+ 44 20 8144 3706Introduction:
Amazon is the US based multinational technology company. The company is headquartered in Seattle, Washington. The company mainly focused on e-commerce, cloud computing, digital streaming and AI. Currently, in the US IT industry, it is considered as one of the top 5 IT companies. Amazon offer varied products like electronics, software, video games, apparel, furniture, food, toys and jewelry. Mentioned company is known across the world for innovation of technology and sound IT infra Amazon. Currently, Amazon has 150.6 million mobile users. 89% of customer in survey state that they are more likely to make purchases from the Amazon. In the year 2020 in Q1 firm earn revenue of 75.5 billion USD. 44% of Amazon shoppers buy electronic items many times from the Amazon. It can be said that there is a strong brand loyalty of the people towards Amazon. In the present research study, PEST analysis of the Amazon is done and threats as well as opportunities that are present in the market are identified. Internal analysis of the Amazon is done on 7 areas namely strategy, structure, style, skills, systems, IT infra and good relationship with suppliers. In this way, entire research work is carried out.
PEST analysis:
Political environment: There is political stability in the USA and due to this reason there is no threat on this front. Whatever party is there either the opposite or ruling party all of them have positive views towards online retail business. Hence, there is no threat to the Amazon. In USA Government is running varied schemes under which small business firms get grants for the development of their IT system for ecommerce business. Gradually, by taking such kind of assistance many companies today comes to the online platform and start selling products online (Polacco and Backes., 2018). Hence, people are seeing many online platforms around them, which motivate them to make online purchases and such kinds of people feel motivated to visit the Amazon website as they get attractive offers there. Thus, it was the Government’s efforts due to which many companies start selling them products online and today there is demand for online services which benefits Amazon on large scale.
Economic environment: Economic environment globally is not good as there is weak demand across the globe due to corona. Before corona also economic conditions were not so good as major economies were struggling to earn sufficient revenue in their business. However, on online platform people get cheaper products and easily they can make comparisons and due to this reason online sales are increasing consistently. Still, there is pressure and it can be said that due to poor economic conditions people intend to save more and they resort to the option where they get better bargaining. Amazon proves one of the best options to the people where they get cheaper deals relative to rivals and due to this reason economic environment even is not so good it benefits Amazon.
Social environment: Changes are seen in the social environment of the developed economies after year 2008 when the recession comes. During the recession, many people lost their jobs and due to this reason now people become habitual of saving more and more money and doing online shopping and making purchases from the platform where they get better deals (Rodrigue., 2020). Such kinds of things create opportunities for Amazon as through the online platform now it reached two large parts of the world and by making available products at a cheaper price.
Technology factor: Amazon is using advanced cloud technology and BI as well as machine learning technology to make decisions and operate businesses on online platforms. Relative to rivals it has very sound IT infra and this increase firm capability to capitalize on opportunity in the market.
Internal analysis:
- Strategy: Amazon is operating online retailer and it is consistently innovating its online marketplace. Amazon makes huge investments every year on its online platform and consistently upgrades IT infra, which makes it more competitive relative to others.
- Structure: There is a hierarchical organizational structure at the Amazon because mentioned firm employ a number of individuals. Currently, the total workforce size of the Amazon is 5, 00,000. In order to manage such a large workforce firm keeps a hierarchical organization structure in its business.
- Style: Managers at the premises follow democratic leadership style and after taking advice from the subordinate’s make the final decision (Cui, Zhang andBassamboo, 2019). Thus, there is inclusive culture in the Amazon, which is its major strength.
- Skills: Amazon has in house skilled workforce, whether it is for BI, IT infra development, cloud, Machine learning domain. Amazon retains employees for long term in its premises. Thus, it can be said that it has a strong, skilled workforce, which give its competitive advantage over the rivals.
- Systems: In the Amazon there is a good performance management system and by following appropriate process performance evaluation and appraisal is done by the employees. There is systematic stock control system as firm is using the advanced software’s for the inventory management. Firm through the BI system consistently monitor demand in the market and accordingly place order with varied suppliers for purchase (Ross. And Presti, 2018). This leads to low inventory storage cost and insurance cost in the business. Thus, in this way Amazon lower down cost in its business.
- IT infra: Amazon use BI system and under this it consistently monitors its performance across varied products. On the basis of performance evaluation it decides that which product more need to be purchased and which product less need to be purchased. Based on trends demand forecasting is done and accordingly varied decisions are made in the Amazon.
- Good relationship with the suppliers:Amazon has a good relationship with suppliers and it develops a long term relationship with them. It has a good supply chain network and due to this reason customers got all sorts of products on its platform (Wingfield, Thomas and Abelson, 2018). Firm make purchases of these products in bulk and due to this reason is able to serve products at cheaper price to the customers. Thus, it is the reason due to which Amazon gets huge success in the business.
Reference:
Books and Journals:
Cui, R., Zhang, D. J. andBassamboo, A., 2019. Learning from inventory availability information: Evidence from field experiments on Amazon. Management Science. 65(3).1216-1235.
Polacco, A. andBackes, K., 2018. The amazon go concept: Implications, applications, and sustainability. Journal of Business and Management. 24(1).79-92.
Rodrigue, J. P., 2020. The distribution network of Amazon and the footprint of freight digitalization. Journal of Transport Geography. 88. 102825.
Ross, F. H. andPresti, S. S. L.,2018.Appraising Retail Properties in the” Amazon Jungle”. Appraisal Journal. 86(4).
Wingfield, N., Thomas, K. and Abelson, R., 2018. Amazon, Berkshire Hathaway and JPMorgan team up to try to disrupt health care. The New York Times. 30. 52.
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