The worlds 10 most valuable brands in 2007 were Coca-Cola, Microsoft, IBM, GE, Nokia,

Toyota, Intel, McDonalds, Disney, and Mercedes-Benz,

PART A
(1) External Macro and Micro business environment of Amazon.com
A. Societal Environment/External Macro
PESTEL
Factors
Political

Economic

Social

Technological

Environmenta
l

Key Point

Relevance to
Amazon.com

Government policies promote competition through

telecom liberalization, e-commerce promotion and
legislation (Held et al., 1999)
High government investment in national ICT
infrastructures (DTI, 2002)
Relaxed EU and North American competition
policies on e-retailing as opposed to heavy
industries (Kobrin S, 2001)
High interest rates slow UK consumer spending.
The credit squeeze and the housing slump has
reduced consumer spending in the USA. However,
consumer spending is rising in China and India due
to high economic growth in both countries. (The
Times online, 2008)
Internet retailing will see tremendous growth
between 2006 and 2011 with sales rising over
100%. This growth is fuelled by the number of
online households in the US, which has increased
by 85% since 2000. (Euromonitor International
from national statistics)
By 2011, 617 million households across the world
will have an annual disposable income exceeding
US$5,000. 143 million of these will be in AsiaPacific. Second only to Western Europe with 185
million. (Euromonitor International from national
statistics)
Increase in online social networking (e-Marketer
online, 2008)
Product category risk and financial risk decrease
online shopping (Sorce et al, 2005)
Growth of internet from 2002 to 2007 is 244.7%.
18.9% of world population use the internet (Internet
World Stats, 2007)
There is an increase in broadcasting, information
and telecommunications technologies for internet
access

More affordable internet access

and increase in internet users

Rapid development of high-speed network

services (e.g. broadband) increases usability of
media-rich applications
Global Warming/ Pollution Awareness
Have to become more green to attract consumers

Faster, better and more reliable

internet access for national users
Rapid expansion into new markets
through acquisitions
Amazon.com
may
consider
entering India and developing the
Chinese market.

More potential
Amazon.com.

customers

for

More potential
Amazon.com.

customers

for

Marketing needs to take advantage

of this new channel.
Need to consider overcoming risks
to increase users.
Opportunity to increase market
share.
Increased frequency of use and
sources (e.g. mobile devices, TV
etc) for internet access by online
shoppers
Media-rich contents are easily
made available to online shoppers
Less car journeys, more shopping
online. (Matthews et al, 2001)
Changing business methods and
environment to become more
green, i.e. with postage and

Legal

No uniform regulations governing e-commerce

covering all the countries e.g Data Protection Act in
UK and Federal Trade Commission in USA
EU Electronic Commerce Directive

The Electronic Signatures Law: China's First

National E-Commerce Legislation

packaging, work
environment.
Be aware of both the domestic and
international laws (Bange, 2007)
Could impact the growth of
transatlantic e-commerce given its
strict regulations (Jacobson, 1999
as cited in Zugelder et al, 2000).
Removes legal obstacles and
provides a more secure and
transparent legal environment
(Yan, 2005).
Increased use of ecommerce for
both consumers and businesses
(Yan, 2005).

Summary of PESTEL
Political, economic, social, technological progress indicates an increasing and attractive market to be
exploited by Amazon.com. The Chinese and Indian markets have shown exceptional growth. The use of
internet as a social networking channel has created new opportunities to be exploited. Additionally, as
environmental awareness increases globally (Stern et al, 2006) it is important that Amazon.coms strategy
support environmentally friendly activities. The global nature of Amazon.coms activities also suggests that
strategies developed should comply with the different legal obligations internationally.
B. Task Environment (Industry)/ External Micro (Porters Five Forces in the E-Retailing Industry)

Summary of key findings from Porters Five Forces

The competitive rivalry amongst the e-retailing industry is intense. From some of the largest to the smallest
companies, dotcom businesses are abundant, making competition intense. Amazon.com competes directly
with big firms such as Barnes and Noble and Ebay.
The threat of new entrants that are able to compete directly with Amazon.com is low
The strong brand image of Amazon.com should be an advantage in any price wars

(2) Internal business environment Amazon.com

A. The Value Chain
B. Resource Based View

C. SWOT Analysis

STRENGTHS

Operational Network
The company supplies products to end customers through an extensive network of facilities managing
fulfillment, segregation, delivery, warehouse operations, data center, customer service, and other services
across North America, Europe, and Asia. As of December 2014, the companys facilities covered an area of
113.7 million square feet. Through its large fulfillment centers, the company stores, manages and distributes
diverse goods.

