(HX41 04) Environmental analysis for amazon using Strategic Management assignment research techniques

Question

Task: How to perform an environmental analysis for amazon using Strategic Management assignment research techniques?

Answer

1. Introduction
1.1 Introduction of the company
The company that has been chosen for this Strategic Management assignment is Amazon, which is an American multinational technology firm. It is an international tech firm which mainly focuses on “e-commerce, digital streaming, cloud computing, and artificial intelligence (AI)”. Founded by Jeff Bezos, in the year 1994, the firm is renowned for providing millions of products at the reasonable price available. The firm has an extremely effective vision and mission statement which states “Striving to offer the customers, the lowest possible prices, from the best available selection, with utmost convenience”. The mission statement of the firm is strongly supported by its vision statement, i.e. “Mission to be Earth’s most customer-centric firm” (Flamand, Wisher and Riley, 2020). The revenue of the firm has been constantly growing with a 27.66% increase every year. The products and services offered by Amazon are provided in appendix 2. As per the Strategic Management assignment resource-based theory, the value of the asset is not fixed as it changes as per the time and period; however, the assets are sometimes generated inside the firm, along with the constant evolution in the resources (Salazar and Armando, 2017). Since the competition is very high in the market within which Amazon operates, Amazon makes significant use of its assets while generating them within the firm. Thus it positions Amazon in the top position in the global market while providing a competitive advantage to compete with its rivals.

1.2 Strategic Management assignment -Current business scenario
Currently, Amazon has been striving to be an innovative force, while exploring new ideas to facilitate to expand its business into various untapped markets. The organizational structure of Amazon is identified as a hierarchical structure because of the gigantic size of the organization (see appendix 1). At Amazon, the authority is well structured, along with proper job specialization, clear lines of communication, and a narrow span of control (Rutakirwa, 2018). The firm, with its continued dedication towards its mission and vision statement, has been currently at the growth stage, which the firm has been trying to enhance with various acquisitions. Though the firm competes against retail giants such as Walmart, Alibaba, and eBay, the strong positioning and organizational structure of Amazon have a significant impact on its competitors, mainly in terms of the pricing of the products and services offered by the firm.

2. Environmental Analysis and need for change
A Strategic Management assignment PESTEL analysis is a method for businesses to comprehend the external factors that can potentially impact their business. A PESTEL analysis assesses different external forces which can affect the organisation which then allows the organisation to build its business strategies optimally, mitigate risks and formulate a foolproof future plan. Through PESTEL analysis an entity can assess its political, social, economic, environmental and legal factors which are likely to impact its business in the future (Alanzi, 2018). The retail sector in the recent years has witnessed an exponential rate of growth. One of the longstanding leaders of the e-retail sector has been Amazon. Jeff Bezos has not left any stone unturned to make the e-retail giant Amazon, one of the most successful brands in the world. Following are some of the external factors which can impact the e-retail giant and become a hurdle in its path to success:

Political: The issues and hurdles faced by e-businesses differ significantly from traditional businesses. Amazon the leader in the e-business sector is subjected to numerous political factors (Pratap, 2017). The US has been under a conventional nationalistic policy which makes it hard for foreign firms to operate and run their business in the country. While Amazon is an American corporation, it imports almost all of its products from other nations which can be difficult for the brand considering dealing with trade and tariffs policies on imports. The UK under the Brexit deal has left the EU which offers the American e-retail giant the to expand its market shares in Britain. The Strategic Management assignment investigations showThe company is faced with a substantial threat in the Asian countries and market due to the existence of companies like AliExpress and Alibaba which are serving their customers at a cheaper price as compared to Amazon.

Economic: The stock market has been undergoing significant losses due to the upsurge of the Covid-19 pandemic around the world. With Amazon expanding its stores in the grocery retail sector in order to compete with grocery giants like Tesco and Walmart, it is likely to witness a drop in its share price. Apart from that, the sector of e-retail has been becoming highly competitive due to the emergence of sturdy competitors (Droesch, 2020). The company has been following a capitalist structure from its initiation which has proved to be fruitful for its business however traditional models of business are no longer suitable and appropriate for the business due to the tech revolution.

Social: In the era of customer service and marketing all organisations have been trying to deliver their consumers better offerings than their competitors. Amazon is one of the best businesses to offer customers accessibility, fast and efficient services and free delivery for its premium subscribers which have been a competitive edge for the brand.

