Global Strategy and Sustainability
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Executive Summary
Global strategy initiation in organisation guides to maintain operations in organisations that determined performances to retain in business fields. Aim of this study is to analyse external and internal factors, due to which Amazon would be able to achieve competitive advantages for expanding further in international markets regions. In this study, it has identified key issues such as ruthless behaviour towards employees and immense work pressure that led to obstruct path of development for Amazon for future growth. In addition to this, this study has implemented recommendations for the future growth of Amazon that led to providing better aspects of sustainability in business fields. In this study, it has been recommended that improvement of Amazon by applying global strategy can be possibly in form of product development strategy, market development strategy, practising 3Ps and triple bottom line.
Introduction
Global strategic and sustainable development plays an indispensable part in empowering businesses to attain their predetermined goals and gain a favourable advantage in the highly global business environment. Operating in a responsible and ethical manner has further gained prominence in recent years due to increased awareness among consumers as well as the need for corporates to collectively address persistent economic, environmental and social issues. In this context, Amazon.com is popularly known for its sustainable approaches and initiatives and its focus on employee development through training, additional incentives and bonuses and community support. This report focuses on conducting a critical evaluation of amazon.com’s internal and external environment to ascertain key challenges as well as recommendations that the company can take. This would be conducted through PESTLE, Porter’s, Value chain, VRIO along with SWOT analysis to gain an in-depth understanding of Amzon.com’s current opportunities and threats for sustainable global development of its operations. The key areas of focus for the provision of recommendations would include global sustainability and development within the highly competitive global environment.
External Analysis of the Industry
Threat of New Entrants (Low)
There has been a drastic rise in e-commerce businesses in the UK as well as globally. However, Amazon faces a relatively low level of threat from these new entrants due to its high brand image and brand establishment. However, e-retail businesses would be required to innovate their existing business processes and products and services for differentiating themselves from their competitors.
Threat of Substitutes (High)
One of the major threats faced by the e-retail industry can be established to be from the physical retail industry globally. Since Amazon does not offer a wide portfolio of products under its own brand, it faces a comparatively higher threat from physical retail giants including Tesco, Morrisons, ASDA and Sainsbury among many others.
Bargaining Power of Suppliers (Low)
Suppliers of e-retail businesses have a comparatively low level of bargaining power. Amazon has a wide and strong network of suppliers on whom it can depend (Sustainability.AboutAmazon, 2021). This is an added advantage that increases its likelihood of developing globally and strengthening its presence on an international scale.
Bargaining Power of Buyers (High)
Amazon prioritises customer satisfaction along with product quality providing a high level of power to its buyers. According to Bergel and Brock (2018), buyers have a low switching cost within the retail industry. This further increases the power helped by consumers making it crucial for Amazon to focus on increasing their satisfaction rate.
Rivalry among Existing Competitors (High)
Existing rivalry among top competitors operating within the e-retail industry is relatively high. Haque et al. (2017) observed that there has been a sharp increase in the number of businesses operating within the e-retail industry. Apart from this, growth in consumer preferences towards online sales has further driven competition with Flipkart, Alibaba, eBay among many others.
PESTLE Analysis
| Factors | Impact |
| Political | ● Positive impact has been furnished through the help of potential political stability.
● Regulations in terms of taxation initiates of having an integral impact.
● Interference by the government professionals can be identified in terms of the operational functions of the UK’s retail sector. |
| Economical | ● “Per Capita GDP” in UK is recognised to bear the growth rate of 5.5% as of 2021 which tends of having a significant impact
● “Rate of interest” being recorded as 0.1% as per the reports of 2021 in UK has a significant impact on the operations of the retail sector. ● “Rate of inflation” has been estimated as 1.2% in UK in accordance with the reports of 2021 which further regulates the retail sector’s operation. |
| Social | ● Fluctuation in the purchasing power of customers due to the outbreak of Covid-19 pandemic is identified as having substantial influence on the retail firms of UK.
