AMAZON.COM, INC.

Module: MS7SL93O - Strategy and Entrepreneurship

Student Number (UWL Registration Number): 21498582

Assignment Name: Assignment 1

Lecturer Name: Mr. Rizwan Anise

Word Count: 3000

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CONTENTS
1. Executive Summary.......................................................................................................................3
2. Introduction to the Company.......................................................................................................4
3. Environmental Micro Analysis......................................................................................................5
4. Industry Analysis...........................................................................................................................7
5. Internal Analysis............................................................................................................................9
6. Conclusion...................................................................................................................................12
7. References...................................................................................................................................14

LIST OF TABLES

1. VRIOs review of Amazon…………….……………………………………………………………………………… 11

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 1. Executive Summary
An organization to stand strong and dominant in the market needs to undergo a well-built
strategic plan. For such a plan to formulate the organization must take into consideration in
regards to the external environment as well as the Internal environment, hence evaluating
the strengths, weaknesses, opportunities and threats along with factors such as Political,
Economic, Social, Technological, Environmental and Legal bound aspects that possess
towards the organization and learn lessons to move forward in the industry. Hence with the
help of these looks necessary frameworks are built. The importance of formulating
management strategies is investigated this assignment. The whole study analyzes how the
corporate world is evolving and provides techniques for analyzing the possibilities and
challenges that have been developing. Alternative opinions in evaluating organizational
positioning are created, each of which is compatible. Managerial and executive-level
corporate practices that guide important trade choices, general direction, and benefit
maximization are referred to as strategy or entrepreneurship. Entrepreneurial activity is
concerned with identifying and exploiting market prospects using creativity, risk
management, and strategic actions. The mechanism whereby businesses and governments
turn new information into practice opportunities in the form of new goods and services is
known as entrepreneurship. This field of studies specifically shows though when HR policies
become coordinated to develop and implement and support employee-based skills that
contribute to competitive advantage, HR practices lead to success. Mostly as result, the best
definition of entrepreneurial human resource strategy is the collection or collections of
human resource practices that maximize the likelihood which involves being translated into
new innovations.

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 2. Introduction to the Company

As per Forsgren 2013 accepting the world which the company works can be considered as a
very important aspect of strategy because this can help to identify the risks as well as
prospects that the industry presents. Exterior research examines the larger market world
through which the company operates. The organizational review examines the company's
fortes and disadvantages. Probing both the personal as well as the external environment.
Throughout this research the PESTEL analysis as well as the five-force analysis will be taken
into consideration for a chosen organization. The organization that have been chosen for the
research is well known global organization that extends throughout the world. Amazon can
be considered as one of the largest internet established corporation. Jeff Bezos who is the
founder of Amazon believed the only method for surviving was establishing an online
platform. Cadabra was the original name for Amazon (from Abracadabra). His online
platform began in 1994 as an online book seller. From books later the platform branched to
various day to day miscellaneous items. Amazon has grown to market customer computer
electronics, computer playoffs, applications, homebased maintenance products, figurines,
games. Now Amazon has established as a one stop internet store where buyers can compare
prices and quality of products as thousands of products to choose from.

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 3. Environmental Micro Analysis

As per Gereffi etc 2005 examining a company's industry climate, considering aspects such as
economic assembly, economic status, trends, and history, is known as external research.
Macroeconomic, financials, politics, societal, demographics, and technical analysis are all
examples of external analysis on a macro scale (Murphey & Gause 1974). The set main goal
of exterior analysis is to identify the opportunities as well as risks to promote effective and
efficient performance, expansion, as well as uncertainty of a given industry or segment. To
complete the external review, an organization must examine the industries. Without a doubt,
Amazon has played a significant role in this shift in consumer behaviour in online shopping.
In several countries, it is the market leader in the online retail industry.

• Political environment viewed as trade agreements between organizations, countries, and

locations. As Amazon is an internet retailer that sells merchandise to customers all around
the world. Since Amazon operates in many countries, they must adhere to local political and
legal laws. However, as different parties can obstruct online transactions. To introduce, sell,
and benefit, Amazon is reliant on federal assistance. Nevertheless, due to many e-based
location Amazon must abide by the cybersecurity bills along with taxes pertaining to those
countries as well. Since Amazon's activities cover several countries, it is susceptible to
political upheaval in any one of them. Donald Trump, Bernie Sanders, the GMB union in the
United Kingdom, and the Archbishop of Canterbury, for example, all criticized it (Elliott
2018). Numerous viewers believe the decision to raise the minimum salaries for staffs in the
United States and United Kingdom was influenced by both political and economic factors.

