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External and Internal Environments

Beth

External and Internal Environments

In running their routine business operations, corporations are required to consider their internal and external environments to guarantee overall success. Understanding the internal and external business environment enables a business organization to identify its potential influence on the business critical for minimization of costs and maximization of output. Overall, Amazon has, over the years, mainly prioritized existing industry rivalry and the bargaining power of its customers.

Choose the two segments of the general environment that would rank highest in their influence on the corporation you chose

Technological forces and economic forces are the major general environment segments that have significantly influenced Amazon’s operations. Technological forces encompass the influence technological advancements have on consumers, a business, and society (1). Favorable technological forces include better management of information systems, improved means of production, and improved communication, while adverse forces may include misuse of information and increased competition. Conversely, economic forces include diverse factors that influence the ability of an organization to compete and the willingness and ability of customers to purchase products and services (1). Notably, the state of the economy is ever-changing as inflation and interest rates rise and fall. Similarly, the ability and willingness of customers to buy

Technological forces

As a corporation whose centrality is technology, Amazon is directly affected by changes in technology. The rapid technological obsolescence requires Amazon to continually develop its technological resources to run its business operations smoothly (3). With technological advancements, emerging threats such as cybercrime threaten customer experience quality and the company’s integrity, hence the need for Amazon’s continuous investment in its technology assets.

Economic Forces

Overall, Amazon’s performance hugely relies on the state of the economy in the countries or regions it operates its non-online and online businesses. Major economic factors affecting Amazon include the potential recession of China, which forms a considerable proportion of its global market, and the economic stability of Europe, the U.S., and other developed countries (4).

Considering the five forces of competition, choose the two that you estimate are the most significant for the corporation you chose.

Analysis of a business competition is vital to its success as it influences his well the company’s suppression of competition to boost its sales, grow its market share and maximize profits. The five forces of competition include the threat of new entrants, suppliers’ bargaining power, buyers’ purchasing power, the threat of substitute products, and rivalry among current competitors (1). The primary forces of competition that are most considerable for Amazon are rivalry among current competitors and the bargaining power of its customers.

  1. Rivalry among current competitors.

Over the years, the retail industry in the United States and beyond has been marked by the high aggressively of firms and high availability of substitutes. Amazon competes against international retail giants such as Walmart. Walmart has a considerable and expanding e-commerce platform that can significantly threaten the success of Amazon by gaining a higher market share (5). To suppress rivalry from its competitors, Amazon has incorporated a flexible technology stack, allowing it to provide a wider product assortment, highly competitive pricing, and greater convenience to its competitors.

  1. Bargaining power of customers

In the contemporary business environment, customers have access to high-quality information on the diverse products and services offered by online retailers. To a wide extent, this external factor influences the operations and performance of Amazon regarding its online retail services. Equally, the low switching costs and high availability of substitutes make it more efficient for Amazon’s customers to shift to other companies. For instance, instead of buying products and services from Amazon’s e-commerce platform, a customer can opt for Walmart stores that are strategically located throughout the U.S. To avoid losing customers to its competitors, Amazon has, over the years, incorporated behavioral targeting (3). Behavioral targeting encompasses targeting users based on their activities and behavior online. This has enabled Amazon to manage and deliver unique content to its customers automatically, thereby improving its customer experience.

With the same two forces in mind, predict what the company might do to improve its ability to address these forces in the near future.

To counter the high bargaining power of its customers and guarantee continued success in the future, Amazon should prioritize the maximization of customer satisfaction. For instance, Amazon should eliminate counterfeit products from its e-commerce website. Also, Amazon should continue enhancing its website’s usability. Through these customers, customer satisfaction will be maximized, thereby enhancing customer loyalty.

Considering the strong rivalry among current competitors, Amazon should continue growing its brand image. In the contemporary business environment, a positive brand is regarded as a major factor that can significantly suppress competition and boost a firm’s market share.

Assess the external threats affecting this corporation and the opportunities available to the corporation.

Overall, business threats encompass diverse external factors that limit or reduce the general performance and development of a firm. Amazon currently experiences diverse threats directly related to its different markets and industries. Among the diverse threats, aggressive competition with non-online and online firms is the strongest. Companies such as Walmart, Google, Home Depot, Apple, eBay, Netflix, and eBay, among others, threaten the development and success of Amazon in consumer electronics markets, e-commerce, cloud-based services, online digital content, retail, and additional information technology services (2).