● “Rate of Literacy” has been estimated as 99% which regulates the productivity as well as profitability of the operations of retail business (Clark, 2021). |
| Technological | ● Incorporation of consistent evolving technologies is observed to have a potential impact on the UK’s retail business operation.
● Implementation of technologies in terms of transactional approaches as well as warehouse management initiates of having notable impact on the retail chains within UK. |
| Legal | ● Complying with the legal obligations with reference to “Employment Right Act 1996 (c.18)” is recognised to focus upon the rights of workers within the business.
● Patents and ownership can be maintained through “Copyright, Design and Patents Act 1988 (c. 48)”. |
| Environmental | ● Incorporation of environmental attributes by complying with the “Environmental Protection Act 1990 (c. 72) in UK initiates of having potential impact on the sustainability and growth of retail sectors,
● Management of e-waste can be attributed to rendering integral impact. |
Table 1: PESTLE Analysis
(Source: Inspired by Macrotrends, 2021)
Internal Analysis of Amazon.com
VRIO analysis refers to improving business conditions, due to which companies such as Amazon would be able to explore further in competitive markets. Additionally, it helps companies for analysing implemented techniques and determines whether implemented techniques would be effective for the growth of businesses. Through the help of VRIO analysis, it would help in gaining insight to grow as well as sustain its own industry position. The VRIO framework highlights the capabilities of Amazon in terms of artificial intelligence along with cloud computing. This can help in enhancing desirability as well as effectiveness of the products of Amazon. Simultaneously, increase in brand diversity would be accounted successful in entertaining valuable online services. The expertise of Amazon in terms of e-commerce operations as well as strategic planning would help in the awareness of the brand in the retail market of UK. Furthermore, the company would also significantly attract the customers in alliance with emerging trends as well as evolution of insights with reference to customer purchase. This would entail in enhancing the brand equity for Amazon in the global market. Amazon can furthermore maximise the benefits which can be acquired through core competencies and enhancement of market capitalisation. Affiliation of the network can be possessed by the brand would tend to serve as core competency thereby promoting overall revenue. The benefits of Amazon’s operation within the retail market of UK would also increase the revenue sources. Through the aid of VRIO Analysis, Amazon would reap competitive advantage. However, the business would require to corroborate development pof new competencies and simultaneously strengthen the existing one in minimising disruption in the growth of the multinational firms. This can result in long term strategic planning as well as experimentation of strategies as well as tactics. The company would also ensure affiliation of its potential network in terms of sharing links to products sold on the company website.
Value Chain Analysis
Value chain analysis for a business helps in the specification of iterative operations that are being performed by an organisation. Value chain analysis can be considered significant and advantageous for enhancement of production efficiency with an inclusion to deliver maximum value at a reduced cost. This in turn would provide the scope for organisation in obtaining a competitive edge in the marketing by increasing productivity. Amazon is recognised to maintain short term contracts with the vendors in corroborating guaranteed availability of merchandise. Furthermore, the business can significantly create value by making innovative as well as creative approaches to problem solving along with risk mitigation. It aims to maintain its operation by addressing the warehouse management along with an effective inbound logistic. Moreover, outbound logistics can be maintained through the help of experience as well as increase rendering of satisfactory customer experience and create strong value through the help of efficient marketing investments. The services entailed by Amazon mostly stresses upon maintenance of effective approaches thereby enhancing customer experience. Customer centric operation of Amazon can be beneficial with respect to establishment of a broad spectrum in terms of availability of products for customers at a minimum cost.
