BUSINESS ENVIRONMENT

SUBMITTED BY: DIVYA TIWARI

ROLL NO: 124
SECTION: A
 AMAZON

 Amazon.com, Inc. is an American multinational technology company based in

Seattle, Washington.
 It focuses in e-commerce, cloud computing and artificial intelligence.
 Amazon is the largest e-commerce marketplace and cloud computing platform in the
world as measured by revenue and market capitalization.
 Amazon.com was founded by Jeff Bezos on July 5, 1994, and started as an
online bookstore but later diversified to sell video downloads/streaming, MP3
downloads/streaming, audiobook downloads/streaming, software, video
games, electronics, apparel, furniture, food, toys, and jewelry.
 The company also owns a publishing arm, Amazon Publishing, a film and television
studio, Amazon Studios, produces consumer electronics lines including Kindle e-
readers, Fire tablets, Fire TV, and Echo devices, and is the world's largest provider
of cloud infrastructure services through its AWS subsidiary.
 Amazon has separate retail websites for some countries and also offers international
shipping of some of its products to certain other countries.
 POLITICAL FACTORS

In Amazon's case the following political external factors are important in the development
of the e-commerce industry:

 Political stability of developed countries.

 Governmental support for e-commerce.
 Increasing governmental efforts on cyber-security.
 Trade protectionism in the USA from the trump administration currently threatens the
existence of foreign firms in the country . While Amazon is an American firm, a
considerable amount of its goods come from overseas, and thus its operations may be
threatened by a possible reduction in the number of foreign imports or tariffs to foreign
imports.
 In light of Brexit negotiations, the British and American government are currently holding
discussions about potential trade deals between the two countries . This could serve to
ease Amazon's operations in the UK as an American firm, potentially reducing import
taxes and resulting in less regulations.
 ECONOMIC FACTORS
The following economic external factors are significant:
 Economic stability of most developed markets.
 Increasing disposable income in developing countries.
 Potential economic recession of China.
 Stock market uncertainty is an increasing characteristic of the globalised world and its
levels of uncertainty, and Amazon's expansion into the grocery sector further served
to heighten this uncertainty, with competitors such as Walmart all facing drops in their
share prices.
 Analysts have recently revered the Amazon way of capitalism as being the key to
future productivity in growth, given that this is based on reinvesting gains back into
new, market creating innovation and research.
 The economic stability of most developed countries increases the likelihood of
success for Amazon.com Inc. in these markets.
 Amazon has other growth opportunities in developing countries. For example, the
increasing disposable income in developing markets could boost the company’s
financial performance.
SOCIAL FACTORS
Amazon must consider the following sociocultural external factors:

 Increasing wealth disparity. It refers to the increasing gap between the rich and the
poor in many countries. This condition threatens Amazon.com Inc. in terms of
the potential stagnation of disposable income levels and the corresponding
stagnation of the remote or macro-environment of online retail business.

 Increasing consumerism in developing countries creates opportunities for Amazon.

For example, higher consumerism in developing markets increases Amazon’s growth
potential as the company looks to expand its global online retail operations in these
locations.

 Increasing online buying habits. The company stands to benefit from increasing
online buying habits, as more people around the world gain access to the Internet.
The external factors in this aspect indicate the benefits of focusing on market
penetration and expansion in developing countries.
TECHNOLOGICAL FACTORS

The technological external factors important in Amazon.com Inc.’s business are as

follows:
 Rapid technological obsolescence. Amazon.com Inc. faces the threat of rapid
technological obsolescence, which imposes pressure on the company to
continuously develop its technological assets. However, this condition is also an
opportunity in optimizing the business. For example, the firm’s continued heavy
investment in information technology could boost its competitive advantage and
protect its business from new entrants in the e-commerce industry.

 Increasing IT efficiency. Amazon also has opportunities to further improve its

performance based on the rapid increase of IT efficiency. For instance, new
technologies can maximize online retail productivity and minimize operational
costs.

 Increasing cybercrime. The company also faces the constant threat of

cybercrime. This external factor threatens consumer experience as well as the
integrity of Amazon’s business.
ECOLOGICAL FACTORS

Amazon considers the following ecological external factors in its strategic formulation:

 Rising interest in environmental programs. The improvement in Amazon’s corporate

social responsibility strategy could significantly contribute to satisfying such interest.

 Rising emphasis on business sustainability. There are major opportunities in business

sustainability. For instance, the company could implement higher sustainability
standards to further enhance its strong brand image as an e-commerce
organization.

 Increasing popularity of low-carbon lifestyles. It provides opportunities for

Amazon.com Inc. to boost its corporate image. The company could implement
extensive energy-saving policies in its operations for this purpose. This aspect shows
the significance of a comprehensive corporate social responsibility strategy to
increase the company’s competence in its remote or macro-environment.
 LEGAL FACTORS
The following legal external factors are significant:

 Rising product regulation. It is seen as a result of societal demands on

business organizations. It creates opportunities for Amazon to intensify its efforts in
reducing counterfeit sale on its online retail website.

 Easing of import and export regulations. Amazon can expand its global operations
to exploit the increasing ability of sellers to access overseas supplies.

 Rising environmental protection regulations. The company has opportunities to

strengthen its brand image through appropriate corporate social responsibility
policies that address rising environmental protection regulations. Such effort can
increase business competitiveness in the remote or macro-environment.

 Based on this aspect Amazon can ensure long-term e-commerce success through
regulatory compliance.
THANK YOU