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Amazon Porter's Five Forces Analysis

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Amazon.com Inc., is an online market place where sellers and buyers meet, Amazon sellers are described as third parties showcasing their house products to millions of people around the world. Founded by Jeff Bezos who was born on January 12, 1964 in New Mexico to his teenage mother, Jackie.Jackie divorced Bezos’ father that same year. When Bezos was five years old, Jackie remarried to Miguel Bezos, a Cuban-born engineer for Exxon. The family moved to Houston, Texas, near a 25,000 acre ranch owned by Bezos’ maternal grandfather. It was then when Bezos would spend most of his summers learning the basics of everything from veterinary care for cattle to repairing bulldozers in what he now calls “just an incredible, incredible experience.” …show more content…

The company was founded by the American entrepreneur, visionary and investor Jeff Bezos in 1994 where it was formed initially as …show more content…

The logo evolved from river to a smiling arrow pointing A to Z, we are happy to deliver anything anywhere.
The purpose of this report is to demonstrate a strategic recommendation plan to Amazon.com incorporation board of directors, stake holders and CEO to formally showcase a clearer picture of how amazon can develop the core competencies and future strategic direction.
PESTEL and SWOT Analysis were used to examine and analyze the external environments, Majority of middle class and low-cost influence of distribution centers in Asia and specifically the Middle East and GULF countries are a high potential opportunities for AMAZON.COM to take a big slice of the market share and grow income massively.
On the downside, Amazon should work massively harder on deploying a user friendly interface and add Arabic and Asian countries translation into their website, establish shipping agreements with local Asian shipping companies to secure arrival of consumer orders on time to secure success and growth in ASIA with emphasis on MENA and GULF regions. 2-External

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Many states within the United States have passed online shopping sales tax laws which have been designed to compel Amazon and other e-commerce retailers to collect both state and local sales taxes from their customers. In 2011, it was noted that Amazon only collected sales tax from five states, however in April of 2017, it was said that the company must collect sales tax from consumers in all states that currently have sales taxes. ANALYSIS OF STRATEGIC FACTORS In a December 2011 article written by Forbes contributor, Venkatesh Rao, he states that “the company [Amazon] is nothing if not deliberate and systematic in everything it does.” Rao goes on to say, unlike the other big companies that symbolize our times – Google, Apple, Facebook and Microsoft, Amazon did not rise to power by inventing a new product or service.

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Porter’s five forces is a framework that provides analysts with knowledge of the external factors regarding their company and the development of business strategy. These shows people how attractive a company is in a certain industry. I have chosen to develop the porter’s five forces strategy regarding Cisco and the information received. I will evaluate the competiveness, threat of substation, buyer power, supplier power and the threat of new entry.

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This is having a positive impact as by expanding their business and locating in Australia they are attracting more consumers. According to Morgan Stanley, prior to their expansion, Amazon already had $1 billion in sales in Australia. Amazon attracts consumers through their promises of low prices, vast variety and fast delivery and thus their market share in the Australian retail sector is expected to grow significantly. Despite their promises, fast delivery is not the easiest thing to do in Australia. Location has also had a negative impact on Amazon due to the large geographical spread of Australia.

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Amazon’s competitive strategy is cost leadership. Amazon has achieved a lot on a great scale that it gets the best prices from its vendors so they can operate in very flexible and thin margins and sell their items easily at retail prices and make money. They also provide shipping products for a reasonable cheap price. They also have improved their warehouses by giving some space to other sellers who want to sell their items through Amazon. They differentiate and provide better quality than their competitors across the industry.

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This report aims to analyze the effect of external analysis and the various other forces of change that has an effect on the business environment of Zara. External environment is an important consideration while planning the strategy for future as well as for venturing into the international markets. Every company irrespective of the sector of operation faces a phase of stagnation in the domestic market at one point in time and there is a need to take stock of situation and reframe the strategy to move ahead. External environment comprises of many dynamic forces like political, technological, social, cultural and environmental factors. These factors form the macro environment of the company.

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This situation in turn created a service differentiation for the company compared to its other competitors. First, the Amazon.com website has an attractive and customer-friendly interface. Fast and reliable delivery which allow the customers to receive their order within the same day in specific area has also been an incredible feature of the company. A no-nonsense returns policy is being implemented, too. To assist the customers in choosing their order, purchase suggestions based on their previous purchases and webpage viewing are given.

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The business model of Amazon ensures that the product is available for the customer at the best possible price. The fast shipping strategies also ensure customer satisfaction. These aspects offer an excellent value proposition to the customer. Since Amazon is present globally and is successfully into business for a long time period, the strategies of Amazon are sustainable.

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Amazon has achieved many milestones from starting in the founder’s garage in 1994 to the growth in revenue to US$147.8 million in 1997 and then to the revenue growth of US$177.866 billion in 2017 (Amazon, 2018a, Amazon, 2018b and Jurevicius, 2018). These milestones were achieved through tenacious focused strategies of meeting their customers’ needs and wants. These strategies have maintained and expanded their customer base locally and internationally and have increased its market shares and profit over the last two decades. In addition, projection for the company’s growth and expansion for the next three to five years looks positive as it predicted to grow at the same rate with its expansion internationally and continued focused in satisfying consumers’ wants (Amazon, 2018a). Although, some factors such as governmental policies, legal issues and natural disasters could pose a threat to Amazon’s growth plans, the management team led by the founder and Chief Executive Officer (CEO) are working on mitigating the risk (Amazon, 2018a).

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Amazon is a domination force that all other retailers have to compete with and they will only get better. When they began to dominate the market, some retailers followed suit and increase their online presence like Walmart and EBay. They even began to lower their prices to compete with Amazon. This resulted in several other retailers, who did not

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3.2 Industry conditions (Porter 's Five Forces Analysis) Five forces which would impact an organization 's behavior in the market. Understanding the nature of these forces provides organizations the required insights to enable them to formulate the appropriate strategies to be successful in their market (Thurlby, 1998). 3.2.1 Threat of new entrants (high entry barriers) High capital investment for competitor entry into telecommunication industry. Companies in this industry maintain development, spend fairly large amount of capital on network equipment and incurred high fixed costs. Besides, technologies are also considered as barriers for new companies to enter the market.

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