives emphasis on quick delivery and also on logistics. The company has a pressure to expand the operations and has to Target India and China that will help to earn more profits. It is seen that in the market ecosystem the company is a leader that consider calculative strategy so that proper track can be kept on the activities.
In the first phase of the report pestle and porter, analysis is discussed. In the last phase of the report, four recommendations are discussed that will help the organization to grab large market share and also to enhance the overall profitability of the organization.
References
Amazon, E. C. (2015). Amazon web services. Available in: https://aws. amazon. com/es/ec2/(November 2012).
Chopra, S. (2017). The Future of Same-Day Delivery: Same as the Past?. Kellogg School of Management Cases, 1-2.
Cozzolino, A., & Rothaermel, F. T. (2018). Discontinuities, Competition, and Cooperation: Coopetitive Dynamics between Incumbents and Entrants. Strategic Management Journal.
Dallas, M., Ponte, S., & Sturgeon, T. (2017). A Typology of Power in Global Value Chains (No. 91). Working Paper in Business and Politics.
de Almeida Rocha, J. M., Pinto, M. P., Boubli, J. P., & Grelle, C. E. V. (2015). The role of competition in structuring primate communities under different productivity regimes in the Amazon. PloS one, 10(12), e0145699.
Dolata, U. (2017). Apple, Amazon, Google, Facebook, Microsoft: Market concentration-competition-innovation strategies (No. 2017-01). Stuttgarter Beiträge zur Organisations-und Innovationsforschung, SOI Discussion Paper.
Farrell, A. M., Grenier, J. H., & Leiby, J. (2016). Scoundrels or stars? Theory and evidence on the quality of workers in online labor markets. The Accounting Review, 92(1), 93-114.
Haucap, J., & Heimeshoff, U. (2014). Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?. International Economics and Economic Policy, 11(1-2), 49-61.
He, Z., 2015, August. External Environment Analysis of Commercial-use drones. In 2015-1st International Symposium on Social Science. Atlantis Press.
Kang, H. (2015). Toward Entrepreneurial Success: A Strategic Planning and Analysis Model. Business Journal for Entrepreneurs, 2015(3).
Kantor, J., & Streitfeld, D. (2015). Inside Amazon: Wrestling big ideas in a bruising workplace. New York Times, 15, 74-80.
Newcombe, C., Rath, T., Zhang, F., Munteanu, B., Brooker, M., & Deardeuff, M. (2015). How Amazon web services uses formal methods. Communications of the ACM, 58(4), 66-73.
Peer, E., Vosgerau, J., & Acquisti, A. (2014). Reputation as a sufficient condition for data quality on Amazon Mechanical Turk. Behavior research methods, 46(4), 1023-1031.
Ruiz, R., Winter, R., & Amatte, F. (2017). The leakage of passwords from home banking sites: A threat to global cyber security?. Journal of Payments Strategy & Systems, 11(2), 174-186.
Salam, M. T. (2016). Devising a Business Model of Amazon’s 1995-2004 Journey. Browser Download This Paper.
Stratopoulos, T. C. (2016). Expected Duration of Competitive Advantage Due to Technology Adoption. In Academy of Management Annual Meeting, Anaheim, CA. Available at https://papers. ssrn. com/sol3/papers. cfm.
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