7.

0 PEST Analysis

Political Analysis

Political is refers to the factors of laws, corporate tax, policy that set by particular country of
government which influence the business operating.

For international policies, retailer is difficult to penetrate for certain countries, especially in
China and India. In China, it’s having strict policy for foreign firm to penetrate the market
and intention of government is encouraging public consuming in local companies. Lacking of
government support has influence foreign retailer to expand further market share. In India,
government has set up a new rule as restricted non-single vendor can earn more than 25% for
foreign company. It influenced the companies that relying on single seller that accounted
more than 25% and companies may require to restructure their form to overcome the new
rules.

Countries Corporate Tax %

US 40
UK 23
China 25
Japan 30
Germany 29
India 34

Referring to the table above, it shows the tax rate requirement for Amazon operates in few
different countries. For UK, China, Japan and Germany is still maintain an average rate for
Amazon but as in US and India has incurred a high tax rate which affected a declined in
profitability due to a high tax rate to be pay.
Economic Analysis

Economic is refers to the factors of growth, inflation, disposable income of a country which
influence a business operation.

Countries Inflation %
US 2.5
UK 1.8
China 2.5
Euro 2.0
India 3.1
Japan 0.4

Referring to the table above, it shows the inflation in few different countries. In China, US
and India, these countries has high inflation rate which impact high wages cost to operate in
these three countries when comparing with others. Instead of wages cost, due to a high
inflation rate, it’s difficult for retailer to further invest causes of fluctuation in cost and
uncertainty occur. Causes of inflation, online retailer may less competitive as in international
competitiveness which outcoming retailer will only preferable to invest further in Euro, Japan
and UK.

Countries Disposable Income

US 14345.40 USD Billion
UK 310245.00 GBP Million
China 33616.00 CNY
Euro 1666307.00 EURO Million
India 154965120.00 INR Million
Japan 360.50 JPY Thousand

Yet, referring table above, US, UK and Euro are having high disposable income and China
and India even the disposable income is not as high as US or UK but it’s become an
opportunity for online retailer to increase it due to an economic growth rate is increasing.
Their growth rate is between at 7% to 8%, even the regulation of the countries is strict but
based on the growth rate, if online retailer managed to gain more market share in these
countries, it’s has high possibility become sustainable in global. For Japan, even the tax rate
is low but due to disposable income is decline which may not favourable for retailer to further
invest.

Social Analysis

Social is refers to the factors of lifestyle, population, health consciousness which influence
the changes business operation.

In social, change of lifestyle is benefiting online retailer as public is pursuing for more
convenience and rapid to buy or sell their goods which outcoming the uses of M and E
commerce has been widely use causes of it allowing public to buy and sell in everywhere and
anytime. The change is not only happening in developed country but also developing country
such as India and China which indicate there is more opportunity for online retailer to
penetrate the marketplace and gain further market share internationally.

Technology Analysis

Technology is refers to the factors of R&D activity and changes of technology which
influence the trend of a business operation and market.

Technology has been developing rapidly for every retailer. As the market is demanding for
more unique, convenience and rapid service deliver. Large amount of research and
development cost has incurred for online retailer for being sustainable and leading in the
market. For instances, augmented reality, virtual reality, prime air and others in order to
deliver a whole new different shopping experience to customer and gain the awareness for
sustain the current market. In others words, there is split between retail and technology for
nowadays, to be able sustain in the future market, it’s necessary for retailer updating their
technology for fulfilling the trends of market demand.