Customer-Centric Business
Amazon has adopted a number of technologies to make its websites customer friendly. Some of the key
features of the websites include editorial and customer reviews, manufacturer product information, gift guides,
web pages customized to individual preferences such as recommendations and notifications, 1-Click
technology, secure payment systems, digital content and 'Search Inside the Book' feature

Strong Business Model

The company has strategically enhanced its business operations through expanding its business areas to
different products. The company diversified its operations from online bookstore to wide variety of online
merchandising. Its direct-to-consumer online model helps in increasing its inventory turnover and better
returns.

WEAKNESS
Declined Financial Performance
In FY2014, Amazon recorded decline in its financial performance. Though, the company's total revenue
increased to US$88,988 million in FY2014, an increase of 19.52% over 2013 (US$74,452 million), its bottom
line declined. Amazons revenues increased largely due to significant growth in electronics and other general
merchandise.

Operational Issues
Amazon is subject to lawsuits and claims, actual and potential. Currently, the company is involved in
defending several of its cases. Legal proceeding, regardless of the outcome, could drain the financial resources
and divert the time and effort of any management. Most of these are related to patent, employee relations,
contract, product liability, environmental, antitrust and others.

OPPORTUNITY
Expansion Initiatives
In September 2015, the company announced its plans to expand its Kindle Scout, a reader-powered publishing
platform, to more authors and readers across the world. The company plans to partner with authors in Europe,
Canada, Australia, New Zealand, South Africa, Mexico, Brazil, Japan and India to publish their works under
its digital publishing banner, Kindle Press. In August 2015, the company also announced its plans to open a
fulfillment center in Joliet, Illinois and San Marcos, Texas. In June 2015, the company expanded its operations
into Mexico by launching a Spanish-language website that offers a wide selection of products at low prices.

Growth Prospects: E-Commerce

With the increasing trend of e-commerce business, there is huge potential for the company to increase its sales
and customer base. A large number of customers prefer to shop online and place their orders through credit
cards, thereby avoiding the time consuming journey and billing queues.

Strategic Acquisitions
Amazon continues to view acquisitions as a key part of its growth strategy. These acquisitions are intended to
supplement the companys core growth and assure ongoing expansion of its business, including new
technologies, additional products, and geographic reach. Inorganic growth strategy adopted by the company
may significantly increase its market share. In September 2015, the company signed an agreement for the
acquisition of Elemental Technologies, Inc. (Elemental), a provider of software-defined video solutions for
multi screen content delivery.

THREAT
Foreign Exchange Risk
Amazon carries out transactions in Euro, British Pounds, Japanese Yen, and Chinese Yuan and others.
However, the functional currency of the company is the United States Dollar (USD). The company has
potential threats for reduction in its overall revenue due to weak exchange rates for the US$ against all major
currencies.

Market Competition
Some of its major competitors Amazon are eBay Inc., Yahoo Inc., Books-A-Million, Inc., Barnes & Noble,
Inc., Value Vision Media, Inc., Walmart, Macys, and Netflix, Inc. Some of the company's current and
potential competitors may have access to greater resources, wider customer base and greater brand
recognition.

Stringent Government Regulations

The US Supreme Court decisions restrict the collection of state and local taxes for Internet sales. But, a
number of states and the US Congress have been considering initiatives, which may limit the Supreme Courts
position regarding sales and use taxes related to Internet sales. If these initiatives are successful, the company
may be required to collect sales and use taxes in additional states or change its business practices. The
imposition of taxes by state and local governments may create administrative burden on the company. Such
existing and future regulations may reduce the demand for the companys products and services and increase
its operating costs.

(3) Strategy implementation Amazon.com

a) Power and leadership
b) Programs
c) Organizational Structure
d) Procedures (SOP)
e) Organizational Culture
f) Budget

(4) Evaluation & Control Amazon.com

a) Performance
b) Resolution
PART B
(5) Lingkungan Eksternal Makro dan Mikro IBM
(6) Lingkungan Internal IBM
(7) Formulasi Strategi Bisnis IBM
a) Corporate Srtrategy
b) SBU Strategy
c) Functional Strategy
(8) Implementasi Strategi
g) Power and leadership
h) Programs
i) Organizational Structure
j) Procedures (SOP)
k) Organizational Culture
l) Budget
(9) Evaluasi & Kontrol
c) Performance
d) Resolution