Pestel Analysis OF Amazon PDF

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Pestel Analysis OF Amazon...

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AMAZON TODAY Angela Przybysz

SUNY Empire State 7080 Strategic Business Applications

Executive Summary:

Amazon is a conglomerate e-commerce retailer that was founded by Jeff Bezos on July 5, 1994 in Bellevue, WA. It first started off as an online bookstore that transitioned to what it is known today. The products of the company are offered through consumer-facing websites. Amazon also provide merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. The Company sells its own products as well as third-party products in several departments, through its retail Websites and through its mobile websites and applications. As providers of its star product, Kindle, it manufactures and sells electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, Echo and Fire phones.

Amazon encourages merchants to sell their products and fulfill orders through the company’s websites and the seller’s own websites. It has an online platform that lets independent authors and publishers choose a 70% royalty option and make their books available in the Kindle Store, along with Amazon’s own publishing arm called Amazon Publishing. In present day, Amazon operates in two segments: North America and International. The North America segment of the company focuses on retail sales earned through North Americafocused websites. The International segment focuses on the company’s operations done through its international websites.

Company Highlights:

Amazon is across the globe, Amazon has more than 175 operating fulfillment centers and more than 150 million square feet of space where associates pick, pack, and ship millions of Amazon.com customer order to the tune of millions of items per year. Specifically in North America we currently have more than 110 operational facilities with a variety of employment opportunities. https://www.aboutamazon.com/amazon-fulfillment/our-fulfillment-centers/

Number of Employees: Amazon currently has 750,000 employees since 2019 and that number is still increasing. https://www.geekwire.com/2019/amazon-tops-750000-employees-first-time-adding-nearly100000-people-three-months/

Annual Profit: Amazon annual/quarterly gross profit history and growth rate from 2006 to 2019. Gross profit can be defined as the profit a company makes after deducting the variable costs directly associated with making and selling its products or providing its services.     

Amazon gross profit for the quarter ending September 30, 2019 was $28.679B, a 21.66% increase year-over-year. Amazon gross profit for the twelve months ending September 30, 2019 was $109.123B, a 23.87% increase year-over-year. Amazon annual gross profit for 2018 was $93.731B, a 42.16% increase from 2017. Amazon annual gross profit for 2017 was $65.932B, a 38.16% increase from 2016. Amazon annual gross profit for 2016 was $47.722B, a 34.98% increase from 2015.

https://www.macrotrends.net/stocks/charts/AMZN/amazon/gross-profit

Growth Rate: Amazon's revenue rose 20% year over year -- an acceleration from 17% growth in the first quarter. This puts Amazon's revenue growth rate back in line with growth seen in the company's fourth quarter of 2018. Revenue for the period was $63.4 billion -- at the high end of management's guidance for revenue during the period to be between $59.5 billion and $63.5 billion. In addition, the top-line figure was ahead of analysts' average forecast of revenue of $62.5 billion. Helping drive this growth was 37% year-over-year growth in Amazon Web Services (AWS) revenue and an acceleration in the company's online stores revenue. Online stores revenue rose

16% year over year to $31 billion. This is up from 12% growth in the first quarter of 2019. https://www.fool.com/investing/2019/07/25/amazons-revenue-growth-accelerates.aspx

Performance challenges:  

Keeping Up E-commerce Growth International Performance.

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Keeping Rivals at Bay. Balancing Investments vs. Profits. Dealing With More Intense Government Scrutiny. https://www.thestreet.com/technology/amazon-key-challenges-for-2019-14825146

Amazons Mission Statement: Come build the future with us. – Our mission is to be Earth’s most customer-centric company. This is what unites Amazonians across teams and geographies as we are all striving to delight our customers and make their lives easier, one innovative product, service, and idea at a time.

Amazon’s Vision: Earth’s most customer-centric company- When Amazon.com launched in 1995, it was with the mission “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.” This goal continues today, but Amazon’s customers are worldwide now, and have grown to include millions of Consumers, Sellers, Content Creators, and Developers & Enterprises. Each of these groups has different needs, and we always work to meet those needs, innovating new solutions to make things easier, faster, better, and more cost-effective.

