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The Macro Enviroment Analysis

Amazon. com was one of the well-know companies to sell goods online. Amazon. com, Inc. in the beginning began as an online bookstore which offer the fastest, least complicated, and most gratifying shopping experience on the internet. With all the success of the web bookstore, the business has diversified into extensive range products and services of basic merchandise, groceries, electronic digital product and even more. Amazon. com is formal American e-commerce company by Jeffrey P. Bezos in 1994 and it goes online in July 1995. The Headquartered happens to be positioned in Seattle, Washington and operate worldwide. Amazon. com, Inc. has a total 33700 employees and proven distinct websites in Canada, the uk, Germany, France, Italy, Japan, and China. In addition, it provides international shipping and delivery to certain countries for a few of its products. In May 1997 the company fulfilled initial public offering and common stock under the sign "AMZN" is outlined on the Nasdaq Global Select Market. According to official twelve-monthly report acknowledged the company had produced USD$ 34. 204 billion of revenue and USD$ 1. 152 billion total net gain in yr 2010. Amazon. com has achieved a huge success over the years and it claimed one of the most successful online stores in the annals. In 1999, the famous Time magazine is named the company founder Jeff Bezos be the Person of the entire year, and recognizing the business's success in popularizing online shopping. Lately Amazon. com has extended into digital syndication of selling downloadable music and electronic digital books. The company pioneer to introduce Amazon Kindle in currently 2007. The e-book audience displayed the first motion into hardware that allows user to learn books and paper in the devices.


In this part is to supply the external environment research of Amazon. com in USA America. Typically includes the considerable environmental factors which will impact organizations at various levels. It is important to consider the impact of the exterior factors on the individual organizations (Johnson et al, 2006, P65).

PESTEL Analysis

PESTEL analysis is concerned with the external environment aspect that will affects on a business. Normally it used to identify the current developments in the politics, economical, sociable,

technological, environmental and legal surroundings.

In the Politics aspect,


Amazon. com Inc. global headquarters can be found on Seattle, Washington. In additional the business has offices across other places in Seattle, which including Union Train station at the PacMed building in Beacon Hill, and the Columbia Middle. For the most part recent, Amazon is strategies to go its headquarters south Lake Union commencement in mid-2010 and expected with full occupancy by 2011. Essentially Amazon has various office buildings in THE UNITED STATES, European countries and Asia market. The international activities is to provide warehousing and order-fulfillment for third-party vendor across the world.


The SWOT examination of Amazon. com will bottom on their central business which is online store.


Brand Identification: A confident brand image offer competitive advantages to the company really helps to generates trust and reputation to attract customers. Corresponding to Brandz Top 100 Brand Rating by Millward Dark brown, Amazon. com Inc. is positioned quantity 15 out of 100 in list are the world's most trusted brands this year 2010.

The BUSINESS DESIGN: with the built in of it into business model has the benefits to minimize the price. Amazon's business design offers a competitive gain since there is absolutely no physical store. This allows keeping costs low and sells with lower prices than opponents. Although the business offer below selling price, but they have the ability to become profitable from the high volume of goods sold.

High Selection of Goods & Product Diversification: Amazon. com sells a huge variety of products include Dvd disks, CDs, MP3 downloads, computer software, video games, consumer electronics, apparel, furniture, food, and toys and games. Amazon. com has constantly reinvented their product and services and increasing their value. The company's is concentrate on research and development of services and enhancements to existing products maintain a strong market share. For example Amazon Kindle has change the ways people to read catalogs and magazine on new gadgets devices.

Ease of Use, Secure & Trusted Online Retail Program: Amazon. com provides a feature-rich content, a secure and trusted transaction environment and easy-to-use efficiency for customers. Besides that it's able to customize web pages to individual customer personal preferences, typically included product

recommendations generator. This technology promote related goods basic on customer purchase.


