CASE STUDY:

AMAZON

Table of Contents
Introduction..............................................................................................................................................2
Issues....................................................................................................................................................2-3
Models and strategy development theories..........................................................................................4-5
SWOT analysis.....................................................................................................................................5-6
Relevant Theory.......................................................................................................................................7
Conclusion............................................................................................................................................7-8
References................................................................................................................................................8

Case Study: Amazon

Introduction
Amazon was established by Jeff Bezos (Kargar, 2004) who was a hedge fund analyst in
Manhattan in 1994 when he realized how the number of internet users are increasing at a high
rate every day. He took this aspect as an opportunity of profit gaining where he would be able
to sell the products online. Since he recognised that the internet is making things easily
accessible, he thought of selling the products online that could be delivered to the customers
by fixing delivery boys. Thus, the bookselling online market was launched in 1995 which
became widespread. He was also chosen as the Time Magazine person of the year 1999.
Thus, the online mode of shopping helped the company to prosper in the business field
especially between the year 2000 and 2013. During this period of time Bezos executed many
strategies in the business. These strategies were mainly set according to the needs of the
customers where they could get products at cheap prices and delivery charges. The variety of
products also increased that included sport goods, toys, electronics, groceries, electronic
goods which became very useful for gaining the scale based advantage. Through the tactics,
the delivery was also made very convenient and less time consuming. With the arrival of
advanced technologies, the operational costs got reduced making it easier. This is mainly
done by computing technologies and networking technologies whose usage made Bezos as
world’s largest retailer. Bezos happens to be the world’s 12th richest person who possesses
approximately $27.2 billion. However, the retailing business was not really something easily
accomplished by amazon.com. In an article published in the “Fortune”, Bezoz said how they
started their business appropriating investments in every bankruptcy that included pets.com,
living.com and kozmo.com. He accepts the fact that those investments were of no use but that
did not discourage them about their aimed missions.

Issues:
Cost issues - The strategies implemented by amazon.com includes their usage of advanced
technologies that include networking and computing technologies. This helped them to lessen
the price of the products and through which they are able to reach the customers in a
widespread way. However, there have been few issues regarding this as the cheap prices led
them to compromise on the quality. Also, the cheap prices have increased the variety of
customers who buy products from this online store. Thus, the demands have increased which

Case Study: Amazon 2

has resulted in a lot of workload on the market organizers. The customers have to face certain
delays on their deliveries because of this. There is also a fear in the market that this might
lead the customers to back off from being the dedicated customers.

Technological issues - The technological issues that have been mentioned in the cost issues
might include rising security threats. The security threats are very common in the business
sectors which can be many forms such as hackers, phishing, usage of malware and different
types of tactics that would breach the working space. The cyber-attacks on the business
sectors might lead to loss of approximate amount of $ 200,000. Since amazon is a large
company the problems could be solved but had it been a smaller one, the company might end
up closing it. The hackers generally come up with different kinds of tricks which can be only
solved through the usage of managed security solutions. This would be an excellent strategy.

Cost of technology - Since amazon is a large online market, it does not take much time for
the bills to get piled up. The utilities and the payment of the suppliers are also included in this
case. Handling the cost and billing issues would be very time consuming for the employees
which would result in them backing off from many other tasks.

Issues regarding hardware and software - Since the business is done on an online mode,
the hardware and software issues are common to be raised. These issues include the
damaging of the electronics without any prior notice. Sudden breakdown of technologies
might lead to a heavy loss because the customers cannot collect their orders physically from
the shop. Many times the employees have to deal with the issues of software licenses that
have expired or malfunctioned malwares. There might be issues of overheated hard drives,
physical components or the motherboard.

Power protection in the office - There might be electricity issues that also cause the delay of
customer satisfaction. As the online mode of business is wholly dependent upon the
technologies, the electricity supply is a major part of the sector that needs to be looked after.
The provision of emergency auxiliary power units can be a solution to this. There should be
huge investment made upon the backing-up of data. These generally happen because of lack
of inspection in the parts of the company which should be neglected. The investments should
be always made upon the devices that come with surge repression.

