The Amazon was founded by Jeffery Bezos in 1994. The founder thought internet usage was increasing at rapid phase. Therefore it will good idea to open an online book store. His idea was provide people a platform that is easy to use and let people sell and buy their books online.
The idea of opening online book store was successful even from first years as the revenues reached 15$ million in 1996. This made Amazon one of the most successful online book store on internet. Amazon continued to grow with growth of internet users and it is now serving customers in more than 160 countries an d offering hundreds of different products online. Amazon today`s offers different products online in different categories like books, Electronics, clothing, Grocery and health and beauty products.(Amazon.com)
Amazon is now placed in top 100 list of fortune 100 companies. Although competition in online retailing has grown rapidly in last few years but competitors has far less market penetration and business than Amazon. The strategists at Amazon continuously monitors and develops such strategies that can put Amazon at leading place. Strategists use different tools to analyze market competition and different factors that may affect the business . PESTLE analysis is one of such tool that help strategist in analyzing external environment that may affect the business. PESTLE stands for (Political, Economical, Social, Technological and Environmental) analysis. (Cartwright,2004)
Here we will analyze external environmental faced by Amazon.
The business can be highly affected by political situation in countries where they are looking to do their business. This political situation involves political instability, law and order situation, rules and regulations related to business in those countries. (Worthington,2003)
Being internal brand Amazon is continuously looking to grow into other markets.
1. Although Amazon is accessible and serving its customers in nearly 140 countries, but it is still has chances of further grown in big markets like China where growth of Amazon has been threatened by Strict censorship polices by Government. The Amazon.com has been blocked in China many times in the past while it may also be affected by blockage of Google . (Theregistratr.co.uk,2013) China is big market with rapidly growing internet users and has potential market for Amazon for further growth.
2. Different countries around the world has no rules and regulations for protection of internet users that may result in financial loss to customers. Due to these issue many customers in many countries believe buying any thing from internet is not safe. Therefore it will difficult for Amazon to expand to those countries where there are no rules and regulations in place for internet users until the Govts in those country develop and enforce laws to protect internet users.
These are the factors that are mainly linked to economic condition of country overall or purchase power of people in the market where company is looking to grow.
Economic conditions in USA and EU are not so good and purchase power of people has declined due to economic downturn. Customers are reluctant to spend money on buying different products due to economic uncertainty.(Retuters,2015) However purchase power of people in different countries like China, India, Pakistan, and UAE is increasing that can be potential markets for Amazon.
These are the factors that related to day to day living style and culture. Different social factors that may affect growth of Amazon.com are as follows.
1. Although internet usage is growing rapidly but buying and selling on internet is not part of their cultures. Many people in different countries avoid buying and selling on internet due to many different reasons like safety, uncertainty and habit. It is always difficult change habit of the people.
2. Many countries has habit to buy from traditional store rather than online stores. While making payment to someone online is also not part of their culture simply feel uncomfortable while making online transaction.
These factors that may affect the business due to technological advancements.
1. It is important for Amazon to keep itself updated with technological advancements. People in USA and EU are more used to Smart phones and it is important for Amazon to offer different Mobile phone applications to facilitate customers.
2. Many customers are concerned with safety of their private information online. Therefore Amazon has to ensure that it equip itself with latest technology to protect customer information online.
3. It is will also be important for Amazon to use technology in effective way and make experience of purchase as easy as possible without compromising the safety of customers information. This will also help customers in new markets like China, India, and UAE where Amazon is looking to further grow its business.
These are the factors that may affect the business due to environmental issues.
Customers around the world are increasingly becoming concerned with affect of different industries and products on environment. Amazon has to ensure that it promotes environmentally friendly products and inform customers about different measures to ensure that products offered by Amazon have minimum affect on environment.
These are factors that may affect business due to different rules and regulations imposed by govt. Different factors that may affect Amazon are
1. Many Countries around the world has strict rules and regulations for business. It is always difficult to follow those rules especially for companies like Amazon that are used to open markets like USA and EU. Therefore legal issue related to doing business in different countries may affect the growth of Amazon in other countries.
2. Furthermore Amazon will have to keep an eye on product they offers because customers in USA and EU are increasingly becoming concerned with products that were made by workers in China and Bangladesh who are offered very low wage for their work.
Cartwright, R. (2002). Mastering marketing management. New York: Palgave.
Forbes.com,. (2015). Forbes Welcome. Retrieved 7 December 2015, from http://www.forbes.com/sites/greatspeculations/2015/10/06/heres-why-amazon-could-see-market-share-growth-in-the-international-markets/
Reuters India,. (2012). INTERVIEW – Amazon aims for top three in China market. Retrieved 7 December 2015, from http://in.reuters.com/article/amazon-china-idINDEE84907L20120510
Theregister.co.uk,. (2013). China challenged to take down ALL of AWS and Google. Retrieved 7 December 2015, from http://www.theregister.co.uk/2013/11/19/great_firewall_site_mirror_china/
Worthington, I., & Britton, C. (2003). The business environment. Harlow: FT Prentice Hall.