Table of Contents
Amazon.com, Inc. Overview & Background
Amazon Environmental Scan
Economic setting
Technology Surroundings
Competitive Environment
Sociocultural Environment
The laws and regulations which influence how a business operates.
Suggestions
Fabbe-Costes et al. Environmental scanning is the continuous examination of an organization’s strategy planning process. It is a systematic approach to gathering, analysing, and conceptualizing relevant data for an organization in order to plan, forecast, and/or implement an organization’s success. Multinational Companies have found that well-researched and comprehensive strategies are key to their success in marketing.
Further, Wheelen et al. Wheelen and colleagues. Multinational companies can use environmental scans to assess the market and provide the necessary oversight. Therefore, the environment in which an organization operates has to be considered. It includes all factors and conditions that could have an influence on its ability or failure to achieve its primary objectives. The holistic process of environment scanning requires that employees and managers of companies gather, analyze, disseminate and share the data for strategic purposes. According to Wheelen et al., an environmental scan is designed to help management identify and manage prominent trends, leverage opportunities, minimize threats and learn from any lessons that may impact their company. This paper examines Amazon.com, Inc.’s strategic environmental scanning. It will focus on five environments that assess the company’s threats as well as Amazon Environmental Scan opportunities. These environments are increasingly important for marketing: they include regulatory, technological, competitive and social environments. Amazon.com, Inc. Overview & Background Originally called Cadabra, Amazon.com, Inc., was created by Jeff Bezos, an online retailer Kristensen et al., in 1994. 2017. It was the first online retailer to become the global leader in 1995, when Amazon.com, Inc. expanded its business. Kristensen et.al. believe that the company’s mission is “Get Big Fast”. They have achieved their primary objectives by delivering any book to any reader around the globe. 2017. After its first year of operation, Amazon.com, Inc. had 180,000 customer account and $15.7M in revenue. Kristensen and colleagues reported that customer accounts increased by 1 Million to $148 million in the next year. 2017. The company’s annual revenue rose to $600 million in 1998. It is now one of the largest and fastest growing businesses worldwide. Amazon.com, Inc., a world-leading manufacturer of electronic readers, has grown to be a major provider of web services and is now the epitome E-commerce. The company also adopted strategic marketing methods that were based on changing consumer preferences, new markets and increased competition. The company now has a solid E-commerce platform that sells products such a variety of consumer electronics, home-improvement merchandise, software, toys and games. Amazon.com, Inc., has achieved the ambitious goal of offering the largest range of merchandise and products in the world. Kristensen et. al. have surpassed $135B in turnover. 2017. Amazon Environmental Scan The Amazon.com, Inc. Environmental Scan will also provide information to the management about the threats and opportunities facing the company, as a well as an evaluation of how effective the company’s strategies are in achieving its competitive advantages. This section will analyze Amazon.com, Inc.’s five most important marketing environments. These environments can be described as competitive, regulatory, economic, and social. The Economic EnvironmentEconomic aspects are crucial to market and marketing conditions. Smith, Rupp & Offodile point out that there are many economic variables that have a direct impact on a company’s growth prospects and revenue. Inflation and taxation rates are just a few of the factors that can impact a company’s growth prospects and revenue volume. Smith, Rupp & Offodile also cite economic stability as a key economic-based element that provides growth opportunities for multi-national corporations. These companies could be affected by potential economic downturns in China and other developed countries. These factors are linked to trends that affect the macro-environment in a particular niche market. Izogo & Ozo (2015, p. 3) argue that Amazon’s overall performance is dependent upon the stability and market environment in these markets. Amazon.com, Inc., which accounted roughly 30.52% in net global sales, had consolidated revenues of approximately 30.52%. The company’s prospects regarding global growth and revenue volumes are therefore affected by changes in currency rates. Smith, Rupp & Offodile state that fluctuations in foreign exchange rates had a negative impact on net global sales of $5.2 billion, $550 million, and $210 million respectively, in 2015. 2016, 2016 and 2017. In a similar fashion, Amazon’s cloud computing and e-commerce business segments are more dependent on labor. This means that Amazon’s economic climate is directly affected by its labor costs. Izogo & Ozo posit the fact that labor costs are a problem for companies and can impact long-term growth prospects. Smith, Rupp & Offodile, however, point out that the company employs effective strategies to minimize human resource costs, allowing for a limited profit margin of less four percent. The company’s wages for 2017 were reported at $28,446. Technological EnvironmentWheelen et al. Technological environmentWheelen and colleagues. Multinational companies operating in global markets today need to implement more technology because of the complexity of supply chains and the high competition. Amazon’s macro-environment was directly affected by technological advances over the past decade. The company’s logistics, and operations, are now dependent on Wheelen et al.’s online business. The company has seen growth opportunities in the areas of increased information technology efficiency, rapid technological advancement, and other factors. The company’s growth is also threatened by increased cybercrime. David believes Amazon has an opportunity to maximize its cloud computing and E-commerce business operations due to technological advancements. Amazon, for example has made large investments in IT over a decade to ensure a market share in the Ecommerce sector. A key strategy has been developed by Amazon to enhance its