STRATEGY REPORT: AMAZON

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Table of Contents
1. Introduction..............................................................................................................................3
1.1 External Environment Analysis........................................................................................4
1.1.1 PESTEL analysis............................................................................................................4
1.1.2 Porter's Five Forces.........................................................................................................5
1.2 Internal Environment Analysis.........................................................................................6
1.2.1 VIRO framework............................................................................................................6
1.2.2 Value Chain Analysis.....................................................................................................7
1.3 CSR and Sustainability Analysis...........................................................................................9
1.3.1 Economic responsibility...............................................................................................11
1.3.2 Legal responsibility......................................................................................................11
1.3.3 Ethical responsibility....................................................................................................11
1.3.4 Philanthropic responsibility..........................................................................................12
1.4 Evaluation of analysis..........................................................................................................12
1.4.1 SWOT analysis.............................................................................................................12
1.5 Recommendations for Global Development.......................................................................13
1.6 Recommendations................................................................................................................15
 1. Introduction

Amazon.com Inc. is founded in 1994 in Seattle, the USA by Jeff Bezos. Amazon.com is the

world’s biggest bookstore and presently the most successful online company. Moreover,

Amazon.com speedily extended its product portfolio by adding additional products, from

fashion, accessories, electronics, to music, video games, movies/DVDs in 1997. Worldwide

and USA retail revenue of Amazon.com in 2017[ CITATION Pol18 \l 2057 ]. Jeff Bezos

founded Amazon.com, Inc. in Seattle, the USA in 1994. Amazon.com is the first and now most

popular online bookstore in the world. Besides, by adding new items such as apparel, accessory,

or hardware to music, video games, movies, and DVDs in 1997, Amazon.com rapidly expanded

its product range. [ CITATION Mae181 \l 2057 ]

Strategic Position: Centered on three operational tactics, Amazon has been able to achieve a

successful competitive edge. There are low-cost management, consumer distinguishment, and

techniques for emphasis. Amazon mostly differentiates itself based on price in terms of low-cost

management. They think it is crucial to our potential growth to give our consumers cheap rates.

They aim to reduce prices partly over time by increased product rates, improved dealings with

our vendors, and better operational efficiency. They are still trying to achieve better results.

Amazon offers existing and future consumers, by picking an approach, for our customer

differentiation plan, of differentiation by style, pricing, and ease. The approach focuses on one of

the two other tactics and applies it to a business niche on this basis Amazon emphasizes excellent

customer experience as a specialty, but not as a whole, as any niche has its demands and

demands. In the production and implementation plan of its company, the principal cause of

Amazon's failure was the absence of customer-centric models. The purpose of this report to

explore the internal and external analysis of amazon as well as examine CSR and sustainability
through Carroll’s pyramid model. Through analysis, this study will suggest recommendations for

future development.

1.1 External Environment Analysis

1.1.1 PESTEL analysis

Political factor: International Policy: The development of an organization depends on

international policies. The Chinese Government, for instance, has barred Google from making an

argument that the Google content of its database is inadequate, which is also a danger to the

society and domestic industry, a major obstacle for Amazonia's expansion[ CITATION van18 \l

2057 ].

As seen below, for almost two decades Amazon's lobbying spending in the US has increased

with a small decline in 2018. In addition to its tax wars, corporate tax overhaul, anti-trust

litigation and other topics, the biggest internet dealer in the world in terms of revenue targets its
lobbying activities.

Fig. 1 Amazon Lobbying Practices

Economic factor: Currency: Exchange rates also have a significant adverse effect on Amazon's

profitability. It would cost consumers in Nigeria to buy from Amazonia's UK website, a country

like Nigeria where 250 naira is 1 Pound equivalent.

Social factor: Some cultures claim that internet content could damage their ethical beliefs and

cultures. They are also not allowed to use the web

Technological factor: Amazon.com is doing its best in the technology sector which was a big

success for the company. However, to remain ahead of its rivals Amazon also has to do more in

technological advancement.

Environmental factor: Increased engagement in conservation initiatives (opportunity) and

increased focus on corporate sustainability. However, it should be noted that Amazon plans to

make 50 percent its exports zero carbon (Shipment Zero) by 2030 and net zero carbon through its

companies by 2040.

Legal factor: Regulation of increasing products (opportunity), imports, and exports change

(opportunity). Enhanced rules on corporate environmental health (opportunity)

The evaluation of Amazon by PESTEL/PESTLE highlights crucial problems which are vital to

the long-term sustainability of the brand. One piece of advice is to extend the activities of the

organization into emerging markets with fast economic development and strong potential for e-

commerce growth.

