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GLOBAL STRATEGY AND SUSTAINABILITY: A CASE
STUDY OF AMAZON.COM
 Table of Contents

Introduction 3

Critical analysis and evaluation of the External Environment 3

Critical analysis and evaluation of the Internal Environment 7

Critical analysis and evaluation of CSR and Sustainability 12

Evaluation of the implications of the External Environment Analysis, Internal Environment

Analysis and Sustainability Analysis and how they may impact the Industry and
Amazon.com 14

Recommendations for Global Development 15

Recommendations for Sustainability 15

Conclusion 16

References 17
Introduction
Amazon started as an e-commerce business that initially used to deliver books. In 1995, the
e-commerce giant came to the market as an online book provider. The business service and
products are highly appreciated by the customers and hence, the business quickly attained a
high consumer base. The business also focused on developing the business models for which
it expanded from a traditional online book store to an ecommerce site from where it delivers
every type of consumer goods. Then, the business expanded dramatically ranging its products
from books to all consumer goods. The business also focused on elevating units technological
performance for which the business developed multiple technological services like AWS and
many more. In this context, Amazon at present time is leading the list of top e-commerce
businesses throughout the globe. The present report examines the business environment of
Amazon. The external business environment is analysed through Porter's 5 forces model and
PESTLE model while the internal business environment is examined through VRIO and
Value chain analysis. In addition, the CSR activities practised by the concerned business is
also examined. Lastly, multiple recommendations are drawn for the betterment of business
sustainability and development.
Critical analysis and evaluation of the External Environment
As per Shtal et al. (2018), businesses get highly influenced by external factors like market
trends, competitors and others. In this aspect, the external factors affecting the business
operation of Amazon have been examined through two business models which are Porter's 5
forces and PESTLE models.
PESTLE model
The PESTLE model is traditionally used for analysing the impacts of the external factors
affecting the businesses as shown in the below figure.
 Figure 1: Application of PESTLE analysis model
(Source: Antamoshkina and Zinina, 2019)

Political Factors ● Presence of a highly supportive federal

governing body
● Adorable tax policies help businesses like
Amazon in clearing all taxes annually.
● Highly active parliamentary body for which
corruption rate is low benefits online businesses
like Amazon in facing low fraudulent activities.
● The implementation of Brexit allowed the
businesses of the UK to employ more candidates.
This helped the nation in increasing its
employment rate

Economic Factors ● The GDP in 2020 was degraded due to the Covid
pandemic which drastically changed the
consumer buying behaviour for Amazon (Statista,
2021)
● GDP has recovered in 2021 which changed
survival methods for the customers and has
increased the sales of the businesses
● The market share of Amazon in the global e-
commerce industry as recorded in 2019 was
52.4% (Statista, 2019)
● The recorded FDI of the US in 2019 was 246
billion US dollars which implies that the business
 attains a high revenue margin as the import cost is
lowered while attaining high exporting sales.

Social Factors ● Amazon has a vast consumer base with high

customer demands.
● Amazon invested millions of relief funds like
Right Now Climate Fund and others
● Supporting societies by recruiting more
employees and also by helping the society
children by offering multiple educating programs
in the US (Amazon, 2021).

Technological Factors ● The business operations of Amazon are primarily

driven by modern technologies which assist the
businesses in increasing their productivity and
efficiency.
● In technological activities, Amazon ranked in
fourth position surpassing Apple, Google and
Microsoft.
● Customers are highly benefited from the secure
environment of the Amazon platform.

Legal Factors ● Amazon follows the Employment act 2008 for

providing huge employment growth to its
employees.
● The Equality act 2010 is also followed by
Amazon for avoiding discriminating factors in the
working environment.

Environmental Factors ● Amazon implemented complete paper-based

operations where the business omitted the use of
plastic from its business.
● Amazon also focuses on operating in climatic
conditions and focused on bring the carbon
content to zero by 2040 (Amazon, 2021).
Table 1: PESTLE analysis of Amazon.com
(Source: Created by the author)
Porter’s 5 forces analysis model
Porter's 5 forces analysis model has been used to examine the competition faced by Amazon
throughout the globe as shown in the below figure.
 Figure 2: Porter’s 5 forces analysis model
(Source: Vlados and Chatzinikolaou, 2019)

Forces Severity Level Impact

Threats of New Entrants Low Opening an online business is a simple

process but being a new player in the
marketplace can face huge complexities
while competing with the e-commerce
giant of the world due to high brand
awareness, huge consumer base and other
factors.