• Economic aspects that refers to the interest rates along with exchange rates, Amazon is
expanding the number of items available for purchase online and delivery to the customer's
home or shop. They have also redesigned their website to make it more user-friendly, with
better search ability for shopping as there is a rise in e-based shopping platforms. It is
effectively meeting the demands of consumers. On the other hand, it should be noted that
high labour costs, especially in the United Kingdom and the United States, as well as
alterations in taxation, could risk earnings, with straight consequences for long-term
business development.

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• Social influences include changes of the lifestyle as well as the age gaps between population
and the new trends in the world, Amazon has managed to increase their product ranges are
constantly expanding, and their shipping is usually excellent. Younger generations enjoy
online shopping, but it is often more convenient for the elderly who have trouble walking or
driving. However, some critics say Amazon is producing a lot of lazy customers, which may
have social and health consequences. As per Patricof, 2018 and Gillespie, 2007 many people
are concerned about the complete effects of the internet tsunami. This is, without a doubt, a
consequence of the essential lack of human contact.

• Technological landscape includes new technological growth, Since Amazon is a technology

business, these factors will have a significant effect on its earnings. Amazon is a major actor
who has helped to make internet shopping a worldwide phenomenon. It is developing
Amazon Prime Air, a super-fast distribution device that potentials to transport parcels
weighing up to five pounds in more of less than that of 30 minutes using small drones. It aims
to greatly boost Amazon's distribution system's protection and performance (Amazon 2021,
Lioukas etc. 2016).

Many people, though, are apprehensive around the effect of technology on our society's
social structure and togetherness. In the same way, a lot of Amazon merchants and users
are concerned about the security of personal details such as credit card and debit card
numbers, as well as all other personally identifying information contained on the Amazon
website. Amazon is, without a doubt, all about technology. Without technology, there will
be no Amazon.com.

• Environmental factors reveal the impact on the environment as well as promotion of

ecofriendly and biodegradable products as well as the appeal of a low-carbon lifestyle is
growing. Though it is difficult to quantify Amazon's environmental effects, many contend
that the organization contributes to environmental harm. Their major areas of criticism have
been packaging volume, traffic-related pollution, and environmentally hazardous materials.
It is worth noting, though, Amazon wants to decarbonize their operation b to have net zero
carbon by 2040 (Amazon 2021).

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• Legal factors such as Changing of the import and the export regulations. Countries in
which Amazon operates has its own set of laws and regulations that it must follow.
Otherwise, it would be subjected to legal action and fines. Recently, a French Supreme
Court had ordered Amazon to cease retailing ‘non-essential' produces or to pay a fine of €1
million per day before the development of a defense strategy to look after its employees'
health (Hern 2020).

Furthermore, based on the external factors identified in this PESTEL/PESTLE report, it is

suggested that Amazon strengthen its reputation by implementing a corporate social
responsibility policy that tackles current concerns that bind the company to the
environment. All these factors together comprise of the PESTEL analysis that examine the
external factors pertaining to Amazon (Roper, 2012)

4. Industry Analysis

Porter's Five Forces is a laidback but an effect technique for determining the attractiveness
of the market climate and the conceivable profitability of your plan. This is helpful because
you will be able to change your approach based on your understanding of the factors in your
world or market that can influence your profitability. Michael Porter, a Harvard Business
School professor, developed the technique to assess an industry's competitiveness and
potential profitability. Organizations are likely to keep a close eye on their competition, but
Porter urged them to look past their competitors' activities and see whether other
considerations could influence the market climate. There are the following:

• Competitive rivalry: Amazon competes against several strong rivals, and the internet
shopping market is highly competitive. Meanwhile numerous superstores, minor scale
products, businesspersons have begun to market the possessions virtually in recent years,
the growth of the industry has arisen due to many actively joining. Other e-platforms such
as e-bay and Alibaba have proven to be the biggest competitors. Amazon is up to a lot of
rivalry from both players. Low switching costs and readily available replacements increase
Amazon's burden because consumers can easily switch from one store to another at a low
cost. As a result, Amazon spends heavily in delivering high-quality merchandise and services

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to its consumers, giving it an edge over competitors. Hence Competitive rivalry can be
evaluated as ‘High’.

• Threat of New Entrant: Without a question, it’s simple begin an online marketplace or an
e-store website on the internet, on the other hand taking on a giant like Amazon will be
daunting for any brand. Huge investments will be needed in warehousing, storage,
marketing, creating a user-friendly platform, customer support, logistics, and other areas.
Hence Threat of New Entrant can be evaluated as ‘Low’ (Mims, 2018).

• Bargaining power of buyers: Amazon places a strong focus on customer loyalty and strives
to provide exceptional service to its consumers. In today’s e-commerce marketplace
Amazon takes the customer-centric tactic. This guarantees that company's goods are of
good quality and that they are delivered on schedule. Because of the fierce rivalry in the e-
commerce market, customers have a lot of buying power. Because of the abundance of
replacement options and heavy competition, Amazon customers have strong purchasing
power for household products, online subscription channels, Amazon fire TV stick, and
Kindle. Hence Bargaining power of buyers can be evaluated as ‘High’.