Technology: The e-commerce retail business has become highly competitive due to the interconnectivity of several parties. Amazon utilises the most innovative and latest technology to have a competitive edge in its inventory or logistics management. The company has hired more people in its research and development department to unleash better opportunities. Apart from that, the company is also working towards formulating new methods of shipment and digital strategies to build a relationship with its customers.

Environmental: The government has been placing pressure on the manufacturing industries and companies to minimise their carbon emission which brings the question of how the e-retail giant Amazon will comply with such regulations since it is a recipient of substantial supplies from the same industry. Amazon had also never published its environmental sustainability report until 2016 which raised substantial queries about the priorities of the company concerning the environment.

Legal: Multinational businesses like Amazon are under substantial pressure from the government to unveil their consumer database to them. Further, there have been a few instances wherein Amazon has been accused by the FBI of selling products to its consumers who were under the terrorist watch list, thereby violating international safety law (Isidore, 2021).

Impact of Environmental Factors
Although the business of Amazon is primarily online, its business operations are subjected to the influence of the natural environment. The humongous volume of shipping waste and packaging materials produced by online businesses and shopping takes a significant toll on the environment. The Strategic Management assignment investogations show the environmental impact of Amazon can be difficult to comprehend due to the sheer volume of traffic and packaging issues created by the company which leads to the sale of merchandise encompassing environmentally damaging products such as mercury that take place through its online retail platform (Pratt, 2020).

Amazon’s Environmental Actions
Amazon is well aware that its carbon footprint through the internet is immense. The company also unveiled a 15% upsurge in its carbon footprint in the year 2020 (Miller, 2021). During the Covid-19 pandemic, Amazon made a thoughtful offering of assisting through vaccine distribution as a part of their desired expansion into the pharmaceutical and health sector and accumulating collective and personal data about the health of the population. Amazon Web Services also known as AWS is the world's broadly adopted and extensive cloud platform which facilitates over two hundred fully featured data services from global data centres. Further Amazon has also boasted its investments in solar and wind energy to power AWS, however, there are some issues that confront not only Amazon but also its chief cloudy rivals such as Google and Microsoft.

Amazon in its 2020 sustainability report stated that it will attain 100% renewable energy in its business operations by the year 2025. The company has also launched a $2 billion venture capital fund to back up its climate-oriented technologies (Dolsak and Prakash, 2020). The company has also launched CPF or Climate Pledge Friendly to assist its customers in discovering and shopping for sustainable products on its websites. Amazon Aware is another initiative launched by the company to feature thoughtfully crafted, designed, affordable products. Amazon Launchpad offers support and expertise to new entrepreneurs and brands to assist them in overcoming several challenges linked with launching new merchandise.

3. Strategy identification and implementation
3.1 Strategy formulation
Business strategy formulation deals with accumulating and evaluating alternative strategies and choosing strategies which can be pursued by the business. The main aim of this Strategic Management assignment activity is to figure out alternative action courses which can best enable an organisation to attain its objectives and mission. The present strategies, mission, and objective of the firm along with its internal and external environment data facilitate a groundwork for evaluating and generating feasible alternative strategies. Strategic planning techniques and tools assist business leaders to determine where their organisation is present and which initiatives and key metrics they should follow and track to attain that target state. Some common strategic planning and identification tools are SWOT (Strengths, Weaknesses, Opportunities and Threats), OKR (Objectives and Key Results), PESTEL and Balanced Scorecard (Conrad, 2020). There are three main levels of strategy formulation utilised in an entity: corporate level, business level and functional level strategy. Since the process of strategy formulation initiates with situation analysis, a SWOT analysis will be undertaken to evaluate the external as well as internal environment of Amazon:

Strengths: As one of the biggest e-commerce businesses in the globe, Amazon has several strengths. The company enjoys a positive and powerful image across the international market. Amazon after Microsoft has the most diversified and substantial business model. The company indulges in innovative technology and local marketing which led to its top ranking in the list of innovative companies. The main reason most customers trust Amazon is due to its localisation strategy wherein it adopts the culture of the nation or market it enters. Localisation strategy lowers operating costs for multinational companies, solves the issues they face while accessing newer markets, allows the businesses to meet the consumption demand and transfers their operational risk (Huang, 2019).

Weaknesses: Low profitability is one of the major weaknesses faced by the corporation of Amazon as per the Strategic Management assignmentinvestogations. Apart from that Amazon has witnessed successful product journeys accompanied by many failures. Some of the failed products of Amazon are Kindle and Fire Phone. The company during the upsurge of the pandemic also faced troubles from authorities due to unfair treatment of its employees (Stahl, 2020).