1.1.2 Porter's Five Forces

Potential Entrants

High: The cost of establishing an online library is minimal, which poses a challenge. A new

entrant may develop a similar website to compete with Amazon with the right tools and
experience. Low: The infrastructure and information network from Amazon could make it

impossible for participants to compete as the costs and expertise required could be high. A

potential entrant may also be challenged by brand recognition and consumer loyalty[ CITATION

WuG18 \l 2057 ].

Fig. 2 Economies of scale of Amazon.

In the world, Amazon is the world's leading online retailer. The titan in e-commerce runs 109

fulfilment centres globally, generating operating revenues of $4.2 billion, $4.1 billion and $12.4

billion for 2016-2018. Though future new competitors to the market can imitate the business

model of Amazon, the economies of scale cannot profit as much as Amazon. Scale economies

can also be described for new entrants as a significant obstacle.

Suppliers: As the customer is a seller, Amazon will still have vendors. To achieve a positive

experience and establish a connection with Amazon, Amazon needs to combat thievery fraud.

According to the support they get, suppliers may choose to visit another company.

Buyers: Due to inadequate customer care, Amazon could lose its customer. To maintain its

integrity Amazon must still struggle against theft and fraud. If the buyer is not quite happy with

the service provided, he would decide to go to another organization.

Substitutes: Customers prefer to go to another company for better offerings because they have

different options.

The rivalry of Competitors: Amazon.com is facing high industrial competition in the online

book market because of its large and massive footprint. Popular bookstores have the benefit of a

broader and more established client base, a wider range of books, name loyalty, and visibility. In

this market, the inclusion of existing books in the online arena has further enhanced industrial

rivalry. The online music market of Amazon.com still faces strong competition. For one, thanks

to its entrance into the online music business, CD-Now has taken measures to minimize the

danger to Amazon in the industry. The benefits of CD-Now are more known and more

recognized brands than Amazon.com.

The aforementioned review explicitly shows that customer experience is the key sector in which

Amazon lacks. In today's rapidly evolving and increasing market climate, any E-commerce

company must develop its customer-centered business processes efficiently. It improves the

ability to better grasp the business goal and both the particular customer's desires and needs.

Better perception of this scope truly contributed to eBay's strategic edge on the industry. Indeed,

any deficiencies in complete satisfaction will cause the consumer to lose interest in the company
and lead to successive gains for the competitor. Consequently, the main thing that led Amazon to

crash was the absence of customer-centered models in its market strategy and management

strategy.

1.2 Internal Environment Analysis

1.2.1 VIRO framework

Value: Value brand name Amazon.com is the company name of high prestige. Amazon has an

outstanding quality that is well regarded for its competitive costs. It gives the rivals a huge edge.

Amazon has a powerful logistics network resource and it helps the company to take advantage of

resources to prevent risks in the online marketing world. The Amazon online shop facilitates a

company's penetration into large markets and sales - all revenue created by this resource is

captured in the company and this benefit for the company is also highly valued[ CITATION

Ony18 \l 2057 ].

Rarity: Amazon continues to nurture the brand identity and is actively absorbing the market

share in competition. The brand name Amazon is an unusual asset. There are many online

retailers with distribution networks, but none of them is as big as Amazon's distribution network,

so we find it rare.

Imitability: Due to the cost disadvantage which the rivals face in purchasing or substituting

those resources, the Amazon delivery network is very difficult to emulate. Excellent customer

support is accessible, as outstanding as it is, and is a priority of the organization. Not to assume

that this resource will have no cost but, on the contrary, this cost will not cause a drawback.

Organization: Amazon can use a strong brand identity in the company. The ability of Amazon

to absorb any value that could be generated in the delivery network decides that this resource is
successful and contributes to a competitive edge that is above average. Amazon's brand-name

and delivery network services are important, scarce, impossible to imitate, and deployed within

the enterprise. This gives Amazon more than one strategic edge and it keeps its leading

spot[ CITATION Gra18 \l 2057 ].

Fig.3 VIRO framework of Amazon

1.2.2 Value Chain Analysis

1.2.2.1 Support Activities

Firm Infrastructure: It provides its retail websites with offerings for buyers, vendors, and

developers. The child's e-reader is also produced and sold. Amazon provides services to allow
vendors to market their goods on its own branded websites and its websites. The corporation

organized its business into two main segments: North America and the international

sector[ CITATION Eli18 \l 2057 ].

Human Resource Management: The corporate framework of Amazon is ecological. That is

why e-commerce tends to carry on organic properties so that flexibility, pace, and transparency

can be achieved.