• Threat of substitute: Amazon competes against substitutes in both the online and physical
shopping markets. The major challenges that is faced by Amazon is the industry's low
swapping cost, as consumers can quickly migrate from Amazon to new retailers. Given that
Amazon does not bargain elite merchandises and that mainstream of its merchandises are
retail, providing finest user deal in this business. Since of fast accessibility at low-cost
alternatives, a lone negative comment would shock shoppers out of Amazon. Hence Threat
of substitute can be evaluated as ‘High’.

• Bargaining Power of Suppliers: Amazon gets the supplies it uses for its e-commerce service
from suppliers. Suppliers have a greater impact in the e-commerce industry and without
them, retailers will be unable to satisfy their clients. However, Amazon is the most well-
known competitor in the market and has a significant advantage over its suppliers. Since
there is less competition among suppliers, while Amazon retails commodity within a limited
number of contractors, hence authority dealers’ upsurge moderately. Amazon places a
strong focus on its vendors' ethical behaviour, making it difficult for them to see forward

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incorporation in the supply chain. Hence Bargaining Power of Suppliers can be evaluated as
‘Low to Moderate’.

Amazon is the dominant leader in the e-commerce industry, and it must concentrate on its
brand name to stay ahead of the competition. Hence all these five points are very much
needed to become the best of the best.

5. Internal Analysis

A VRIO review of Amazon explains the company’s growth whereas upholds the market
share. VRIO model was founded by Jay B. Barney's. The Internal appraisal method for
determining a firm's strategic advantages. Nonetheless, the company's information
infrastructure properties, as well as associated services and expertise, are at its heart. The
VRIOs theoretical model aids decision-makers in developing optimal action strategies and
competitive strategies to succeed against rivals. The key capabilities of Amazon remain built
on operational services as well as market gears which meets the VRIO necessities such as
values, rarity’s, inimitabilities, and organization. Below are roughly of Amazon's long-term
strategic advantages and key competencies: Brand equity on a national scale, Market
capitalization is high, affiliates from all over the world and the attributes of artificial
intelligence. Any of these ‘resources' fits within each division of the VRIO review, and they
all place Amazon to retain and increase their strategic potential within the industry, enabling
them to maintain their existing capability but still allowing them to expand into new
competitive environments (Pesic 2013, Knott 2015).

• The topic of “value” is the first part of the VRIO system. Understanding whether Amazon is
equipped to respond to environmental challenges or opportunities given its tools and
capabilities, Amazon has honed its expertise and skills to be among the finest in the
industry, allowing them to detect and mitigate potential threats. They will also use these
tools and skills to find and build on opportunities so that their customers profit from their
importance. For example, as their customers started to react favourably to Amazon's two-
day prime delivery, they used their logistics skills and energy to extend the prime shipping
capability, giving them a long-term strategic edge over other rival retailers.

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• The issue of "rareness" is the next part of the VRIO system. How do other companies have
expertise and skills that are comparable to Amazon's, though there could be minor gaps in
more comprehensive tools and capabilities, Amazon's core operation and capabilities are
quite close to those of rival companies. In general, Amazon provides a vast range of
categories and merchandise to its customers at a reasonable price.

• The topic of "imitability" is the third aspect of the VRIO system. Can other companies face
a cost limitation when trying to match Amazon's expertise and capabilities, it has previously
been stated that Amazon faced considerable monetary encounters which contributes to
develop and establish the company’s capabilities, particularly those related for the free two-
day delivery services on which they depend so deeply. Amazon had to tackle the financial
challenge head-on, it is reasonable to take up that competing corporations will face a similar
cost deficit when trying to replicate this capability. Offering free delivery and then absorbing
substantial expenses associated with a two-day shipping substitute would put many
businesses for a drawback.

• The topic “organization" itself is the final part of the VRIO system. Amazon is structured in
such a way that it can fully realize the strategic value of its tools and capabilities. When
adapting the VRIO system to their tools and skills, it is also the most powerful aspect. They
will generate and improve their competitive edge when complementary tools such as
logistical experience, customer relationship management, and imaginative and inventive
marketing all work together. These tools and technologies cannot do much on their own, but
when they are combined flawlessly, as per Kim etc, 2015 Amazon is able to appreciate its true
competitive advantage potential.

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As per the above details the below listed table can be taken into remark.

Table 1. VRIOs review of Amazon

(CA-Competitive Advantage/TA-Temporary Advantage)

In conclusion, adapting the VRIO system to Amazon demonstrates that, while the general
concept or operation might not be unique, the way Amazon organizes itself and performs its
plan daily.

