External and Internal Environments

Answer

Internal and External Environments of Amazon Company

Amazon is the leading e-commerce company in the world. Since its inception, the firm has increased its service and product delivery and it is currently considered one of the most successful companies across the globe. The firm stocks variety of products that include electronics, books and household items among other items that customers may need. Its major aim is to provide customers with the best selection at the cheapest price so that customers can continue shopping with it. Essentially, the products that Amazon offers are often sold from Amazon Corporation as well as through third parties. As such, this paper examines the internal and external environments of Amazon Incorporation to recommend the most appropriate strategy that the firm can pursue to achieve its goals.

Segments That Would Rank the Highest In Influencing Amazon

             The two segments that would rank highest in terms of their influence on Amazon are technology and economic segments. In every business, economic factors affect the market, as well as, market conditions. Economic factors are critical to the activities and performance of Amazon Incorporation. Essentially, higher profit margins are recorded when there is a good economic condition. However, when there is unfavorable economic condition, the impact can lead to reduced profit margins and sales for Amazon. Fortunately, Amazon is e-commerce entity that sells variety of products that customers will purchase regardless of good or bad economic conditions.

             Given that Amazon is a strictly e-commerce retail business; it depends heavily on the technology. The organization relies on technology for business and communicating the target customers. As such, the firm must remain relevant with the new technology to effectively carry out its operations. The company uses technology for social media, marketing and sales. With the current youthful generation, most companies must remain relevant with changes in technology as this generation depends heavily on the technology (Smith, Rupp, & Offodile, 2017). Currently, technology innovation has become a critical key to success and therefore Amazon strives to remain relevant to the unprecedented changes in technology in a bid to remain competitive in the e-commerce industry.

Critical Forces of Competition for Amazon

            The threat of substitute products and services is the least significant to Amazon Incorporation.  While Amazon incorporation neither produces nor sells their products, the organization does not depend significantly on the sales of these items and instead sell numerous other items.  In every business, the threat of new entrant is a critical issue to consider. As indicated in the Amazon’s annual report, the company is subjected to frequent change, growth of new business models, and the entry of the new and well established competition (Onyusheva & Seenalasataporn, 2018). With this, it is evident that the organization finds the threats posed by the new entrants as important.

            The major forces of competition viewed key for Amazon entail the power of buyers and competitive rivalry. In the e-commerce industry, the competitive rivalry is stiff because of the rapid advancements in this industry. Essentially, Amazon operates in different markets across the world and experiences competition from various industries across the globe such as EBay and Walmart. These competitors have a longer history and possibly more customers, or even better brand recognition as compared to Amazon. Similarly, the power of buyers is important for Amazon. Principally, there are several e-commerce services for customers. As a fact, Amazon customers have the option of purchasing the same products that Amazon stocks from several websites across the internet. For this reason, Amazon must provide these customers with competitive or low prices to attract its customers otherwise; the customers may opt for other online stores that offer the same products at cheaper prices. Another major concern is that given that Amazon is an online store but customers can easily get these products from physical stores rather than waiting for their products to the shipped.

Actions to Take To These Forces

            Generally, Amazon is guided by four major principles with the key one being focusing on customer instead of competitors (Majed, Nuraddin, & Hama, 2018). As such, to gain added advantage over its competitors, Amazon should continue putting its customers first. Customers often demand excellent customer service besides quality products.  Therefore, by focusing on their customers, Amazon will ensure that its customers continue to shop with it since they will feel treasured and respected. Moreover, the company should continue keeping its prices low, availing variety of products, fast shipping and offering quality customer service to gain competitive advantage over its rivals. Secondly, Amazon can improve its buyers’ power by maintaining customer satisfaction. Amazon has loyal customers due to the exemplary services and affordable prices that it offers. Given that the business is an online store, it incurs little overhead expenses and thus it can use savings from these expenses to provide its customers with the least possible prices to stay ahead of its rivals.

External Threats and Opportunities for Amazon

             The two major threats that Amazon faces include aggressive competition and identity theft or cyber-crime. Cyber-crime is the biggest challenge that Amazon experiences. Given that the organization handles millions of transactions online, the information saved on its database about customers’ identifies and their credit cards can be hacked, leaving such information exposed. As such, the company must use strong network security to reduce cases of identity theft and ensure the security and privacy of customers are assured.

            The greatest opportunity for Amazon is to open physical stores and gain more entry into the global market. Physical stores can considerably contribute to its sales. Essentially, some customers dislike online shopping and therefore in case the company has a physical store, it will serve the needs of such customers, as well as, its loyal customers. With the physical stores charging the same prices as those charged by online stores, as well as, the customer centric services that the organization is known for, Amazon can expand even further. Expanding the global market can assist the organization to reach thousands of customers in new areas and increase its global operations.

Amazon’s Greatest Weakness and Strengths

             Amazon’s greatest strengths include being the leader in the e-commerce industry. Reportedly, the organization has gained reputation of being the largest e-commerce company across the world, which makes it well recognized (Lincoln, & Andrew, 2018). Similarly, the firm continues to grow rapidly in terms of innovation, sales and growth.  The second strength of Amazon is said to be its platform. Essentially, the company puts high standards on customer satisfaction, a situation that makes the customers to continue shopping with its and remaining loyal. Similarly, the major weakness of Amazon is that it lacks physical location and depends heavily on shipping. As a fact, customers are forced to pay additional charges for their product to be shipped.  In case Amazon had physical locations, it would be easy for such customers to visit the store and collect the products thereby saving them shipping expenses and delivery wait times.

             To fix the weakness described above, Amazon has started offering same day shipping, as well as, a day shipping. However, these services can only be earned by Amazon Prime members and that the services are not found in every part or region of the world. Undoubtedly, the company is moving in the right path before it opens physical locations, these efforts will often be viewed as a weakness.

Amazon Capabilities, Resources and Core Competencies

             The major resources for Amazon include its products, customers and technology. With these resources, the company has the capabilities of ensuring customer satisfaction and gaining competitive advantage over its rivals. Similarly, Amazon’s core competencies entail its ability to variety of products online that has transformed the market. The company is regarded as one of the organizations to first cell items online for customers to purchase from them. Moreover, the organization adopts cost leadership approach that entails selling products at a reduced price than its rivals. More importantly, Amazon offers exemplary services and products that are convenient to their customers since they are reliable and have several options for shipping at relatively low prices.

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