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Models and strategy development theories:

PESTEL analysis
The PESTEL analysis is generally implemented by the marketers for the analysing and the
monitoring purpose of many factors in a business sector. In Amazon.com the PESTEL
analysis is appropriated in the macro or remote environment of the business. The PESTEL
analysis generally enquires the external factors that are political, economic, social,
technological and environmental whose initial letters generally form the term.

Political - The political factors in amazon.com include the functioning of government and
how it can affect the business sector which has remote and macro environment factors. The
political factors which are relevant in the development of the commerce industry of
amazon.com may include the factors upon which the political factors of countries like the
U.S.A and other European countries are stabilized. The governmental support for e-
commerce included both opportunity and threats. The political factors also include the efforts
of the government on cyber security that is again included in the opportunity part.

Economic - The economic factors include the stability of the economic factors in the
European countries and U.S. which is appropriated in the opportunity sectors. There is also
an inquiry in the raising of disposable income in developing countries.

Social - The social factors include the wealth disparity, consumerism in the developing
countries and the rise in the online buying habits. However, the wealth disparity refers to the
gap that is quite prevalent in the rich and poor. This kind of analysis is concerned about a
socio-cultural trend that threatens the market on the basis of potential stagnation of the
disposable income levels as well as the remote and macro environment industry that is based
on the corresponding stagnation.

Technological - The technological factors include how the whole business of amazon.com
revolves around the technological factors whose results are considered in the remote and
macro environment under the PESTEL analysis of the company. The technological
obsolescence faced by the company faces many pressures to bring technological
advancement on a regular basis. But when this aspect comes under the PESTEL analysis it
becomes an optimizing fact in the business sector. Other technological issues include the
several kinds of cyber-crimes faced by the company.
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Environmental - Through the amazon.com business revolves around the technological
aspects that involve electronic machines, the influence of natural factors. In the opportunity
factors of the environmental factors the rising interest, emphasis and the increasing popularity
is included. The increasing popularity aspect is basically the low carbon lifestyle led by the
customers. The environmental factors are generally targeted towards the ecological aspects of
the ecosystem.

SWOT analysis:
Strengths
One of the greatest strengths of Amazon is the brand value. As of the year 2021, it has been
positioned at the second place, right after the tech giant Apple.
Complimentary to brand value, the brand name of the Amazon is known around the world,
this adds to the loyal and wide customer base of the company. The brand image is further
strengthened in the testing time of the global pandemic, which expanded the market for the e-
commerce sites.
Amazon keeps ahead of its competitors through diversification and innovations. The
attractive tech savvy techniques of delivery via the drone help the company gain customers
and reliability. Similarly, its line of own products and stepping into other markets help the
company diversify and strengthen its hold on the market shares.

Weakness
The huge chain and the worldwide presence of the company can be regarded as a weakness.
With the diversification and the expansion, the weaknesses of the company increase. These
lead to the issues at both internal and external levels. The technical problems are likely to be
at an equally large scale, which can be exposed through careful studying of the structure.
The model is easily replicable, which increases the competition of the company.
Quality checks of the company face a serious question in face of the large network, where
monitoring every product and item becomes increasingly difficult.
The international presence of the company has its weakness in the diverse laws of the foreign
lands. The company often finds itself navigating through the delicate law system of the
different countries, which can put them in the negative light.

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Opportunities
Amazon has scope for further expansion in a multiple of fields. For instance, with the nearing
of the end of the pandemic, the physical stores are opening up. Increasing the number of the
physical stores, will put Amazon up against the existing giants. This will enable the company
to hold a significant share of both the e-commerce and the retails stores, enabling a greater
strength in the market.
Revised recruitment policies will allow the company to play a greater role in mitigation of the
wealth disparity of the world. This will lead to a sustainable and holistic growth of the
company.
Owing to the giant presence of the company, Amazon can arrest the sales of the counterfeit
sales through a greater vigilance of the products. This will require the company to closely
monitor the technological measure of the company and the policies governing the
organization.

