Amazon Inc Macro and Micro Analysis Free Report

Introduction

Amazon Inc. is an American international technology company that is situated in Seattle, United States. It was founded in 1994 by Jeffrey P. Bezos (“About Amazon,” n.d.). The company deals in digital streaming, e-commerce, artificial intelligence as well as cloud computing. Amazon is categorized to be among the Big Four Tech organizations including Facebook, Google, and Apple. It is the United States’ greatest e-commerce company. Essentially, the organization owns a wide product portfolio allowing it to serve diverse customers. It is an international company, meaning that it has its customers in various countries. The company provides its customers with a one-stop shopping environment with different products ranging from electronics to apparel to groceries. The company owns a publishing division referred to as Amazon Kindle Direct Publishing. It is an online platform where independent authors and publishers can sell their books and articles. Amazon has its warehouses spread out geographically in most countries such that the dispatch of the goods is done fast and at a low cost (“About Amazon,” n.d.). The company has focused in maintaining its relations with the customers by establishing customer service centers across the world. This enables the company to meet the needs of the customers easily. Additionally, the company grants free shipping options globally thus enhancing the online shopping experience to its customers leading to increased customer loyalty. Primarily, Amazon is located in the United States. Amazon Inc. has already expanded to India. Its appropriate entry mode into India has enabled Amazon to maintain its status as the global giant in the eCommerce industry to outdo its competitors. This paper will undertake a PESTEL analysis, and entry model analysis of Amazon in India. It will also provide recommendations that Amazon should consider. 

PESTEL Analysis

Political

These challenges before e-business do not resemble traditional businesses. There are still issues that harm the e-retail part. Amazon is leading in this part and is affected by some of the political issues. Even e-business such as bay red top and Amazonian Asian nations can be a challenge. A report from Hindustan times showed that any foreign company trying to Engage in business in India Regulatory factors and Red tape can be a .problem. Political issues and taxes are also much costly affair (Cusumano, 2017, p.25). European Union (EU) began aiming at American high-tech firms and for questionable motives. Google was a target by EU due to ant-trust related factors. Amazon is also aimed over its dealings in the e-book with the European Union. These political factors are not inadequate because there are other challenges too that possess political origin. Political steadiness also promotes the stability of an economy. Political instability, on the other hand, affects the movement of products and causes sales reduction.

Economic

Issues of economics are always an essential influence on the conditions of the market and market. If there are good economic conditions in a market, higher profits and sales will increase. The universe has been lately been out of turmoil in economic. Even during recession time, the retail firm was performing better. It is due to the acquisition of regular products by people whether the economy is performing better or not (Jamnani, 2018, p.48). The influence of buyers has been boosted due to improved labor market conditions and the economy of the world. People possess nonrefundable income these trends of the economy are to assist the retail industry. Growth of e-retail was 23% by 2015 and more growth is under expectation from this part in the few years to come (Jamnani, 2018, p.50). However, good conditions in an economy will also add to the available competition from the market. These all issues show that in a few coming years Amazon would rise higher and increase profits.

Social

Cultural and social tendencies are also essential issues behind the rise of e-retail. Shopping trends online have been boosted in a few years past. More usage of mobile technology and expansion in digital technology have increased online sales, The majority of individuals have smartphones worldwide with a connection to the internet and they perform more on their phones such as shopping online and on social media (Wegner and Fernandes, 2018, p.370). 4G availability is the expansion in digital technology that has improved retailer sales like e-bay and Amazon. Changes in buyers’ demographics might also have a consequence on the retail part positively. The majority of millennials prefer acquiring their products online. They require the best goods and prices and are brought to their doors. This convenience is obtainable only by their retailers. Amazon needs to benefit more due to changes in buyers’ shopping and demographic trends. From global regions where there is low penetration of the market, the product should focus on cultural issues to market its brand better and create a better connection with clients.

Technological

Technological issues have expanded highly significantly in the 21st century. Whether it is an online business or a traditional one, both depend on other forms and IT technology to come up with better services. Novation of technology is vital to achievement in this modern era. Cognitive intelligence, the internet, and artificial intelligence have become essential to serving customers better (Wegner and Fernandes, 2018, p.373). Customer service is specifically significant to maintain customers and use technology better. The generation of the millennium can’t be engaged without better customer service. It is also the strategy for loyalty-building for a customer. Expansion cannot be achieved without marketing, selling, and customer relationship through the use of technology. Social media is an area that should be focused on better engagement of customers by retail businesses.

Environmental

One of the main concerns for businesses worldwide is sustainability-retailers should concentrate on some of the areas such as energy consumption, waste reduction, and packaging for business sustainability. Amazon has financed more on sustainability and CRS. It has invested in renewable energy, waste reduction, and sustainable energy (Blagova et al., 2014, p.13). Besides that, it has also invested in helping the community in coming up with sustainable projects. Renewable energy is the main focus of Amazon. It has performed major investments in this sector to have full freedom from dependency on energy that is non-renewable.