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 6. Conclusion

Amazon may be the biggest internet retailer in the United States, but it is the world's second
largest. Alibaba, China's largest ecommerce firm, is ahead of it, controlling 80 percent of the
Chinese industry. Amazon is now the industry leader in corporate cloud hosting technology,
with Amazon Web Services (AWS) allowing consumers to scale up or down resources if
desired. This is preferable to trying to purchase additional machines and tools or having
extra equipment on hand for AWS’s one million or more customers. Amazon, on the other
hand, recently removed the free consumer-facing feature of the cloud storage services as
well as the Amazon Cloud Drive. In video on-demand industry, the firm is currently an
afterthought. In terms of subscribers and content, Amazon Instant Video lags well behind
Netflix and Hulu. Amazon had continuously done good in provision of comments to
customers on the dependability of distinct venders. Nevertheless, it has not stopped public,
nonetheless from writing counterfeit optimistic reviews and false harmful reviews.

Amazon has released a detailed list of ethical procurement policies that it expects its
vendors to follow. Suppliers are not allowed to use forced labour or compel their employees
to work in hazardous environments. According to Amazon, small and mid-sized companies
selling on the platform generated 1.6 million jobs globally in 2018, up from 900,000 in 2017.
In 2018, 50,000 sellers won more than $500,000, with another 25,000 earning more than $1
million. AWS is a corporate unit of Amazon, and Amazon, the retailer, is one of its biggest
clients. AWS was a forerunner of the cloud computing movement. Everyone now has access
to supercomputing facilities with the swipe of a credit card, and they only pay for what they
need, because of cloud computing. Cloud computing has made it both faster and less costly
for startups to introduce groundbreaking technologies.

These new technological advances and the customer service has in large, impacted Amazon
positively and hence capturing the loyalty of the people. Amazon also introduced a new

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initiative that prioritizes ratings that other Amazon users have found useful, feedback from
confirmed purchasers of the product, and current reviews. Amazon has become embroiled
in a slew of other controversies. It has been chastised in the same way as Walmart has been
for the bad labour conditions. Staffs has thoroughly monitored through high shift basis and
have been punished through warnings of bosses if discussed about working conditions.
Though Amazon deserves applause for raising the minimum wage to fifteen dollars and
outfitting its employees with special vests that allow robots to see them and avoid colliding
with them, that is not the whole story. Bonuses and equity incentives for these employees
were also withdrawn. Any former Amazon customers have switched to Etsy, an online
retailer that emphasizes “people over profit” and “community over greed”. Jet.com, the
new company founded by a former Amazon founder, was launched for the sole intention of
taking on Amazon, a challenging task. Meanwhile, Amazon is actively investing in
autonomous technologies for warehouse to accelerate movements of the products and
supplementary goods through factory grounds as well as their shipment to consumers.
Robots can malfunction, but they do not complain about being overworked. These are the
negatives that highly impact Amazon.

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 7. References

Amazon (2021) Amazon Prime Air, available at: https://www.amazon.com/Amazon-Prime-

Air/b?ie=UTF8&node=8037720011

Elliott, L. (2018) Even Amazon isn’t immune to political and economic pressure, available at:
https://www.theguardian.com/technology/2018/oct/02/even-amazon-must-heed-laws-
politics-and-economic

Forsgren, Mats (2013) Theories of the multinational firm: A multidimensional creature in the
global economy (2nd ed.). Cheltenham: Edward Elgar.

Gereffi, G., Humphrey, J. and Sturgeon, T. (2005) The Governance of Global Value Chains,
Review of International Political Economy, 12 (1), 78-104.

Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics.

Oxford University Press, USA.

Hern, A. (2020) Amazon faces €1m a day fine for selling ‘non-essential’ goods, available at:
https://www.irishtimes.com/business/technology/amazon-faces-1m-a-day-fine-for-selling-
non-essential-goods-1.4229733

Kim, S. C., Lee, J. S., & Shin, K. I. (2015). The impact of project management assets on the
VRIO characteristics of PM process for competitive advantage. International Journal of
Productivity and Quality Management, 15(2), 153-168.

Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources? Management
Decision, 53(8), 1806-1822.

Lioukas, C. S., Reuer, J. J., & Zollo, M. (2016). Effects of information technology capabilities
on strategic alliances: Implications for the resource-based view. Journal of Management
Studies, 53(2), 161-183.

Mims, C. (2018). The Prime Effect: How Amazon’s Two-Day Shipping Is Disrupting Retail. The
Wall Street Journal.

Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis. PESTLE Analysis.
Business Horizons, 17(5), 27-38.

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Pesic, M. A., Milic, V. J., & Stankovic, J. (2013). Application of VRIO framework for analyzing
human resources’ role in providing competitive advantage. Tourism & Management Studies,
575-586.

Roper, K. (2012, November). BIM Implementation: PESTEL Drivers & Barriers (Cross-national
Analysis). In World Workplace 2012. IFMA.

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