Submitted By- MITALI BEDI

020-I-138

JIJO GEORGE
020-I-130
Section-A
TABLE OF CONTENT
 Introduction

 Product and Services

 Mission and Vision Statements

 Future Plans

 PESTLE Analysis

 Porter’s 5 Force Model

 SWOT Analysis

 Strategies followed by Amazon

INTRODUCTION

• Amazon is an American multinational technology company which focuses on e-commerce,

cloud computing, digital streaming, and artificial intelligence. It is one of the Big Five
companies in the U.S. information technology industry, along with Google, Apple, Microsoft,
and Facebook.
• Amazon was founded on july 5 1994
• Amazon was founded by Jeff Bezos
• Head quarters- Seattle, Washington, U.S.
• Amazon’s worldwide annual revenue totaled US$386.064 billion for 2020.​
• The company has been referred to as "one of the most influential economic and cultural
forces in the world", as well as the world's most valuable brand.
PRODUCTS AND SERVICES

PRODUCTS SERVICES
 EchoFire  Amazon.com
 Fire Tablet  Amazon Alexa
 Fire TV  Amazon Appstore
 OSKindle  Amazon Music
 Amazon Prime
 Amazon Prime Video
 Amazon Web Services
MISSION AND
VISION
STATEMENTS
 MISSION STATEMENT

Mission statement -“We strive to offer our customers the lowest possible prices, the
best available selection, and the utmost convenience.”
The following characteristics are identifiable in Amazon’s corporate mission statement:
 Lowest prices
 Best selection
 Utmost convenience
 VISION STATEMENT

Vision Statement-“to be Earth’s most customer-centric company, where customers can

find and discover anything they might want to buy online.”
The following characteristics are identifiable in Amazon’s corporate vision statement:
Global reach
Customer-centric approach
Widest selection of products
FUTURE PLANS
Amazon's ambitious projects for the future-

 Cashier-free stores  Amazon's own delivery service

 Biometric payments  Self-driving technology
 Catering for all shoppers  Amazon Scout
 Investment in India  Fleets of delivery drones
 Food delivery service  Home security drone
 Reinventing the department store  Amazon Air
 AI-powered home robots  More fulfilment centres
 Fitness tracker  Game streaming services
 Innovative healthcare
What is pestle analysis?

• PESTEL analysis can be best described as a framework that is mainly used by the
marketers in analysis and monitoring of the macro environmental factors that are
associated with a business.

• The results obtained from the PESTEL analysis are often used in identification of threats
and weakness in SWOT analysis of a company.

• PESTEL is an acronym for Political, Economic, Social, Technological Environmental and

Legal condition
Political factors

Amazon operates alongside political influence. In Amazon’s case, the following political
external factors are important in the development of the e-commerce industry:

 Political stability of developed countries, especially the U.S.A. and European countries

 Governmental support for e-commerce

 Increasing governmental efforts on cyber-security

Economic factors

Amazon’s performance depends on the situation of the economies where it operates its online
and non-online businesses. . In the case of Amazon the following economic external factors are
significant:

 Economic stability of developed markets, especially the U.S. and European countries

 Increasing disposable incomes in developing countries

 Potential economic recession of China

Social factors

Social conditions are a determinant of Amazon. Considering the trends in the remote or
macro-environment, Amazon faces the following sociocultural external factors:

 Increasing wealth disparity

 Increasing consumerism in developing countries

 Increasing online buying habits

Technological Factors

Technological advancement directly affects Amazon, considering the centrality of technology

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

 Rapid technological obsolescence

 Increasing efficiencies of IT resources

 Increasing rates of cybercrime

Legal Factors

Amazon’s e-commerce operations must adhere to legal requirements. In Amazon’s case, the
following legal external factors are significant:

 Rising product regulation

 Changing import and export regulations

 Rising environmental protection regulations on businesses

Ecological/Environmental Factors

Even though Amazon is mainly an online business, its operations are subject to the influence
of the natural environment. Amazon considers the following ecological external factors in its
strategic formulation:

 Rising interest in environmental programs

 Rising emphasis on business sustainability

 Increasing popularity of low-carbon lifestyles

 What is  Porter's Five Forces
model

 first published in Harvard Business Review in 1979.

 Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape
every industry and helps determine an industry's weaknesses and strengths.

 used to identify an industry's structure to determine corporate strategy.

 The Five Forces model is named after Harvard Business School professor, Michael E. Porter.