Opportunities: While the company is growing at an exponential rate, it still has a long list of markets to penetrate and establish its brand for instance the African and Asian markets. Amazon can partner up with more local businesses to expand its motive of dominating the retail industry. The multinational e-commerce giant can acquire businesses that create AI technologies for providing a sound user experience. Threats: The Government currently is working towards destroying monopoly in any sector by announcing newer policies and laws to encounter newcomers in the industry market. The company has been facing a substantial amount of competition across all of its platforms. Due to amplifying rates of cybercrimes consumers have been apprehensive to share their details online owing to data exposure threats which have ultimately affected e-commerce businesses like Amazon. The Strategic Management assignment research shows the company also receives a substantial amount of fake reviews on its website which can make it difficult for genuine customers to search for quality products on the company website.

3.2 Implementation of the strategy
The current business strategy of Amazon can be defined as cost leadership which can be taken to the extreme. Amazon's business strategy is driven by four key principles: long-term thinking, operational excellence, drive for invention and competitor focus (Dudovskiy, 2020). While the company focuses on operational excellence, it is also crucial for it to regularly enter into new segments and niches while looking for solutions faced by its business. The stage of strategy implementation is one wherein the real action is executed through the process of strategic management (Rani, 2019). Following are the key steps which must be undertaken by Amazon to ensure successful strategy implementation: Annual Objectives: The tech giant must work towards increasing its operational range across different industries to broaden its presence on a global scale. Apart from that, the company must focus on strengthening its ecosystem by creating an association between its broad range of services and products and attaining synergy in its business operation. This can be attained by the company through reducing operational costs and providing better and more transparent employee, stakeholder, supplier and customer experience.

Policies for Strategy Execution: To ensure successful strategy execution it is crucial for the business to ensure all its employees know the decisions that they have to make and the duties for which they are accountable (Radomska, 2018). The organisational system must be set up promptly with frontline marketplace data backing leadership so that information can be informed meaningfully.
Allocation of Resources: Allocation of resources is one of the most complex issues for businesses across the board (Burkova et al., 2019). For effective resource allocation, it is crucial for Amazon to apply redistribution. The company must diversify its staff and resources to ensure a broad range of access. Stimulating automation can be one of the most effective strategies for the company to allocate its resources effectively.
Tasks and Activities: The Strategic Management assignment tasks and activities must be delegated by the company based on experience and skill. It is imperative to provide thorough context and direction throughout every step of the way and foster a culture of personal ownership and responsibility.

Leading and Controlling: A fair way to lead and control a team is to be fair to everyone, know everyone and display continuing interest in the subordinates. An effective leader must criticise with care and be flexible in their approach. Providing simple directions and defending subordinates when necessary is one of the best approaches to leading and controlling a multidisciplinary team (Luthra, 2015).

Critical Success Factors
Critical Success Factors or CSFs are as crucial and straightforward as it sounds and it is one of the main areas of the business which are vital to its success. CSFs are the conditions, characteristics or variables which have a substantial impact on the success of an organisation when they are properly managed, maintained and sustained (Lutaaya, 2019). The five CSFs which must be evaluated are plan, process, people, power and contingency. The critical success factor of Amazon will comprise a proficient and good team leader, loyal and committed workers, deliverables and goals that are measurable and achievable, best sector practices, proper risk management policies, sound communication and effective organisational planning. To document the processes, Strategic Management assignment KPIs or key performance indicators will be employed which can assist the organisation in knowing which of its strategies are working are which are not working (Sherman, 2017).

To embrace change and innovation, the company must utilise unique ideas to embrace change and capture customers. Ideas and innovation are the lifeblood of any entity as it allows it to be more creative and unique. Apple one of the major innovative firms in the world has created a globe of committed and loyal customers due to its innovative approach. This notion must be considered by Amazon as well. Amazon must hold brainstorming sessions timely in each of its departments to involve all workers in the decision-making process. This will in turn allow the employees to feel involved in the organisational change. The employees of the company must be trained through a cynical approach to provide them with greater flexibility and control (Bishop, 2020). To promote innovative thinking it must be rewarded by the business which will thereby create an encouraging environment. A strict employee policy can deteriorate employee engagement. The Strategic Management assignment also identifies that while it is crucial for Amazon to maintain an organisation structure, employees must be given enough leverage to be able to voice their opinions and issues without any concern.