Threats of Substitute High The offline retail market throughout the

globe is primarily preferred by the
audience and hence the impact of this
 force on the business environment of
Amazon is high.

Rivalry among the Medium Amazon often faces high competition

businesses due to the increasing number of players
in the marketplace. The key competitors
of Amazon as shown in the case study
are Flipkart, Walmart, Alibaba and others
(Times Now, 2021).

Bargaining power of Low Amazon comprises multiple suppliers in

suppliers its business and hence, the concerned
business has the ability to import the raw
materials at the base price. This helps the
business in attaining a high revenue
margin.

Bargaining power of buyers Low As discussed above, Amazon mainly

operates in an online platform and hence,
the business forecast a complete product
description with an adequate price.
Therefore, the customers are bound to
pay the displayed price and hence, their
bargaining power gets negated for the
concerned business.
Table 2: Porter’s 5 forces analysis for Amazon.com
(Source: Created by the Author)
Critical analysis and evaluation of the Internal Environment
The internal environment of a business plays a crucial role in the business functioning. As per
Onyusheva and Seenalasataporn (2018), internal factors of a business include its strengths,
weaknesses which determine the business opportunities that are gained from the operating
marketplace. In this aspect, the internal business environment of Amazon has been examined
through analysis model which are known as the VRIO analysis model and the value chain
analysis model.
VRIO analysis model
The VRIO analysis model has been used for examining the competencies influenced by the
concerned businesses. The VRIO model has been primarily used to forecast the method used
by the business management for handling business operations for sustaining and growing its
industrial position as shown in the below figure. As mentioned by Bonsu (2019), the VRIO
analysis model is mainly based on the system developed by Jay B. Barney which is primarily
used for describing the competitive advantage of the firms.
 Figure 3: Application of VRIO analysis model
(Source: Sastry et al. 2019)

Organizational Value (V) Rare (R) Inimitability (I) Organization

capabilities and (O)
Resource

Presence of ✔
brick and mortar
model

Developing ✔
diversity in the
e-commerce
industry

Developing ✔
portfolio for the
private label
services

Extensive ✔ ✔
distribution
channels with
high efficiency
involving the
regional,
international
and domestic
partnerships
 Presence of high ✔ ✔
expertise and
specialist

High ✔ ✔
distribution
hubs and
strategic
warehouse

High brand ✔ ✔ ✔ ✔
equity

Huge market ✔ ✔ ✔ ✔
capitalization

International ✔ ✔ ✔ ✔
market reach

AI capabilities ✔ ✔ ✔ ✔
Table 3: VRIO analysis of Amazon.com
(Source: Created by the author)
Non-Core Competencies of Amazon.com: The non-core competencies of the concerned
business as observed in the above table is the presence of the brick and mortar business
model. It has been observed that this capability for Amazon is not rare, imitable. As per the
report of Bass et al. (2019), the Walmart business comprises a strong brick and mortar,
business model. In addition, Amazon strategy was observed in the provided case study of
diversifying the online services throughout the globe. The strategy of diversifying the online
services of Amazon adds high revenue sources making this capability inimitable and not rare.
It has been observed from the case study that developing a portfolio of private label services
helps the business in diversifying its offerings. For instance, a private label used by the
concerned business is known as AmazonBasics which assists the business in competing with
other online and offline businesses throughout the globe. As per Nyiendo and Omamo
(2019), developing the supply chain of a business and developing the capabilities of the
business helps in developing the business performance. In this aspect, the concerned business
comprises vast distribution channels as well as third party suppliers like delivery firms and
courier partners.
Core Competencies of Amazon.com: From the above VRIO analysis table, it can be clearly
stated that Amazon has long term capabilities that allow the business in increasing its
performance exponentially with increasing time. In addition, it has been observed from the
above table that the presence of high brand awareness and high brand equity allows the
business in attaining a huge customer base. This enables the business in increasing the
trustworthiness of its customers. High brand equity enables the business in attracting the
customers and the audience towards the emerging products and services of Amazon. Brand
equity is an imitable factor for Amazon as the business presence throughout the globe is high
and the customer satisfaction factor for the concerned business is relatively high which
enables the business in attaining a high competitive advantage. As observed in the study of
Vecchio et al. (2018), high market capitalization enriches the capabilities of a business. In
this context, Amazon comprises high market capitalization which allows the concerned
business to accumulate enough funds and also to invest in business development and
expansion. The affiliation network of the concerned business is huge and hence, the programs
of the concerned enterprise are high sharing links that support its consumers. This allows the
business in retaining the customers in the long run.
Value Chain Analysis of Amazon.com
Value chain analysis model refers to an analytical model which is primarily used to identify
the business operation which creates value and also provides a highly competitive advantage
to the businesses. In this concern, this analytical model has been used for identifying the key
activities of Amazon which provides a highly competitive advantage to the business as shown
in the4 below figure.