 Was developed in reaction of then popular SWOT analysis which he found lacking and ad hoc.
Components of Porter's Five Forces
Model

 Competitive Rivalry- Rivalry inside the industry


 Threat of Entrants

Threat of new Substitutes

 Bargaining power of Buyers

 Bargaining power of Suppliers
Competitive Rivalry-(Moderate to High)

 Amazon competes against strong competitors and, the rivalry in the online retail industry is
high.
 Because in recent years, the number of players entering the industry has increased with many
retailers, small scale brands, and startups are starting to sell their products online.
 The main competitors of Amazon are Walmart, Flipkart, Alibaba, eBay and many more. All
these players give intense competition to Amazon.
 Low switching cost and readily available substitutes put more pressure on Amazon because
customers can transfer from one to retailer to other at low cost.
 So, Amazon invests a large amount of providing high-quality products and services to its
customers and gains advantage on other players.
 Because no other player in the market can invest such a large amount as Amazon does. So,
Amazon has consistently retained its position of being the market leader of the e-commerce
industry.
 Threat of New Entrant – (Low)
No doubt it is easy to start an online retail store or an e-commerce website on the internet, but it would be
difficult for any brand to take on a giant such as Amazon. It would require massive investments in
warehousing, distribution, marketing, making user-friendly website, customer service, logistics and many
more.
1) Switching Costs: It is easy to enter the e-commerce industry, and also it is easy to gain competitors,
customers, because of the low switching costs in the market. However, the extensive investment that
Amazon makes on its brand development and, on customer experience, it becomes difficult for the
competitors to compete in the market. For any other brand, it would require billions of dollar investment
and, years of patience, to directly compete with Amazon.
2) Economies of scale: Amazon has an advantage over other brands on economies of scale because of the
reputation of being the largest internet retailer in the market. Although new players can comfortably enter
the market, they cannot potentially use economies of scale in their favor at the same extent as Amazon.
3) Customer Loyalty: Amazon gets the advantage of being the first big player in the e-commerce industry.
Amazon knew that customer can make or break a business, and, so it heavily invested in customer
experience from the beginning whether it be modifying customer friendly website, Delivery time and return
of goods. Amazon gave tried to give its customer the best experience in the market.
It is also difficult for any other player in the market to invest heavily in customer experience. In other
words, the time of entry and customer loyalty act as a significant factor in the e-commerce industry.
Threat of new Substitutes-(High)


 Amazon competes with substitutes in the online retail as well as with the offline retail
market.
 The biggest hurdle that Amazon faces is low switching cost in the industry, as customers can
easily change from Amazon to other retailers.
 As Amazon does not sell unique products, and most of the products are retail products, so
giving the best customer experience becomes a necessity for the company.
 And a single bad experience will drive the customers away from Amazon because of the easy
availability of substitutes at a cheap rate.
 Thus, the High threat of substitute in the porter’s five forces analysis of amazon shows that
Amazon highly focusses on customer experience to attain success in the online retail
industry.
Bargaining power of Buyers– (High)
 Amazon highly emphasizes on customer satisfaction and aims in providing high value to its customers.
 Amazon runs a customer-centric approach in its e-commerce business. It guarantees that the
company’s products are of high quality and, received on time.
 Customers generally have high bargaining power because of the intense competition in the e-commerce
industry.
 Customers tend to be price sensitive. If Amazon does not provide its customers with high-quality
service at the best price, they will go for its substitute in the market.
 The advantage for Amazon is its capability of providing high range product with millions of choices for
its customers at minimum cost with the best customer experience.
 It is difficult for any other brand to reach this level. So, it becomes tough for the buyers to find such
level of experience elsewhere.
 Customers of Amazon has high bargaining power for household products, Online streaming services,
Amazon fire TV stick, Kindle because of the availability of substitute products and high competition.
 But customers have low bargaining power for products with less competition or whose alternatives are
not available. Amazon Web Services is one such product with a lack of choices for the buyers.
 Thus, based on Porter’s Five Forces Analysis of Amazon, the company must give great importance to
the customer to maintain success in the long run.
Bargaining power of Suppliers-(Low to Moderate)

Suppliers provide Amazon with the products that it needs for its e-commerce
business.
The influence of suppliers in the e-commerce business is more because without
them, the retailers will not be able to serve their customers.
But Amazon is the most prominent player in the industry and has the upper hand
over its suppliers.
No doubt there are many suppliers working with Amazon, but they must follow
strict rules and regulations laid out by Amazon.
If Amazon sells a product whose suppliers are in small proportion, then the power
suppliers increase moderately, because there is less competition among the
suppliers.
Amazon strictly emphasizes on the ethical working of its suppliers, and it is tough
for the suppliers can even think of the forward integration in the supply chain.
What is SWOT Analysis?