CEO current objective and goals: “Our passion for pioneering will drive us to explore narrow passages, and, unavoidably, many will turn out to be blind alleys. But - with a bit of good fortune - there will also be a few that open up into broad avenues.” – Jeff Bezos https://www.amazon.jobs/en/working/working-amazon

PESTEL Analysis of Amazon: Political Trade protectionism in the USA from the trump administration currently threatens the existence of foreign firms in the country (Diamond, 2017). While Amazon is an American firm, a considerable amount of its goods come from overseas, and thus its operations may be threatened by a possible reduction in the number of foreign imports or tariffs to foreign imports. In light of Brexit negotiations, the British and American government are currently holding discussions about potential trade deals between the two countries. This could serve to ease Amazon’s operations in the UK as an American firm, potentially reducing import taxes and resulting in less regulations. Economic Although critics of Amazon have stated that the firm is serving to reduce jobs with the implementation and use of technology to do jobs traditionally done by human resources, reports show that the firm is actually creating more jobs than it is cutting, with recent reports indicating the creation of additional jobs in both the USA and UK at new Amazon facilities (Vandevelde, 2017). Stock market uncertainty is an increasing characteristic of the globalized world and its levels of uncertainty, and Amazon’s expansion into the grocery sector further served to heighten this uncertainty, with competitors such as Walmart all facing drops in their share prices Economies such as that of the U.K. have traditionally been revered for their capitalist structures, however increasing research indicates that the traditional model capitalism no longer fits the purpose of the present business context (Bowman et al., 2014). Analysts have recently revered the Amazon way of capitalism as being the key to future productivity in growth, given that this is based on reinvesting gains back into new, market creating innovation and research (Denning, 2017). Social -Cultural Increasing levels of obesity affect individuals across the globe, with 711 million people across the globe being classed as overweight and increasing pressure resting on Governments to encourage physical activity and a healthy lifestyle (Bedard, 2017). It could be argued that by extending its delivery services to the extent that customers can even have their groceries delivered to their doorstep, Amazon are encouraging the non-active lifestyles that are resulting in the obesity pandemic.

Technological In terms of logistics, increasing levels of technology are now a necessary requirement to efficiently and effectively deal with the demands of highly globalized, complicated and interconnected supply chains (Sindi and Roe, 2017). Amazon continue to develop high levels of technology to aid their logistics services, with 2017 seeing a new service called ‘Hub’ rolled out, which is a locker system that allows amazon deliveries to be dropped off even when the customer isn’t home; the first technology of this kind to be used for non-business customers in the online Omni channel retail field (London, 2017). Research and Development is of increasing importance for businesses wishing to remain innovative and retain their competitive advantage in terms of the highest levels of technology (Foss and Saebi, 2017). In a drive to expand their UK workforce to 24,000 by 2018, Amazon have recently announced that they will be doubling the amount of staff that they employ in their Research and Development center in London, signifying that the company is focusing on increasing their technological proposition (Ruddick, 2017). Environmental With increasing pressure from governments being placed on large organizations to reduce organizational emissions, the question can be asked as to how Amazon can comply with regulations about the levels of emissions, given that a large part of their business relies on logistics and delivering products on a same-day basis (Gunther, 2016). Until 2016, Amazon had never published a sustainability report, leading to questions about the environmental impact that the organization’s extensive global operations place on the wider environment (Gunther, 2016). Legal At present, increasing pressure is placed on multinational corporations to risk assess their clients, and any politically sensitive clients or clients on terrorist watch lists should be sanctioned. Amazon is currently under federal investigation for selling goods to individuals on terrorist watch lists and violating US sanctions, showing a disregard to international law and safety. Amazon has further come under fire from the Federal trade commission in the U.S. for producing misleading claims about pricing discounts on around 1000 products.

References:

Diamond, J. (2017) ‘Striking protectionist tone, Trump touts US-made products.’ CNN. [Online] http://edition.cnn.com/2017/07/17/politics/donald-trump-made-in-america-showcaseprotectionist-rhetoric// Foss, N. J. and Saebi, T. (2017) ‘Fifteen years of research on business model innovation: How far have we come, and where should we go?’ Journal of Management, 43(1), pp. 200-227. Sindi, S. and Roe, M. (2017) ‘The Evolution of Supply Chains and Logistics.’ In: Strategic Supply Chain Management (pp. 7-25). Springer International Publishing. Bedard, P. (2017) ‘Obesity becomes worldwide epidemic, US is the fattest.’ Washington Examiner. https://www.washingtonexaminer.com/obesity-becomes-worldwide-epidemic-us-is-thefattest

Denning, S. (2017) ‘Apple, Google and Amazon: How to Understand Capitalism’s Future.’ Forbes. https://www.forbes.com/sites/stevedenning/2017/07/31/apple-google-amazon-howto-understand-capitalisms-future/#25e4c923fa0f

Vandevelde, M. (2017, July 29). Amazon is creating more jobs than it destroys. Retrieved from https://www.ft.com/content/cf98680c-738f-11e7-aca6-c6bd07df1a3c

Ruddick, G. (2017) ‘Amazon to double the number of R&D staff in London.’ The Guardian https://www.theguardian.com/technology/2017/jul/25/amazon-double-number-researchdevelopment-staff-london

Appendix

Annual Report, Industry Report, 10-K: https://www.sec.gov/Archives/edgar/data/1018724/000101872419000004/amzn20181231x10k.htm http://www.annualreports.com/Company/amazoncom-inc...