Figure 4: Value Chain Analysis model for Amazon.com

(Source: Cárdenas Retuerto et al. 2018)
Activities Business Functions Operations conducted

Inbound Logistics ● Presence vertically

integrated suppliers
● Item replenishment
Primary Activities operations
● Quality control by
fulfilling the
demands of the
customers
● Presence of
Decentralized
fulfilment centres

Operations ● Packaging
● Supervising the
supply chain
● Software
development
● Handling AWS
operations
● Devise content
creation

Outbound Logistics ● Producing invoice

for the customers
● Order fulfilment
● Order dispatching
and handling

Marketing and Sales ● Operates and handles

Amazon prime
● World's most
customer-centric
business
● Hassle-free return
policies
● Customer and order
tracking
● Examining the
market trends and
offerings of other e-
commerce
businesses.

Services ● Assuring superior by

giving warranty to
the AWS, Amazon
devices and services
● Education and CSR
 practices

HR and Finance ● Hiring skilful

Secondary Activities candidates
● Providing training to
newcomers
● Employee
management
● Risk mitigation

Technology ● Advanced customer

database and analytic
technological tools
● Scalable AWS for
sustaining
technological
infrastructure
● Use of advanced
technologies for
handling customers

Procurement ● Presence of vast

vertically integrated
suppliers
Table 4: Value Chain Analysis of Amazon
(Source: Created by the Author)
Critical analysis and evaluation of CSR and Sustainability
Caroll's CSR pyramid is an analytical framework that is used for examining the CSR
activities undertaken by organizations. As per Čirjevskis (2020), the CSR pyramid is mainly
developed by Archie Caroll and also forecasts the four significant responsibilities of a
business as showcased in the below figure.
 Figure 5: Archie Caroll’s CSR pyramid model
(Source: Krishnaswamy, 2017)
Economic Responsibility
As per Dabbs (2018), this responsibility of the pyramid model focuses on achieving high
profit by fulfilling the demands of the customers. This benefits both the customers as well as
the businesses. In this respect, Amazon comprises a vast consumer base and hence, customer
demands and the market trends for the concerned business is huge and diverse. Therefore, the
business always focuses on meeting the customer demands which enable them in attaining a
high revenue margin by increasing the net sales of the businesses.
Legal Responsibility
Amazon follows multiple trade policies of multiple nations where it serves. The government
policies concerning human safety and tax policies are well accustomed to and being used by
the concerned business. Therefore, it enriches its legal responsibility by improving the wheel-
being and survival nature of the employees. Amazon follows the Employment and equality
act in its working environment which develops the well-being of the employees and the
customers.
Ethical Responsibility
The business handles huge sensitive information of its associated stakeholders. These data are
safely secured by advanced technologies and databases which restrict the attackers and
hackers from infringing on the sensitive data.
Philanthropic Responsibility
The business focuses on improving the lives of the society people. In this aspect, as observed
in the case study, Amazon invested huge funds for the welfare of the societies. Moreover, the
business organizes multiple educational campaigns which are mainly organized to educate
the society children.
Evaluation of the implications of the External Environment Analysis,
Internal Environment Analysis and Sustainability Analysis and how they
may impact the Industry and Amazon.com