4. Leadership Styles to Manage Strategic Change
4.1 Leadership Styles and Organizational Performance
In the Strategic Management assignment literature on management, leadership has continuously been one of the most significant as well as interesting topics in recent decades. Leadership is generally viewed as the most significant and effective response to the opportunities and challenges that are presented by the worldwide context (Vasilescu, 2019). Effective leadership is considered to be the key to the success of any organization, wherein it is also considered the most complex and multidimensional phenomenon as well. The theories of leadership have been one of the major sources for numerous studies of leadership and leadership styles for decades. There are various leadership theories such as the Great Man theory, Behavioural leadership theory, Contingent and situational leadership theory, transformational leadership theory, and transformational leadership theory. There has been a continuous shift in the concept of leadership over the decades, which has led towards the development of collective shared, and collaborative leadership styles (Benmira and Agboola, 2021).

Shift-in-leadership-theories

Figure 1: Shift in leadership theories
Source: (Benmira and Agboola, 2021)

The leadership style is mainly the approach and manner of providing direction, implementation plan, and motivation to the people, which includes entire implicit and explicit actions that are performed by the leader (Bhargavi and Yaseen, 2016). The impact of leadership on organizational performance cannot be neglected, because the leadership style is primarily connected with both the failure and success of the organization. It is the manner through which the employees. The Strategic Management assignment leadership styles that have benefited Amazon for years, while enhancing organizational performance are transformational and disruptive leadership styles (Alqassimi and Upadhayay, 2019). Transformational leadership is a leadership style within which the leader primarily aims to inspire, motivate, and encourage the employees in order to innovate or create change, which eventually helps the organization to grow while enhancing and shaping its organizational performance. From the initial stages only Bezos, the leader of Amazon, has been mainly focused on making bold decisions while accepting the risks and assessing the challenges with the desire to continuous upgrade. This is one of the significant traits of the transformational leadership style, which has helped Amazon to maintain its position in the competitive global market. As per the transformational leadership theory, the transformational leadership style distinguishes itself from other leadership styles by aligning to a greater good and entailing the involvement of the followers in the process that is correlated to personal factors towards the organizational performance. The transformational leadership style raises the morality and motivation of both the leader and followers, while actively engaging in interactions with the followers, on the basis of common beliefs, values, and goals. This eventually impacts the organizational performance significantly, while leading towards the achievement of the organizational goal (Khan, Nawaz and Khan, 2016). It is the transformational leadership style of Bezos, through which the employees of Amazon are empowered by allowing them to conclude “Type 2 decisions”, which can reverse the organizational performance if things went wrong in the business. On the other hand, the disruptive leadership style has aroused from the theory of disruptive innovation that was developed by Clayton Christensen, while observing the process of product distribution in the digital age. According to theStrategic Management assignment theory of disruptive innovation, this leadership style has consistently become mainstream in the business sector, wherein through this leadership style; the leaders encourage the employees as well as the process of disruptive innovation (Ryan, 2016). A disruptive leadership style has significantly helped Amazon to enhance its organizational performance, as it views problems in new ways while finding opportunities for various unsolvable problems, has patience for change, and acceptance of failures. Bezos commands his firm with his leadership style, along with the cultural change in order to drive engagement, and communicate powerful narratives regarding, while developing a road map for any disruptions that the firm might face. Disruptive leaders are the ones who always look for better solutions to enhance organizational performance and processes, without being fearful to shake things up in order to achieve the desired results (Joy, 2017). Thus, following the transformational and disruptive leadership style, employee engagement and productivity in Amazon is very high, which further provided a competitive advantage to the firm in terms of managing its organizational performance effectively and efficiently achieving the organizational goal, while considering Bezos as one of the successful global leaders.

4.2 Leadership Styles and Values
There is no denial with the fact that the transformational and disruptive leadership style has helped Amazon to enhance its organizational performance. However, in concern to support the further development of the corporate values for Amazon, the following leadership styles can be recommended for the firm.
Charismatic leadership style: Charismatic leadership is said to be one of the most booming leadership styles because charismatic leaders are likely to develop a vision, wherein the followers are likely to follow as well as execute the vision (Hasan et al., 2018). From the Strategic Management assignment reviews leadership style is not only considered to be motivational for the employees but also invites creativity and innovation which eventually aid towards the efficient management of the organizational change. The appropriate treatment of the employees is crucial in the context of the corporate social responsibility (CSR) of the firm in the current era. Therefore, providing opportunities to execute the desired vision of the firm will help to create, maintain, and sustain strong employee relationships, which will eventually enhance customer relations and employee/customer satisfaction. Thus this leadership will have a positive impact on managing the CSR of the firm. The charismatic leadership style is therefore mainly defined in terms of the affective needs of the followers while conveying the confidence and enthusiasm of the leader (Sacavem et al., 2017).

