On 4th September 2018, Amazon became only the second company in history to reach a market capitalization of US$1 trillion, the other company being Apple. This capped off a tremendously successful last couple of years for the world’s biggest internet retailer. Amazon has been growing from strength to strength, purchasing Whole Foods for $13.7bn in 2017, diversifying into healthcare with the acquisition of PillPack in 2018 and making strategic investments in complimentary sectors such as online ads (hence taking on Google & Facebook) and its own logistics and delivery services.
Nevertheless, a Pestle analysis for Amazon globally shows emerging threats that could undermine the book retailers’ dominance in key markets such as the US as well as the UK. One such key issue that’s a potent threat is Trump’s antitrust threats and calls to increase the taxes Amazon pays in the US. Though Trump’s accusations against the e-commerce giant may be politically driven, according to political pundits, they do have legitimacy and could negatively impact Amazon if implemented via regulations.
Using Pestle and Swot analysis, this report examines Trump's political threat as well as other threats from economic, social, technological, legal and environmental sources while also identifying opportunities Amazon should capitalise on in order to mitigate threats.
The report also undertakes an Amazon Swot analysis to understand Amazons key strengths, as well as weaknesses, concluding with personal recommendations for ways the internet retailer can use its strengths to overcome its weaknesses, and ways to leverage new emergent opportunities to mitigate some of the arising threats from the external environment.
Amazon Strategy Case Study
Key Learning Outcomes
- Understand the broad macro-environment of Amazon and the online retailing industry in terms of political, economic, social, technological, environmental and legal factors (PESTEL/PEST/STEEPLE).
- Use our swot analysis example to gain an overall understanding of Amazon's strengths and weaknesses and strategic options arising from the opportunities and threats that have been identified from the Pestle analysis example on it's business environment.
- To apply strategy business models and frameworks such as Pestle/Pest/Steeple, Swot etc to real company cases.
Analyze the external environment of Amazon using Pestel and Swot
- See also, Amazon Porters Five Forces 2018
Amazon is an American electronic commerce and computing company based in Seattle Washington. Founded in 1994, it is the biggest internet retailer in the world in terms of both revenue and market value. On 4th September, Amazon became only the second company in history to reach a market capitalization of US$1 trillion, the other one being Apple (Bradshaw 2018).
Amazon is known for its vast array of products and services from electronics, books, clothing, and food. The giant retailer operates in a number of sectors including retail, consumer goods, publishing, and media etc. with subsidiaries include; Audible, Whole Foods, Twitch TV, Good Reads, Zappos etc (McQueeney 2017). The internet retailer has had continuous success over the years, dominating the global e-tail industry with its low-cost model that has enabled it to dominate likes of Alibaba, eBay, and Walmart to become the world’s retailer (Statista 2017).
As of 2017, the giant online retailer’s revenue was $178billion, 50% of it coming from electronics and media (Statista 2017). Amazon also commanded 44% of the USA e-commerce market in 2017 with sales representing $200billion in e-commerce revenues or about 4% of total US retail sales (McQueeney 2018).
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