Critical Analysis of Corporate Social Responsibility (CSR) and Sustainability
Corporate Social Responsibility (CSR) and Sustainability is considered as the responsibility of a business for the society in terms of sustainable business practices. CSR is accounted for as the determination of aspects of social, environmental as well as economic affairs. Huang et al. (2018) stated that sustainability is considered responsibility which ensures response to the challenges modern business is facing. It is a comprehensive approach to management of organisation which highlights creation and maximisation of “long term economic, social and environmental value”. Amazon is recognised as one of the leading e-commerce chains of retail and cloud computing organisations within UK. It also ensures effectiveness and maintenance of brand image while retaining market position as well as gravitating satisfactory customer experience. This aids the firm in formulating a strong brand image and simultaneously management of costs along with resources. Amazon helps in strengthening the brand equity which assists in ensuing growth along with sustainability. The firm aims to foster significant programs of educational interface along with help the underprivileged kids to have a better future and career. Furthermore, it has been also recognised that the firm aims in making usage of emerging technologies and approaches of innovation in incorporating creativity to corroborate in the long run. However, in terms of CSR Amazon is recognised to embrace challenges and pressure from investors.
Carroll’s Pyramid
Carroll’s Pyramid recommends the fulfilment of responsibility at four levels of factors which includes economic, legal, philanthropic and economic aspects. Bloom et al. (2019) stated that Carroll’s Pyramid helps the business firms to link CSR strategies in a holistic manner. In terms of economic responsibility, the first responsibility of the business is needed to be profitable. Moreover, without profit it is not possible for the company to pay their workers. On the contrary, the business is recognised to face challenges in terms of demand for transparency and disclosure. In this case, Carroll’s Pyramid helps in identification of business practices which prioritises effective ways in terms of organising, collecting, analysing as well as managing the data for clear, accurate as well as accomplishing reports of financial along with business activities. Application of Carroll’s Pyramid can help the business in identifying the areas which creates the long-term value of the organisation. It also helps in the reduction of operation costs in terms of effective resource management in terms of supply chain. This also corroborates business stability while relying on the good relations with the key stakeholders.
Evaluation of the Implications of Analysis
SWOT Analysis
| Strengths
● Amazon’s strong brand image and market position. ● Its focus on brand differentiation along with innovation has made it a key competitor within the global retail market. |
Weaknesses
● Lack of “brick-and-mortar” store presence is a weakness that limits its ability to attract a wider source of consumers. ● Easily replicable business model of Amazon following an e-retail operation format has led to an increase in competition. |
| Opportunities
● Amazon has an opportunity for backward integration through an expansion of its in-house brands enabling it to differentiate itself from its competitors. ● Increased acquisitions would help Amazon strategically expand its operations globally. |
Threats
● Increased susceptibility to cybercrime and data breach is a major threat that would hinder Amazon’s global growth. ● Linkages to exploitative labour sources within its outsourced labour activities is a critical threat that leads to social, economic along with legal risks for the brand. |
Table 2: SWOT Analysis
(Source: Amazon, 2021)
Based on the internal analysis, it has been established that amazon is required to focus on incorporating its internal strengths to effectively address its external threats and weaknesses. Jasiulewicz-Kaczmarek et al. (2020) noted that global development and sustainability of operations can be attained by businesses through periodic monitoring and environmental scanning. Evaluating the outcomes driven by sustainability and CSR analysis of Amazon, it can be asserted that Amazon needs to be more mindful of its outsourcing processes. This would empower Amazon to tackle the labour-based issues and avoid social, economic and legislative concerns appropriately.
Recommendations for Amazon.com’s Strategic Global Development
Implementation of internal analysis factors has helped to acquire knowledge based on strengths, weaknesses, opportunities along threats. According to Amazon’s performances, it has been found that the presence of customer orientation activities have successfully catered demands of customers, due to which it has been convenient to operate e-commerce in global markets. Willcocks et al. (2017) noted that an increase of acquisitions guides companies to operate buses for a long duration in international market fields. In this regard, it can be advised to Amazon that strengthening bonds with international business alliances would help to achieve a competitive advantage as per accordance.
A common weakness of Amazon is that involvement of business models, which can be easily imitated by other e-commerce companies, due to which Amazon faces a rise in market competition. Other than this, products like Kindle fire devices have been unable to attract customers and affected its revenue income. Hopkinson et al. (2018) improvement of business model aids businesses to adapt techniques for circulating economic infrastructure positively for growth of organisations further. From this, it can be advised that up-gradation of business models by Amazon would help to manage market competition appropriately. Besides, application of a product development strategy to Amazon would provide advantages as a flop of Kindle fire devices could be modified and able to gain attention of targeted audiences in markets.