Technology Development: Based on the great pool of technological talents, Amazon was

founded in Seattle. Bezos has developed ground breaking programming and applications.

Amazon is the pioneer in e-tail customer service that supports its market model through

Customer Relationship Management (CRM) and (IT).

Procurement: Amazon has adopted e-procurement to buy university materials and tools through

the history of Amazon.com.

1.2.2.2 Primary Activities

Inbound Logistics: Technological advancement and selective procurement to filter retailers' and

manufacturers' choice of products and services into safer transactions. Moreover, thanks to the

book order from the dealers, Amazon has the advantage to avoid the overhead costs and keep a

lot of products.

Operations: Two sections were grouped by Amazon: North America and Overseas. In February

2010, Touchco was recently acquired as a corporation of screen technology. Amazon uses robust

high-tech storage models.

Outbound Logistics: Amazon has built and used an optimized logistics network in-house, based

on i2 technology software Supply Chain Strategist. Moreover, it outsourced some shipments to

marketing and sales for USPS and USPS – marketing and sales -: Revenue is a rise in revenue in

the North American division, due to lower selling costs and higher international

profits[ CITATION Que18 \l 2057 ].

Services: The Service will also stable shopping experience using online advertisement

techniques. Amazon also provides analysis and recommendations on the products.

The main competitive advantages of Amazon lie in two ways based on the previous analysis:

Low prices: guaranteed by relatively low rates. That is due to the substantial savings from

logistics and human capital from Amazon's operating model. The special shopping experience

for customers: derived from user preferences awareness and the website and database

architecture.

Fig.4 Value chain analysis of Amazon

1.3 CSR and Sustainability Analysis

Fig.5 Carroll’s Pyramid of CSR

1.3.1 Economic responsibility

Amazon's market cap of $815 billion was announced on 6 February by CNN money to analyze

each stage of economic responsibilities for amazon and made a 49,000 percent Return on

Investment at its 20th anniversary which translates into a very strong checkmark on Carroll’s

model economic responsibility column. The Amazon Sustainability Data Initiative dramatically

decreases expense, time, and technological hurdles that otherwise would create a time-

consuming and expensive process by analyzing massive datasets[ CITATION Lis19 \l 2057 ].

1.3.2 Legal responsibility

The legal responsibilities have revealed that Amazon.co.uk, the largest internet retailer, had

earned more than £3.3 billion but pays no corporate profits tax on all of the revenue and was

even subject to scrutiny by the United Kingdom's tax authority where we can identify many

issues (The guardian, 2014). It is difficult to respect all the legalities in this technical and global
era, especially in big companies with international accounts and currencies, but in most cases,

Amazonia complies with the rule.

1.3.3 Ethical responsibility

Concerning the next principle, ethical tasks are more abstract criteria; for anyone else, what can

be considered positive can be considered bad. However, the principle of human rights involving

a concept of "while the respect, intrinsic equality is the basis of democracy, justice and the peace

of the world," as the United Nations implies, as regards the recognition of moral and alienable

privilege of all members of the human family. Then there are two things about Amazon. First of

all, the firm cannot fulfill the ethical requirements imposed on the United Nations human-rights

concept when talking about workers with blue-collar, but on white collars, this company does

fulfill certain criteria at some stages[ CITATION Che19 \l 2057 ].

1.3.4 Philanthropic responsibility

Finally, the philanthropic part of the model on the final step of the Carroll model. It will see

Amazon's donations to charities, they also have a "smile amazon" website. This website gives the

chosen organization a share of the cost of the good you are purchasing, without costs. These

contributions, however, most often offer tax benefits such as the matter of tax deductions

whether or not the organization cares or wants to pay fewer or fewer taxes. In the Amazon Smile

tab, Amazon has these kinds of donations.

1.4 Evaluation of analysis

1.4.1 SWOT analysis

Strengths: Largest e-commercial with an e-commerce stake and a strong identity and affiliation.

Strong brand name. Amazon's business approach is supported in customer relationship

management (CRM) and IT support. Amazon is an enormous worldwide brand. For two major
factors, it is recognizable. It has been one of the first dotcoms and has established a client base of

about 30 million people over the last decade. Highly efficient ads, publicity, infrastructure

efficiency, and collaboration[ CITATION Alv19 \l 2057 ].

Weaknesses: Loss of emphasis on main goods and poor revenue economics. Because of no brick

and mortar presences, high advertisement and publicity prices.

Opportunities

Established technology sales, brand growth in new regions, and international expansion in India,

China as well as other developing economies in particular. Opportunities for the mutual

advantage of non-competitive companies.