Strengths
● Presence of high brand position
throughout the globe (Lorkowski and
Grzegorowska, 2020)
● Presence of high brand image
throughout the globe
● Amazon is ranked at 2nd position
concerning brand value after Apple
and before Google (Silva et al.
2018).
● Constitutes a huge consumer base
and hence referred to as one of the
customer-oriented businesses
throughout the globe
● Amazon brings and focuses on
regular innovations in products and
services
● The cost leadership strategy used by
the business allows the business in
attracting new customers.
● Presence of huge distribution
channels and third-party sellers.
Weaknesses
● The business model of Amazon is
easily imitable
● Amazon faced a huge decline in its
revenue margin in multiple areas of
the globe
● Multiple products and services of
Amazon went flop and failed. An
example of such products was the
advent of Amazon’s Fire phone
(Akter et al. 2016).
● Tax avoidance in some nations like
the UK, US and Japan negated the
publicity of the businesses
● Amazon is over dependent on its
distributors. One of the more
examples of its distributor is the
German Logistic group.

Opportunities
● Amazon has immense business
opportunities to expand in various
nations. This high brand image
throughout the globe help the
business to develop its expansion
plan
● Amazon can expand its physical
stores which can help the
concentrated business in competing
with other offline retail stores
operating throughout the globe
Threats
● Amazon faced multiple controversies
an example of which was faced in
2010 (Singh et al. 2020).
● The advent of modern technologies
can disrupt the business reputation
by exploiting the sensitive
information associated with the
business.
 ● It has an immense opportunity to
develop the organizational policies
and the technological measures for
securing the organizational data
Table 5: SWOT analysis of Amazon.com
(Source: Created by the author)
Recommendations for Global Development
As discussed in the SWOT model of the concerned business, the business faced multiple
controversies from multiple parties which disrupted the business net sales. In addition, as per
Kusumastuti et al. (2021), controversial business presence decreases the business presence in
the marketplace. In this aspect, few recommendations can be drawn for Amazon.com.
● The competitive advantage, market trends and promotional activities of the concerned
business can be boosted through consolidating the market dominance.
● The global controversies should be deal with a strategy for maintaining high
competitive advantage as well as sustainability and business growth
● The business presence on the aggressive competition faced by the concerned business
can be handled or mitigated through opening physical stores.
● Business plans for business expansion should be developed mainly in developing
countries from where the business can gain high business profits.
Recommendations for Sustainability
It can be identified from the provided case study that Amazon deals with a huge volume of
information related to customers and products in its daily operations. Therefore, the business
stores a huge volume of data which are sensitive to the customers and also for the business.
The sensitive information involved is like customer name, adulteress, their transactional
history and many more. Therefore, any sort of vulnerable data leaks or data theft can
diversity impact the brand value of Amazon. In addition, the business reputation can be
adversely affected by data leaks or data theft. This can lead to attaining unauthorized access
to the attackers or the hackers. These data hacks can be mitigated through implementing
multiple data security approaches like one of the reputed approach of data security is
multiple-factor authentication where the users are required to match their identities before
accessing any sensitive associated with the business. Another CSR dilemma associated with
the concerned business is waste production. Amazon faced a waste controversy in 2018
where it has been reported that the business exploits the environmental factors by increasing
the waste volume. This can be mitigated with the implementation of the lean production
model through which the waste generation issue can easily be mitigated keeping the quality
of the services and products at a superior margin.
Conclusion
Therefore, from the above discussion and after the analysis of the provided case4 study it can
be stated that Amazon holds a strong position throughout the globe. It has been identified that
Amazon focuses on continuous product development which helps the business in attaining a
huge consumer base. It has also been observed that the business operations of Amazon get
highly influenced by its external business environment where it faces high competition due to
the presence of a huge number of competitors. Value chain analysis and VRIO business
model have been used to identify the competitive advantage gained by the concerned
business which allows the business to operate seamlessly. It has been observed that the CSR
activities practised by the business highly benefit the society and also focus on the welfare of
the society people. However, multiple recommendations have drawn like the implementation
of the lean model and multiple-factor authentication can help the business in enriching its
business growth and its sustainability throughout the globe.
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