Low Profit Margins - The gross profit margin which measures the relationship between income to cost of sales has decreased by 1. 1 %. Lowering margins signify increasing cost stresses and continued reduction in margins would impact the success of the company

(Marketline Business Information Centre, 2007).

Cost of Free Delivering: Amazon. com has offered free delivering in order to draw in customers in US. Nevertheless this plan is expensive and escalates the expenses to the business.

Inventory: to be able to meet delivering times, amazon. com has to maintain an important inventory; this may be risky because of the fact that demand of products is continually changing.


International Market segments: the quickly growth of use of internet throughout the world would allow Amazon. com to extend the brand to more markets.

The Expansion of Digital Press: Digital press begin popularizing within the last few years. According to Emarketer Online (2008) predicts that US customer spending on movie downloads will more than two times from 2007 to 2008, from USD$114 million to UDS$245 million. It seems to a chance for Amazon. com to regularly increase on digital downloadable content business.

Plentiful Suppliers: strong marriage to largest provider includes Toy R Us, Circuit City, Office Depot, WHSmith and more. This allows Amazon. com to sell more goods to improve services and the image of the brand.


Business Competition: Online retail is highly competitive and business rivalry to Amazon. com such as eBay and Wal-Mart. A lot more products and services the company supplies the more competitors can be found.

Price Competitiveness: Amazon. com experienced a low profit percentage and one of the best attractions is platform on low prices strategies which seduced most of the shopper. At this time price is high elasticity where bulk consumer will pressure by the price. Consequently other competition such as eBay and Wal-Mart may offer even low price and better deals to consumer.

Difficulty on Syndication: boost the variety of products and geographical position may present numerous complications in the circulation.

Over Dependency on Supplier:


The Ansoff Matrix

Ansoff's Product Matrix to recognize directions for our strategic development



The Porter's five pushes tool is a straightforward but powerful tool for understanding where vitality lies in a company situation. That is useful since it helps understanding both the strength of the current competitive position and factors affecting the strategy development. Eventually, amazon. com will be examined under this model:

Supplier Power

On the main one hand amazon. com has marked advantages with almost all of their providers (books, audio, technology) for the reason that these businesses do not demand their products until the moment that amazon. com sell them (consistent strategy from big companies). On top of that, amazon. com compensates suppliers for those products only 35 days and nights after that that has been sold, nevertheless companies are prepared and prepared to provide services and products to amazon. com. On the other hand, amazon. com has turned its primary functional system (OR WINDOWS 7) to Linux (for more details see appendix E), this activity is estimated to save more than 15 millions of dollars to the business.

For small companies and publishers, amazon. com maintains a maximum of five items in their stock in order to lessen costs.

Suppliers consider amazon. com as an important and esteemed company hence, their determination with amazon. com is plainly obvious and essential.

Buyer Power

Once, Invoice Gates (Microsoft's owner) said, "I buy my literature in amazon. com because I really do not need time to go to the publication store" (thetimes. com). Initially consumers that buy goods in amazon. com have a tendency to become regular clients because of the low prices that amazon. com can offer. In addition these prices can be hard to reach by the competence.

Low prices is the principal fascination that amazon. com offers to each individual buyer. Moreover the low average of clients transitioning from amazon. com products and services to the people of the competence is reasonable.

Competitive Rivalry

Amazon. com is main companies into the e-commerce field. Thus giving to amazon. com a certain degree of tranquillity in to the market. Nevertheless amazon. com has innovated along the years getting highest degrees of customer's satisfaction which can assure their position in to the market money for hard times.

Threat of Substitution

As this paper discussed earlier, amazon. com has innovated their services along the years and the name of amazon. com is well known and trusted in to the field hence, amazon. com does not present threats of substitution at least in the small amount of time.

Threat of New Entry

Internet shows to us that a simple idea well developed can offer astonishing results, instances such as Facebook. com, Plentyoffish. com, Youtube. com and so forth, these companies are suffering from their internet sites in a brief period of time with incredible final results. This can be the proof a threat of new entries in to the market can be done.

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