Legal

Submission of legal is essential for business worldwide. In the business aspect, large brands such as Amazon need to maintain submission to the law. Amazon possesses several legal groups to check legal challenges and issues (Yiu et al., 2013). There are some other areas apart from law where legal compliance is important. A battle with the law can be costly for large firms such as Amazon. Any wrongdoing can result in charges and the image of the company is lost (Blagova et al., 2014, p.15). There are a few areas that should be dealt with better legal issues. Many nations have different laws and firms have to comply without an excuse. Law creates pressure for companies working worldwide. Amazon Company should remain cautious in this.

Entry Model Analysis

Deep customer understanding

India, Amazon has taken its time in investing the time, resources, and energy to understand the Indian consumer market. For instance, Amazon determined that Indian consumers are uncomfortable purchasing online or are possibly illiterate to read online product reviews (Aggarwal, 2018, p.2). Therefore, the company has set up kiosks in various local retail locations enabling entrepreneurs to provide an assisted buying service to the consumers. 

Accommodation of bandwidth challenges

Amazon identified that more than 500 million consumers in India still utilize phones using slow network connections (Ghosal, 2018, p. 27). Therefore, the company has established a slimmed-down version app adjusted to slow network speed. This modified app is very resourceful and enables Indian consumers to experience a decent browsing experience while at the same time holding the reality of network constraints. 

Use of artificial intelligence in finding addresses

In India, residential addresses are usually guessed estimated locations thus making delivery services a bit challenging. But, Amazon, uses machine learning, as well as artificial intelligence in bringing better precision into delivery as well as a 0 to 100 confidence, score when it comes to addresses (Ghosal, 2018, p. 27). 

Challenges

Legal Challenges

There is a challenging environment for foreign direct investment in India. Since the attainment of independence, its economic policies were highly controlled by protectionist policies that were instituted by Britain in the early 20th .and exploitation that was faced by India due to mechanization results of foreign companies. Its economic policy was based on central planning and protectionism. During the 80s and 1991 economic crises, the economy of India was opened up allowing investment by foreigners and ushering in liberalization in many zones (Ghosal, 2018, p.28). It is nowadays still there are challenges due to laws in regard to investments that are changing. Amazon 2013 entered the Indian market, laws gave the right to foreign investment in a market. Amazon was forced to change its model in business to maintain its Indian presence.

Technological Challenges

There is a small fraction of internet penetration from penetration in India due to the lack of a growing middle class and an economy that is booming. Few Indian populations comprising 22% have internet penetration and this mean 336 million people have access internet. Logistic challenges are a foundation for Amazon services to be timely, fast, and efficient (Aggarwal, 2018, p.4). There is a large postal system in India but not known for its efficiency and speed. In addition, there is no standardization of addresses in most cities which often includes landmark proximity. Amazon requires the possibility to bring products in massive numbers. These efforts were just simply beyond the major courier systems and reach the availability of the postal system. Since operations of Amazon as a market area.it requires the possibility to maintain a product inventory from many small sellers.

Ferreting fake fraud and products out. A plethora of fake reviews has created wariness for buyers in India’s E-commerce. Amazon is performing to build trust among sellers and buyers by fighting fake reviews and fraud for third-party products and safe product promotion (Ghosal, 2018, p.29). India Amazon team has created algorithms to become aware of fake reviews, fake productions, and fraudulent transactions. Expansion of logistics and fulfillment. Amazon is increasing its network of satisfaction centers in India. It understands the essentials of increasing infrastructure and providing networks to assist with customer experience and order fulfillment of orders more efficiently.

Conclusion & Recommendation

To sum up, Amazon Inc. is a well-performing company that continues to increase its performance in India. The entry mode of Amazon is suitable and has enabled the company to perform well. The company has focused on maintaining its relations with the customers by establishing customer service centers in India. This enables the company to meet the needs of the customers easily. To successfully gain a competitive advantage, it needs to sustain its status as the global giant in the eCommerce industry to outdo its competitors.

Amazon should not expand its growing business into areas where coverage of the market is not accessible instead of changing into other businesses. This would put Amazon’s position to be the largest player in India, reducing the possibility of other players emerging as uncontested and securing the achievement of their main business.

Another better option is through a joint venture in India. This should be done by assessing the best partner company and strict rules for managing the relationship. These joint ventures are less risky than acquiring even though they still suffer due to failure. Undertakings suffer due to a lack of discipline during the process and other joint ventures always tussle with a lack of enough plan for responding to ultimate changes in safety. Consideration of a joint venture should create value for Amazon. A joint venture needs to be rebranded and repositioned in the market. This cannot be accepted by both companies because they both have consumer bases and created brands. New costs will also be brought by the new venture to both parties.

Another better option is a strategic alliance with companies in India. They are all exposed to disaster threats and are developing and considering a successful way that may lead to joint paybacks to both parties. A recommended strategy to be followed by Amazon is a strategic alliance. This is due to essential evidence:

• Quite a lot of large-scale brands are operational on the market and adore large market shares
• The building of distribution channel cost will be higher
• There are no important competencies to explain selected demand in a market.
• Buying an existing firm or business needs more capital and creates various risks.

This issue concludes that Amazon can follow a strategic alliance to come up with competencies and join the market. Coming up with a strategic alliance is an important strategy for most existing firms. Such a supportive relationship can assist the firm to reduce costs, share the risk, enhance reliability, obtaining information, and conserving information.