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PESTLE Analysis of Amazon | Amazon Pestle Analysis

 

Pestle Analysis of Amazon reveals that their performance is based on several factors. It is a big company and holds a major position in the micro-business environment so it is a little tricky to find the exact issues and working of Amazon. PESTLE is a strategic management tool that helps to discover external factors such as political, economic, social, technological, legal, and environmental. With these factors, you can identify the external factors of this e-commerce retailer. No doubt, Amazon is a global giant in the relative industry and enjoys the advantages of high popularity, market reach, and high capitalization. Also, the online industry is highly dynamic and challenging. It is necessary for Amazon to fulfill all the challenges in order to maintain competence and resilience.

The company’s decision-makers can find plenty of opportunities and reduce the risk of threats by utilizing this PESTLE analysis tool. In this way, they can uncover the possibilities of growth and expansion in the global e-commerce business. Moreover, Amazon should give tough competition to its competitors such as Walmart and technology firms such as Google, Microsoft, and Apple. However, Amazon has its own microchips that are used in the cloud infrastructure, which makes Intel a tough competitor. With the business analysis tool, Amazon can find ways of continuous growth. They can also boost the working of its subsidiaries such as Whole Foods Market in different markets.

PESTLE Analysis of Amazon | Amazon Pestle Analysis

Political Factors:

The political influence on Amazon is huge due to its shipment and delivery service. In this section, we will focus on the government policies and their effect on Amazon’s business. Below, we have listed some important political factors that are necessary for the development of this e-commerce firm.

  • Political firmness of developed countries particularly European countries and the United States of America.
  • Support from the government for e-commerce business.
  • Government efforts on cybersecurity.

Political stability is really beneficial for the growth and working of Amazon. According to PESTLE analysis, this thing provides a big opportunity for Amazon to diversify its working in developed countries or regions. The company can diversify its ‘’Brick-and-Mortar’’ operations in the US to set off its e-commerce dealing. On the flip side, the governmental support for an e-commerce business is also giving a wonderful opportunity for Amazon. This kind of support aids the company to make exponential growth in relative markets. However, the same opportunity can threaten the company’s position due to increasing competition in the e-commerce market. There are several big Chinese retail companies that are continuously diversifying their operations in relevant markets. The government’s support for cybersecurity also a big opportunity for e-commerce retailers. Companies can take benefit of this factor in order to expand their options in the related business.

PESTLE Analysis of Amazon | Amazon Pestle Analysis

Economic Factors:

The company is highly dependent on the economic circumstances in which it operates its non-online and online dealings. In this portion of the PESTLE analysis, we will discuss the economic factors that can affect the working and operation of Amazon. The following factors are enough to understand the economic factors of the company:

  • The economic stability of European countries and the USA.
  • Rising disposable wages in developing countries.
  • The prospective economic recession of China.

The economic solidity of different developing countries raises the chance of success for online sectors. According to PESTLE analysis, this thing reduces economic problems in the macro-environment and remote. So, this kind of minimization creates a bundle of growth opportunities for e-commerce businesses. Also, the company has a lot of potential in the developed countries. The rising disposable wages can advance the financial performance of Amazon. Moreover, the prospective economic recession of China can threaten the company’s business. No doubt, China is a big player in the market and can affect the market situation. Further, Amazon’s business strategy can increase the growth chances.

PESTLE Analysis of Amazon | Amazon Pestle Analysis

Social Factors:

Social conditions identify the effect of the latest trends and a socio-cultural change on Amazon’s workings. Amazon is a leading information technology provider in goods and services. Here are some socio-cultural external factors:

  • Rising wealth inconsistency.
  • Rising consumerism in developing countries.
  • Increasing e-commerce buying.