To address the competition threat, Amazon should progressively diversify its business to strengthen itself against competitors. Additionally, Amazon should develop additional partnerships to boost its market reach and enhance its multinational operations against competition and other strategic limitations. With a high market share, Amazon will suppress competition and continue generating growing revenue.

Give your opinion on the corporation’s greatest strengths and most significant weaknesses.

Opportunities encompass diverse available factors that a company can use to improve the quality of its products and services and overall business performance. The major opportunity that Amazon can exploit is expansion in developing countries. The developing markets, such as Africa, have, for an extended period, been ignored by mutilation retailers despite them signifying progressive growth in income and adoption of technology (5). To venture into the developing markets, Amazon should launch in new markets and gain market share through the destabilization of local competitors. Once a considerable number of third-party resellers and local customers are acquired, the company should start marketing its devices and emphasize Amazon Prime memberships.

Strengths and Weaknesses

While strengths enumerate internal strategic factors used by a firm to maintain and develop its operations in the markets the firm operates in, weaknesses outline factors limiting the growth and expansion of a business. Regarding strengths, Amazon has a strong brand and high capability for rapid technological innovation (3). Currently, Amazon has the strongest brand recognition and confidence among customers in the online retail market, a factor that has enabled it to grow rapidly, especially in the early years (4).

Conversely, Amazon’s major weaknesses are an easily imitable business model and limited penetration in developing markets. For instance, any company can establish an e-commerce website selling any products, thereby threatening Amazon’s success and business operations.

Strategy or Tactic

To maximize its strong brand, Amazon should venture into developing markets. With a strong brand image, Amazon will require less to establish and develop in developing markets such as Africa. Regarding high capability for technological information, Amazon should develop an online business model that is hard to imitate.

To minimize the possibility of losing its market share through the immigration of its business model, Amazon should use its technology prowess to develop a unique and customer-friendly business model.

Determine the company’s resources, capabilities, and core competencies.

For any business organization, the available resources, capabilities, and core competencies play a vital role in its routine business operations and overall success. Amazon’s main business resources include AWS, a third-party seller marketplace, and direct delivery (2). Its capabilities include operating an efficient supply chain to fulfill orders, a wide selection of products and services, and providing excellent customer service. Efficient and strategic incorporation of these aspects can enhance the success of Amazon in the contemporary business environment and the future.

Sources

  1. Hitt, I. & Hoskisson. (2020). Strategic management: Concepts and cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning
  2. Hyken, S. (2017). How Amazon Competes Against Walmart And Every Other Retailer. https://www.forbes.com/sites/shephyken/2017/08/05/how-amazon-competes-against-walmart-and-every-other-retailer/?sh=609ac0c16de8
  3. Izogo, E. & Ozo, J. (2015). Critical evaluation of how well placed Amazon is to sustain its historical in online retailing. British Journal of Marketing Studies. 3(6), 31-42. https://www.eajournals.org/wp-content/uploads/Critical-Evaluation-Of-How-Well-Placed-Amazon-Is-To-Sustain-Its-Historical-In-Online-Retailing.pdf
  4. Nesmyanovich, I. (2015). Amazon Competition – Survival Guide for Retailers. Research Gate. https://www.researchgate.net/publication/281110202_Amazon_Competition_Survival_Guide_for_Retailers/citation/download
  5. Sadq, Z.,Nuraddin, S. & Hama, S. (2018). Analyzing the Amazon success strategies. Journal of Process Management. New Technologies. 6. 65-69. https://doi.org/10.5937/jouproman6-19264 

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Question 

External and Internal Environments

Overview

In this assignment, you are to use the same corporation you selected and focused on for the Strategic Management and Strategic Competitiveness assignment.

External and Internal Environments

Using the corporation you chose from the Week 3 assignment, Strategic Management and Strategic Competitiveness, examine the industry in which the entity operates. Use any or all of the following resources to conduct research on the company:

Use the External and Internal Environments Template [DOC] to ensure that your assignment meets the requirements.

Requirements

Write a 4–6 page paper in which you do the following:

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is as follows:

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