ecommerce business segment’s performance, and it is based upon the fact of rapid IT efficiency growth. These strategies include implementing new technologies to maximize online retail productivity and minimize operational costs. Smith, Rupp & Offodile point out that Amazon built a new technology hub which allowed it to deliver goods to customers from anywhere in the world. Cho & Lee warn that Amazon’s rapid technological progress is threatening its growth. Cho & Lee explain that Amazon’s rapid technological advancement puts pressure on it to continuously improve its technological resources. In addition, the company faces increasing cybercrime threats. In the ecommerce industry, cybercrime continues to increase. It is affecting the quality of consumer experiences and the integrity of this industry. similarly, competitive environment Ritala, Golnam & Wegmann,. Competitive EnvironmentFabbe-Costes et al. Multi-national companies must evaluate the potential threat of new entrants or substitutes, competition, bargaining power, and bargaining power for both consumers and suppliers when performing an environment scan. Amazon is a global business that sells ecommerce products. It is therefore highly exposed to different competitive factors. To counter these dynamic, they must devise resilient competitive strategies. This industry can be challenging for established companies like Walmart and Amazon, as new entrants often challenge the status quo. Amazon’s position as a strategic market leader in e-commerce is crucial to its ability to withstand new entrants. A well-known brand, a mature learning curve, as well as a larger scale economy are some of the advantages that Amazon enjoys. Three factors contribute to the industry’s potential for substitutes. These external factors are the low cost to switch, availability of substitutes, as well as low costs of substitutes. Ritala Golnam & Wegmann point out that Amazon has made substitution a priority to help them achieve their long-term business goals. Amazon.com, Inc., is active in competition with strong ecommerce online retailers like Walmart, eBay, and Amazon.com. The websites of the rival companies are well-developed, as is Walmart’s brick-and mortar store. The company’s growth goals are also threatened by the low switching costs. Ritala Golnam & Wegmann explained that Amazon’s business objectives are affected by increased customer bargaining power. This is due to several factors, including low switching costs and availability of replacements. Consumers have easy access to high-quality information about the services and products offered by e-commerce retailers. Consumers have many options to shop online for services from established companies like Walmart and eBay. Ritala Golnam & Wegmann believe that suppliers are becoming more important in the online retail business’s dynamics. Amazon’s success is directly affected by the external factors like the bargaining power of suppliers. This includes the small number of suppliers and the low level of forward integration. Sociocultural EnvironmentKristensen et al. Sociocultural EnvironmentKristensen et al. Amazon’s market performance as an online retailer is dependent on the sociocultural dynamics. These dynamics include the shifts in the e-commerce industry and the changing habits of consumers regarding their health and food intake. The company’s growth prospects are also affected by a variety of sociocultural factors, including increased online shopping trends, wealth disparity and consumerism in emerging economies. Sarbah & Otu-Nyarko also explain that the modern marketplace continues to see a behavioral shift in how consumers purchase products. Turban et.al. The current consumer generation has advanced technology and is increasingly choosing to purchase products online. Amazon sees this as a potential opportunity to expand its business. However, Turban et al. However, Turban and al. The potential for income constraint due to a wider wealth gap could result. Turban et al. Note that e-commerce industries must have high disposable income in order to generate higher revenues. The company must consider the potential for growth in emerging markets as it evaluates its plans for online retail expansion. Regulatory EnvironmentSarbah & OtuNyarko discuss how legal and regulatory factors can directly affect a company’s overall macro-environment. Multi-national companies involved in e-commerce must follow established regulations when conducting business operations. The most important factors that affect the industry are the increased product regulations as well the relaxed import and export regulations. Cho & Lee believe that Amazon’s increased product regulation is a result of societal demands and offers the opportunity for the company to reduce the sales of counterfeit products online. Sarbah & Otu-Nyarko explain that the company was able to grow because it took initiative to relax regulations on exports and imports. For instance, Turban et al. Amazon can capitalize on the looser laws to expand its global operations. Additionally, Amazon can increase its brand value by adopting CSR corporate responsibility policies that respect environmental protection laws. Sarbah & Otu-Nyarko point out that governments have been imposing strict regulations on the technology sector in recent years. These regulations include antitrust legislations, security, taxation, data storage, privacy and antitrust. Amazon has had a good experience with regulatory issues. In a global instance, regulators investigated Amazon for its compliance with antitrust settlements in book sales. Turban and al. Another regulatory factor that Turban et. al. Amazon’s cloud computing services are directly affected by the FTC Act. It requires that additional compliance and data security experts be hired, along with data protection specialists. This initiative could lead to increased operating costs for the company. RecommendationsBased in part on the environment scan, this review has several strategic recommendations. It requires that Amazon.com, Inc.’s management address all the identified competitive factors. As a way to improve its competitive advantages, the company will emphasize its strong brand. Second, the review suggests that the company should use elaborate strategies to expand its reach in new markets. Third, it is important that the company takes effective steps to develop new strategies for addressing the cyber security issues and IT.