In terms of market exploration, Amazon has initiated technological measures, from which it has been able to lessen counterfeit revenue. However, it has been noted that it operates e-commerce operations solely by online techniques, which can be further improved for expanding in international market regions. According to Tallman et al. (2018) applying changes in business operations determine to present effective changes in organisations and become easier to increase sales point. In Amazon’s case, opportunities require to be developed further, which can be recommended by establishing a physical store, from which customers would be able to purchase in offline mode as well.
Market competition has increased threatening levels against Amazon by retail companies such as eBay along with Walmart. Implementation of market development strategy would guide Amazon to understand market value and it would regulate operations accordingly to meet expectations. In this way, top retail competitors would be receiving tough competition from Amazon’s end. By market development strategy, Amazon would be successful and be sustaining in global markets for further growth of e-commerce.
Recommendations for Corporate Social Responsibility (CSR) and Sustainability
Global development requires effective changes in organisations, due to which it becomes possible to expand further in competitive markets accordingly. However, in Amazon’s case, it has been noted that board directors of this firm would be in a dilemma regarding CSR and sustainability based on making internal changes among employees. The video represented by Valuetainment (2019), has helped to convey that recruitment needs to be effective regarding selection of workers, upon which performances and productivity of Amazon depends. From this, it has been understood that the board director of Amazon is concerned and in a dilemma that if recruitment fails to hire skilful employees then this e-commerce business has to face negative consequences and would not be able to maintain sustainability in international markets. In this regard, it can be associated that CSR norms can be developed by following legal norms such as practising code of practice, due to which recruitment would be conducted properly to hire efficient and skilful employees. Additionally, it would be equally supportive for Amazon to gain successful outcomes by improving performances, due to which sustainability of the market would be obtained. Matthews et al. (2019) opined that use of triple bottom line initiates successful approaches to businesses as it emphasizes maintaining sustainability on economic, social and environmental factors. In this respect, it can be recommended to Amazon for enhancing CSR along with applying the triple bottom line concept to strengthen commercial activities, from which sustainability would become easier for Amazon to retain in business fields. Applying a triple bottom line would also provide advantageous outcomes based on managing good relations with stakeholders in Amazon and help in maintaining a peaceful working environment.
Leadership roles in organisations are important as it guides and commands workforces for major changes and working procedures to run smoothly without any interference. However, in the Amazon workplace, it has been noted that labourers are treated ruthlessly and are commanded to work continuously without taking any breaks (Democracy Now, 2018). This has been affecting workplace decorum in Amazon which needs to be changed for further benefit. According to Lock and Araujo (2020) practising 3Ps based on people, planet and profit aid profitable results to organisations since this concept helps in managing workplace situations and focuses on issues following presenting mitigation steps. Hence, recommendations can be provided to Amazon for regulating the concept of 3Ps, from which it would be gaining effective changes on a part of treating employees along with maintaining leadership traits. Board directors have been in a dilemma of whether operating leadership is going well for the growth of Amazon or not (Croitor, 2017). In this manner, the dilemma faced by board directors of Amazon would be addressed positively and this e-commerce would be receiving successful approaches to expand further in competitive market regions.
Conclusion
The global strategy focuses on presenting proper changes and regulation of activities, which help organisations to achieve competitive advantage. This study concluded that application of a change in business models would be beneficial for the growth of Amazon in a convenient way, due to which other forms would not be able to imitate business models. Other than this, it has been noted that dilemmas faced by board directors of Amazon can be addressed properly by applying triple bottom line and concept of 3Ps into practice, due to which competitive advantages would be obtained and Amazon would be able to sustain in markets for a longer time. Additionally, application of product development strategy and market development strategy, which has been recommended for future growth of Amazon, would be positively supportive to maintain sustainability in global markets.
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