Amazon - PEST Analysis of the Company, E-Commerce - Case Study Example

Computer Sciences and Information Technology Table of Contents Table of Contents 2 Introduction 3 Organisation Overview: Aims, Objectives and Structure 3 PEST Analysis of the Company 3 Stakeholders Analysis of the Company 4 Corporate Mission Objectives and Policies 5 Business functions of Amazon.com 5 Impact of e-Commerce in Business 6 Consumer Impact 6 Business Impact 6 Process of Designing an e-Commerce Solution 7 Conclusion 9 Introduction With the advancement of technology over the years, the approach of conducting business by the companies has also transformed rapidly. In the present day, business unit sells products not only through outlets or stores but online as well. This change has become possible mainly with the emergence of e-commerce in the business sector. E-commerce is a particular technology, which further provides a platform for selling products and services online (Tassabehji, 2003). In order to get a more apparent view of the use and implication of e-commerce in business, Amazon.com will be analysed in this essay. Organisation Overview: Aims, Objectives and Structure Amazon.com is one of the largest e-commerce companies of the world that has established its operations worldwide. The company operates with the online sells of books, electronic items, gadgets, games, jewellery and other consumer commodities. It is a public company established in the year 1994 in the United States (US). The company is currently headquartered in Seattle, Washington. The company aims at becoming the largest and most prestigious e-commerce company of the world. However, company focuses more on the needs and demands of the customers rather than emphasising on profit making. The company wants to be known as the biggest customer centric operator of the world. The company endorses the idea of providing a large variety of products that they intend to buy through online. This further serves as the major element for its growth over the year in the online retail sector (Reuters, 2014). PEST Analysis of the Company Political Environment Since the company operates in various nations of the world, it functions are more or less hindered by international and domestic policies. Again, since internet laws have become sterner in the recent times, Amazon.com is deemed to face challenges in its operations (Reuters, 2014; Mennen, 2010). Economical Environment Both global as well as domestic economic fluctuations are seen to have considerable impact on the operations of Amazon.com. Currency fluctuations also results in major issues in the online selling domains, which consequently effects the company as well in its online operations (Reuters, 2014; Mennen, 2010). Social Environment There are places in the world where the use of internet is restricted because of religious obligations. In such areas the company face problems to flourish its operations. Again, the ever changing demands of the customers within the society also creates concern for the operations of the company (Reuters, 2014; Mennen, 2010). Technological Environment Since, the company operates in the online market, they are forced to emerge with innovative operational ideas one after another. Furthermore, with the increasing number of players in this sector, the company has the need to remain ahead in competition (Reuters, 2014; Mennen, 2010). Stakeholders Analysis of the Company The stakeholders of Amazon mainly include the customers, employees, investors, government, environment and society among others. Amazon focuses more towards fulfilling the needs and demands of the customers to the highest extent. This will ensure that the company is able to enhance its performance and profitability with which it can satisfy the stakeholders. The company intends to build a knowledge sharing environment in the workplace with which maximum innovation can be achieved. Entering into the emerging markets quickly than the competitors, is an approach of Amazon.com towards dealing with the rivals (Mennen, 2010). Corporate Mission Objectives and Policies Corporate responsibilities have a major role in the success and failure of any business. With regard to Corporate Social Responsibility (CSR), Amazon.com uses environment friendly materials for packaging. The company uses compact packaging process so that the inclusion of extra packages can be avoided. Furthermore, the Kaizen Program initiated acts towards ensuring environmental friendly operations with maximum energy conservation (Amazon.com, 2014). Business functions of Amazon.com Various functions of Amazon.com include marketing, sales, finance and human resource among others. The company executes its marketing strategies on the basis of six pillars, which include deliverance of customer centric products, proper and easy communication with the customers and understanding the behaviour of customers among others. The Pay Per Click (PPC) advertising of the company automatically diverts the browsing customers to the official site of the company. Again, the company presents it products and services online with the use of e-commerce tools and techniques (Amazon.com, 2014). The company is also involved in successful incorporation of MIS feature for integrated along with proper flow of information in every section of business (Slideshare, 2014). Impact of e-Commerce in Business Consumer Impact With the emergence of e-commerce, customers all over the world have been able to have a better experience of purchasing products with utmost convenience. This enables companies to provide a wide range of products to the customers under one platform. Amazon.com has also been creating direct communication with the customers, which further enhances Customer Relationship Management (CRM). Furthermore, the wide range of products offered to the customers online, provides greater number of choices to select from. Notably, with the emergence of ecommerce companies are able to offer thier products directly to the customers through online in the absence of retailers or any other department. This not only reduces the complexities of business functioning but also the operational cost of online companies like Amazon.com. Consequently, they are able to offer products at a lower price to the customers (Tassabehji, 2003). In the presence of e-commerce, companies are able to enjoy a wider global market, as it has become easy for them to reach a wider customers base through online selling. E-commerce has enabled companies to market themselves and thier products and services with the help of online advertising with which widespread awareness can be ensured amid the customers. It is also a cheaper means of advertising (Tassabehji, 2003). Business Impact The impact of e-commerce is also quite apparent in the overall business domain. With the emergence of ecommerce, business units are able to operate globally without setting a large infrastructure for their operations in the foreign markets. It increases the operational convenience to an extent. However, the challenges faced are that online companies including Amazon.com have the continuous need to emerge with innovative ideas and adoption of new technologies in order to attain long term sustainability. Since, online selling involves passing of confidential data while making payment, security threats are deemed to arise. Again, while dealing with customers online, companies have to ensure appropriate quality being delivered. In case of any issue with the products or services deliver, the customers can directly place thier views on the company site. Furthermore, in order deliver products on time to the customers, companies needs to form numerous number of distribution channels in every regions where it operates further increasing the complexity of the business. The stiffness of the competition has also increased in the online retailer sector owing to the emergence of large number of small online sellers. Moreover, since online business is largely dependent on human resource especially in distribution, flexible workplace needs to be maintained to assure maximum customer retention. Focus should also be levied on forming new selling chains in order to grow the business. In the presence of stiff regulations e-commerce business gets affected (Tassabehji, 2003). Process of Designing an e-Commerce Solution To design an e-commerce solution, the first step is to set up its objective. The objectives can be in the form of getting access to a wider customer base, enhancing global operations and creating a USP that is different or better from the competitors. Subsequently, a domain name has to be created to increase the presence of the business online site through enhancing its visibility and credibility. Furthermore, while initiating an e-commerce solution, market research needs to be conducted to understand the trend of the customer purchasing habit and thier demand. This can also be used to comprehend the competition in any particular online sector. Primary research is quite vital to gain accurate information about the market trend and competition in online e-commerce business. Additionally, a target market is needed to be ascertained prior to forming the ecommerce solution. Market research will be able to depict the composition of a market with which the business can build a better operational strategy. These approaches will also avail companies with data relevant to market history, its trend and the shares of the rivals in the market among others (Tassabehji, 2003). There are certain key processes followed while designing an e-commerce solution. For setting up an e-commerce domain, one needs to understand the technical requirements such as hardware, software, html files, database, browsers for marketing the business and other web tools. In order to ensure safe and secure operations through e-commerce, a secure server and along with proper verification process needs to be incorporated. Again, with regard to supply chain, proper inventory management is quite important as it is directly related with timely deliverance of the products to the customers. Additionally, while deciding on the payment system, it will be recommended that e-commerce companies can associate with reputed company like PayPal, which deals with online payment transaction further assuring safer means of transaction. Start-up capital in e-commerce business can be a combination of loan from financial institutions and personal capital. To avoid security issues such as hacking and hindering virus attack in the e-commerce site, strong passwords needs to be developed along with the use of a secure platform. Moreover, SSL (Secure Sockets Layer) and the use of digital certificates can also prove to be vital in stopping identity theft (Digicert, 2014). To execute the operations of the business with utmost legality and ethicality legislations such as ‘Data Protection Act 1998’, ‘Consumer Credit Act 1974’ as well as ‘Freedom of Information Act 2000’ will need to be adhered (Alghamdi, 2011). Conclusion From the overall analysis, it can be comprehended that with the emergence of e-commerce business approach has witnessed immense transformations. Companies are considering online operations as a potential element to steer business growth and sustainability. Hence, to conclude the discussion it can be stated that e-commerce is an important development in the business domain, which is beneficial both for the business as well as customers and society. References Alghamdi, A. M., 2011. The Law of E-Commerce: E-Contracts, E-Business. AuthorHouse. 1Amazon.com, 2014. Amazons Innovations for Our Planet. Home. [Online] Available at: http://www.amazon.com/b?ie=UTF8&node=13786321 [Accessed August 26, 2014]. Digicert, 2014. What Is SSL (Secure Sockets Layer) and What Are SSL Certificates. About SSL Certificates and SSL Encryption. [Online] Available at: http://www.amazon.com/b?ie=UTF8&node=13786321 [Accessed August 26, 2014]. Mennen, M., 2010. Global Corporate Strategy - A Critical Analysis and Evaluation of Amazon.com. GRIN Verlag. Reuters, 2014. Amazon.com Inc (AMZN.O). Home. [Online] Available at: http://in.reuters.com/finance/stocks/companyProfile?symbol=AMZN.O [Accessed August 26, 2014]. Slideshare, 2014. Managing Information Systems - Critically Evaluation of Using Of the Management Information Systems at Amazon.com. Home. [Online] Available at: http://www.slideshare.net/TolgaKoymen/kcb-14508-managing-information-assignment [Accessed August 26, 2014]. Tassabehji, R., 2003. Applying E-Commerce in Business. SAGE. Read More