Threats

Improvised developments in US and international legal standards. Patent violation legal matters:

15 legal lawsuits. International questions: limits on exports and imports, quotas and trade

barriers, currency volatility, political unrest, longer payment times.

Evaluation: Free delivery and Amazon subscription costs fluctuate Amazon, like most of the

major businesses have had their difficulties and ups and downs, but the overall outlook of this

enterprise is to provide low-cost goods worldwide. This opportunity stems from the fact that it

looks at everything and has not an annual CSR report, that Amazon should re-define or show the

world how and why it should make a sustainable long-term transformation from a responsible

company to a well prepared CSR company in this economy, both for citizens and businesses.
1.5 Recommendations for Global Development

This SWOT review reveals that Amazon will continue its activities to grow, both based on

market prospects and the capabilities of the group. For example, the company will grow by

expanding its activities into new e-commerce markets, in particular in developed countries with

fast growth. However, Amazon must consider reviewing some of its tactics because of the flaws

and risks found in this SWOT analysis. The company remains powerful as one of the world's

largest technology companies.

It is advised that Amazon.com Inc. further diversify its market and reinforce itself against

industry-specific hazards and counter both external and internal considerations in this SWOT

analysis. Another piece of advice is to create new alliances to expand the reach of the market and

strengthen the global activities of Amazon against competition and associated competitive

challenges. Amazon wants to develop internationally to evolve rapidly and to modernize markets

and exploit synergies.

While it also accommodates a global audience in its present business model, it must still provide

local portals in the countries it wants to join. For example, in many countries like India, Amazon

now has dedicated websites, which are also available in other countries. Furthermore, it has to

follow a Global strategy by adapting the central global distribution model to local requirements

so that the global and local or global merger is updated.

Then there are the Scandinavian countries where the population of those countries is strongly

linked and has high wages, which are the particular areas it should target and grow into. The

double combination of high internet penetration rates and high disposable incomes is a sure way

to make more business. The MINTs (Indonesia, Mexico, Nigeria, and Turkey) must, as part of
global expansion strategies, be targeted both on the BRICS (Russia, Brazil, China, India, and

Southern Africa) and the MINT markets.

To personalize the service, Amazon can use a web-based model. To "create the best shop for any

client," Amazon can want to use personalization. Each consumer has a customized web page

focused on recent shopping. This means that any customer can attract as many returning

customers as possible for a specific retail chain. Increase brand recognition advertising. Amazon

could advertise its services to existing customers and new customers with a general promotional

strategy, such as television and print advertisements.

1.6 Recommendations for Sustainability

It was hard to find an indicator of active CSR activity in Amazon's CSR activities. It was

selected to evaluate all the problems from various points of view to provide a summary. The

study has thus attempted to establish and understand the motives behind Amazon's marketing

practices. Overall, the actions mentioned in this study can be viewed as reactive. Amazon would

not look aggressively for changes in its processes in any of the scenarios used. The corporation

has shown its only active behavior in discovering loopholes to save costs.

The Climate Pledge, the promise to fulfilment of the Paris agreement 10 years early was declared

by Amazon and Global Optimism in 2019. The climate commitment calls for Net Null Carbon

Signatories in all their companies until 2040. Amazon has set up a Right-Now Climate Initiative,

a $100 million fund for the restoration and conservation of trees, wetlands and peat lands all

around the world, as part of the Climate Pledge. Shipment Zero, with 50 percent of all shipping

net zero by 2030, is Amazon's vision of making the entire shipments net zero emissions.
The conclusion is, that Amazon's poor behavior is superior to its usual conduct. But this article

would have been more optimistic if the firm had been more transparent about its CSR activities.

This report has some recommendations on Amazon's marketing policies about how it should

improve CSR efficiency. Based on this research. The corporation usually has a preventive

approach under which it follows or awaits such examples lawfully. The main change in their

CSR approach will be being a more proactive organization in respect of CSR.

Throughout the report, only the benefit (3P's) for Amazon will be applied from the bottom line.

Many of their poor CSR behaviors may be associated with their (high) profitability. It will be a

big change to achieve the best balance between the three components in the end.

The staff is significant, but they don't always behave according to these terms, as stated in the

letter from CEO Jeff Bezo. Amazon can also be fantastic not only for the staff in corporate

offices but also for customer services and warehouses. Improving working standards will

contribute to restoring the 3P balance.

It would benefit considerably if the Company chose to be more transparent about its operations

and particularly those in the areas of CSR and sustainability as a final recommendation. It never

reported on all of these subjects in the history of the firm. It is therefore hard to report and inspire

NGOs, non-profit organizations, or even the media to improve on problems with the business.
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