Democratic leadership: In concern of supporting the development of corporate values in Amazon, the democratic leadership style can be recommended for the firm. It is because, in the democratic leadership style, the decision-making is decentralized and mutual throughout the entire subordinates. It motivates the employees to actively participate in the process of decision-making and to perform better because their opinions and views are valued. As per the Strategic Management assignment democratic leadership theory, it has become evitable to relate the governments with the organizations to enhance effectiveness and proper conduct (Sharma and Singh, 2013). The core issue regarding democracy is the significance it connects with the human personality, and it’s the right of every man which is delimited by the government’s decision to contribute towards the process of making and remaking decisions. This right is vital to democracy because it makes probable free discussion along with the consistent participation of the individuals in the organization and government. This will significantly impact the CSR of the firm, and the efficient management of the organizational change, as the views and opinions of the employees and the customers are valued. The implementation of a democratic leadership style is likely to engage the members as a team in terms of decision-making and monitoring process and helps to easily and effectively cope with the challenges which exceed the potential of the individual leaders (Klçolu, 2018). Thus this leadership style will ultimately help the firm to develop corporate values within the organization, as the employees are encouraged to actively take part in the process of decision making, wherein the alignment with the decision of the governments will help to enhance and manage the CSR of the firm.

5. Recommendations and Conclusion
Strategy implementation is generally the process through which the managerial objectives, rules, and methods are implemented throughout the financial plans, growth program, and procedures (Rani, 2019). During the stage of strategy implementation, it is crucial that actual actions within the organization are executed through the process of strategic management. Therefore, in order to ensure the successful implementation of the strategy the following recommendations are provided for the firm:
Setting clear goals: The first step identified on this Strategic Management assignment to ensure efficient implementation of strategy is to identify the goal which the new strategy aims to achieve. However, while setting the goal, it is crucial to ensure that the goal is attainable and realistic. The development and implementation of the strategy have always been at the top of the organizations, therefore, the top management of the organization should initiate the implementation of strategy by making goals and setting in motion the actions requisite to ensure that the goal can be attained (Hitt et al., 2016).
Determining roles and responsibilities: After the identification of goals, it is crucial for the firm to build a roadmap to attain those goals while setting expectations among the team members and communicating clearly about the implementation plan. Once the employees are aware of their expected role, they will eventually tend towards performing better, as it is significant for the organization to highlight the roles and responsibilities of the employees clearly (Thangavelu and Sudhahar, 2017). Furthermore, a strong relationship is essential during the implementation of strategy, in order to support the team members during the process of strategy implementation.

Employee training: Many Strategic Management assignment studies have found that there is a positive relationship between the level of employee training and the implementation of the strategy (Rotich and Osodo, 2017). In order to implement the strategy efficiently and effectively within the organization, it is crucial for the organization to provide training to the employee so that they can cope with the changes and challenges during the phase of strategy implementation. The investment in employee training is not just a simple expenditure but it is an investment with valuable returns which can be computed.

Effective communication: As mentioned earlier, the process of strategy implementation is a complex process, therefore in order to ensure the successful implementation of strategy, the significance of effective communication must not be neglected by the organization. From a broader perspective, communication is the procedure through which information is passed amid individuals and the organization, through the means of the formerly agreed symbol (Iloafu, 2017). Thus establishing and maintaining effective communication throughout the organization will ensure accurate information among the team members, which will eventually help in the successful implementation of strategy within the organization.

Conclusion
Amazon, despite being one of the most renowned e-commerce retail giant, the firm however firm face various issues in term of its strategic management. Since the firm operates in various regions globally, the strategic management of the firm is influenced by various political, legal, and cultural factors. The two major issues faced by the firm are non-marketing strategies and tax avoidance. Hence, after the overall analysis, it can be said that Amazon considering the continuous change in the global market, Amazon also need to change and upgrade its strategic management. The Strategic Management assignment shows focusing on its leadership style, which will eventually help the firm to maintain its position in the competitive market.

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Appendices

Appendix 1: Strategic Management assignment - Organizational structure of Amazon

Rutakirwa-2018