Threats
The expansion in the market of e-commerce has led to more local companies emerging as
potential threats to the company. This is especially aided by the cost issues of the company.
The slightest delay in the deliveries can cost the customers to consider the alternatives
available in the market. This leaves room for the company to check and reconsider supply
chains and on ground delivery structures.
The technological threat remains a paramount threat. A breach in the security of the system
can lead to massive discredit of the company in all dimensions. Loss of credibility among the
customers will be massive in case of such security breaches. The working space will be
disrupted at a global scale, which will be difficult to manage.
Breaks in the power supply in the massive chains, especially in the third world countries can
cause significant loss of the working hours and hamper the customer satisfaction (Baboolal-
Frank, R. 2021)The structural problems of the different countries remains a threat to the
company's reputation and the existing and potential customers.

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Relevant Theory
Introducing a business level strategy model into Amazon's functioning can help the company
become more diverse and successful. This strategy involves an integrated and coordinated set
of actions that is taken by the form to gain a competitive advantage by exploiting their other
core competencies in that product market. Amazon must develop a one business level
strategy and divide it among its other geographical locations to to imply that in its separate
jurisdictions. For successfully introducing this model strategy Amazon must start performing
their activities differently or perform different activities and bring out differentiation in their
business. This would help Amazon lead an integrated cost leadership differentiation where
their uniqueness would be focused with differentiation and cost will be focused with cost
leadership. It will help the company achieve lower overall cost and process more efficiently
and provide lower price products to the customers. If Amazon stands out from its other
competitors then its service can have an added value therefore asking for a premium price. A
broad company business strategy model inclusion scope will let Amazon use their capabilities
in creating value for the customers in the industry wide bases by competing in the various
segments that they are a part of (Feeny, 2001) It makes the company become more integrated
in the set of actions that it takes and retains customers. Amazon should have few management
layers with efficient production and consistent policies in its organisation. The employee
should be given effective training and the organisation must use easy-to-use manufacturing
technology that includes low-cost automation. High performance Salesforce and low cost of
transportation can be very advantages for customer retention.

Conclusion
The conclusion here can be drawn that the amazon.com business has always been on good
terms. This has been possible because of the advancement in the technological factors which
help the business sector to produce more and thus increase their sales. The company has been
an ideal one when it comes to customer satisfaction that includes cheap prices and fast
deliveries. The company always focussed on the aspects where less time is consumed and
that could be made successful because of the technological factors. In the PESTEL analysis
the factors have been elucidated upon which the business sector is wholly dependent upon.
The political factors would help them improve their business as they are able to keep a track
upon the factors on an international level where leading countries like the United States of

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America and other European countries are included. The economic factors would always help
the company to improve upon their business as there is always a pressure to increase their
advancement in technologies under the technological aspects. The economic aspect would
help the company to think about the profit gains of the company. The sociological and the
ecological factors talk about issues like increasing the gap between the rich and poor and how
the business is focussed on the natural factors of the company. Now the SWOT analysis talks
about the strength, weakness, opportunities and threats. Here, the business aspects of the
company are explored on the basis of the four terms allocated to it. Thus, through these
aspects it can be judged whether the business sector is functioning on the basis of these
things.

References

Baboolal-Frank, R. 2021, "ANALYSIS OF AMAZON: CUSTOMER CENTRIC

APPROACH", Academy of Strategic Management Journal, vol. 20, pp. 1-16.
Feeny, D. 2001, "Making Business Sense of the E-Opportunity", MIT Sloan Management
Review, vol. 42, no. 2, pp. 41-51.
Kargar, J. 2004, "AMAZON.COM IN 2003", Journal of the International Academy for Case
Studies, vol. 10, no. 1, pp. 33-52.
Kumar, S., Eidem, J. & Diana, N.P. 2012, "Clash of the e-commerce titans", International
Journal of Productivity and Performance Management, vol. 61, no. 7, pp. 805-830.

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