 SWOT Analysis is a strategic planning technique used to evaluate the strength,

weaknesses, opportunities and threats of any business or organization or a product or a
process or a methodology.
 SWOT analysis is mostly used to understand the impact of the internal or the external
factors on the viability of an undertaken project or an organization.
 A technique that enables a group or individual to move from everyday problems and
traditional strategies to a fresh prospective.
 SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Strengths & Weaknesses = INTERNAL factors
Opportunities & Threats = EXTERNAL factors
 strengths
 Strong brand name – As a global e-commerce giant, Amazon has a strong position and successful brand image in
the market.
 Brand valuation – According to Interbrand’s Global Brand Ranking 2020, Amazon is ranked at #2 position (Apple at
#1 and Google at #3), with a brand value of $200 Billion.
 Customer oriented – Amazon caters to a large number of customers for everyday needs at inexpensive prices. This
has made it a customer-oriented brand.
 Differentiation and Innovation – Amazon frequently brings creative ideas and innovative additions to its product
line and service offerings like ambitious drone delivery service and Withing's Aura Smart Sleep System. This creates
a differentiation from other companies.
 Largest Merchandise Selection – Amazon owns extensive product mix which attracts online customers to make
their majority of purchases from it rather than other online retailers.
 Large number of third-party sellers – Due to the high traffic volume on Amazon’s sites, a large number of third-
party sellers have joined the platform of Amazon to sell their own merchandises.
 Market Leader – With over $1 Trillion market capitalization and above $386 billion annual revenues, Amazon is
truly a market leader in online retail industry.
 Superior logistics and distribution systems – Amazon uses highly efficient logistics and distribution systems. It
even has fixed rates for different delivery time periods. Thus, it executes reliable, secure, and fast delivery of goods
and products to the customers.
Weaknesses

 Easily imitable business model – Online retail businesses have become quite common in
this digital world. So imitating Amazon’s business model for rival firms is not so difficult. A
few businesses are even giving Amazon a tough time. These include Barnes & Noble, eBay,
Netflix, Hulu, and Oyster etc.
 Losing Margins in Few Areas – In few areas such as India, Amazon has faced losses. It’s
free shipping to customers can be one of the reasons that expose the risks of losing margins
in some markets.
 Product Flops and Failures – Its Fire Phone’s launch in the US was a big failure while its
Kindle fire device didn’t even grow well.
 Overdependence on distributors – Relying on distributors exposes Amazon to a wide
range of issues.
opportunities'
 By expanding physical stores, Amazon can improve competitiveness against big box
retailers and engage customers with the brand.
 Amazon has the opportunity to improve technological measures and organizational policies
to reduce counterfeit sales.
 Can do backward Integration by expanding its production of in-house brands such as
Amazon basics to differentiate its offerings and improve profit margins.
 More acquisitions of e-commerce companies can increase the company’s market share and
reduce the competition level.
 Self Driving Technology – Amazon recently acquired California-based self-driving startup
Zoox Inc for whooping $1 Billion.
 Launch of electric rickshaws in India– Amazon pledges to make a positive impact on the
environment. With this vision in mind, Amazon plans to deploy 10,000 electric rickshaws
for delivery in India by 2025.
 Threats
 Few controversies have caused a dent in Amazon’s brand image. Amazon has an
overwhelming amount of fake reviews, and the problem has worsened in recent times due to
the pandemic. Product reviews are a critical indicator of quality and authenticity, and
customers rely heavily on reviews to make purchases.
 Government regulations can also threaten the business proceedings of Amazon in some
critical countries. Amazon does not ship to Cuba, Iran, North Korea, Sudan, and Syria.
 Increasing cybercrime can affect the network security system of the company.
 Aggressive competition with big retail firms like Walmart and eBay can give Amazon a tough
time in the future.
 Imitation is simple as many new entrants are coming up in the market usually with the same
business model of Amazon.
 Economic Recession – Amazon is not immune to an economic recession. If economic
uncertainty worsens, it can impact Amazon’s sales.
Strategies followed by Amazon
Following are the few strategies that is followed by Amazon that make Amazon so successful-
Customer Centric Approach-
 Amazon Stresses the Importance of Customer Satisfaction Instead Of The Competitor
 Amazon Achieves Excellent Customer Satisfaction By Offering An Ever-Expanding And
Large Selection of Products And A Personalized Experience
 Amazon Achieves Excellent Customer Satisfaction through Speedy Service
 Amazon Achieves Excellent Customer Satisfaction through Competitive Prices
 Amazon Continually Improves the Customer Experience
Differentiation and Innovation-
Amazon Maintains Leadership with Their Product Selection
Amazon Maintains Leadership by Offering Various Features and Services
Worldwide recognition-
 Amazon has a powerful influence on any new market it enters. Amazon has been able to
leverage its brand recognition globally, which makes it such a threat to new markets.
Logistics-
Amazon has a logistics system that is far superior compared to other global retailers, and this
is one of the key ways Amazon is able to deliver on its goal of being the earth’s most customer-
centric company. From distribution centers near large cities to an advanced robotics system for
improved efficiency, Amazon invests deeply in its logistical systems.
Corporate Agility-
Despite its size, Amazon can make decisions quickly that enable it to stay ahead of the game.
The company has several built-in systems that keep teams and decision-making flexible and fast.
Other Strategies-
Amazon Focuses On The Long Term Not The Short Term
Amazon Sees Opportunities and Not Failures
Amazon's Has Strong Values & Culture