The rising wealth difference between the rich and poor indicates the escalating gap. It is considered a threat again the company. This kind of higher disposable income is favorable for e-commerce companies in terms of revenues. However, the rising consumerism also creates plenty of opportunities for IT services and e-commerce businesses. It increases the potential success of the company and gives a competitive edge over competitors. These factors help the company to diversify its operations in different regions of the world. As the numbers of online purchasers are increasing day by day, this thing results in the increase of revenue of the company. These tech-savvy people love to purchase products online due to specific reasons. In this way, Amazon can enter into different markets and expand its operations in developing countries.

PESTLE Analysis of Amazon | Amazon Pestle Analysis

Technological Factors:

Technological innovation can directly impact the working of Amazon. Basically, it is a two-edged sword that can cause damage if used incorrectly. We have covered the consequences of technological advancement on the macro-environment in the online business. Below, we have mentioned some important technological factors:

  • Rapid technological advancement.
  • Increasing competencies in IT.
  • Increasing numbers of cybercrime.

The rapid change in technology has affected Amazon. It also pressurizes the company to upgrade its system with the latest technology as a big e-commerce retailer. Well, in PESTLE analysis, it is considered as an opportunity. For example, the heavy investment in technology and the IT sector can give a major boost to the company and increase its competitive advantage in the relevant field. In this way, they can protect the company from hackers and compete with new entrants.

It is a big opportunity for Amazon to increase its efficiency in the IT sector. Thus, the betterment of computing technologies can reduce operational costs and multiply online retail productivity. Moreover, the risk of cybercrime can be a big threat for big companies like Amazon. It threatens the customer experience and integrity of Amazon. So, it is imperative to invest in this segment to improve the cybersecurity of the company. They should invest in appropriate technological sectors to retain their position and improving operations. In short, Amazon needs to improve its technology continues to fulfill the requirements of customers in a better way.

PESTLE Analysis of Amazon | Amazon Pestle Analysis

Legal Factors:

It is necessary for Amazon to follow all the legal rules and requirements. It is important for the growth of the company. They determine the working ability and reputation of the company. the following are some important legal external factors:

  • Increasing production guidelines.
  • Varying import/export laws.
  • Increasing environmental protection laws on industries.

The increasing product laws are designed specifically for customer security and protection. This external condition creates opportunities for the company. They can reduce counterfeit sales and products by exploiting these regulations. With strong import and export laws, the company can diversify its growth and sales in different countries. They can expand their operations in different regions due to this kind of regulation. It creates a strong bond between suppliers and sellers. They can also strengthen their brand image and social reputation by addressing increasing environmental protection laws. These factors amplify the business competitiveness in the macro-environment. By utilizing these factors, Amazon can take its operations to success.

PESTLE Analysis of Amazon | Amazon Pestle Analysis

Environmental Factors:

Basically, Amazon is an e-commerce business and it also affects due to certain ecological factors. As the number of eco-friendly people is increasing, this thing can make or break the image of Amazon. Below, some of the essential environmental factors are given:

  • Increasing interest in environmental campaigns.
  • Increasing prominence on business sustainability.
  • The rising popularity of low-carbon practices.

Amazon has the ability to enhance its environmental impact by investing in environmental factors. Certainly, this thing can create a positive impact on the mind of eco-conscious shoppers. They can improve their energy consumption and waste management problems. It provides a great opportunity to improve its sustainability which strengthens the brand image and market position. They can also adopt low-carbon practices which enhance their reputation. They can also use energy-saving strategies which show the concern of Amazon towards climate change. It also creates a good impact on the working and operation of the company.

Recommendations:

There is no doubt that Amazon is a big player in the e-commerce retail market. The company is also giving great competition over its competitors like Walmart. PESTLE analysis of Amazon shows the problems of Amazon and also provides great opportunities for growth. The company has the ability to retain its long-term strategies. The company has big potential in the developing markets for maximum growth and revenue. It is necessary for Amazon to improve its technological system with the latest technology in order to get a competitive edge over rivals. These factors expand the chances for Amazon and also improve the purchasing power of the customers. It is imperative for Amazon to exploit effective strategies in order to fulfill the requirements of consumers and suppliers.

 

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