pestel analysis amazon case study

Amazon PESTEL Analysis

Before we dive deep into the PESTEL analysis, let’s get the business overview of Amazon. Amazon.com, Inc. is a multinational technology company based in Seattle, Washington. Founded by Jeff Bezos in 1994, the company initially started as an online marketplace for books but later expanded to sell electronics, software, video games, apparel, furniture, food, toys, and jewelry. Here is an overview of Amazon’s business:

E-commerce: Amazon.com, the company’s primary platform, is one of the largest online retailers in the world. Amazon offers millions of new, refurbished, and used items in categories such as books, movies, music, games, electronics, toys, men’s/women’s clothing, sports, tools, etc.

Amazon Prime: A membership program offering free two-day shipping on many items, access to streaming video and music, and other benefits for a monthly or yearly fee.

Amazon Marketplace: This platform allows third-party sellers to sell new or used products alongside Amazon’s regular offerings. Many small businesses use Amazon Marketplace as their primary online retail channel.

Amazon Web Services (AWS): A suite of cloud-based services, including computing power, storage, and databases, available on demand and charged based on usage. AWS is a major source of revenue for Amazon, and it powers many popular websites and services.

Amazon Devices: Amazon develops and sells electronic devices, most notably the Kindle e-readers, Fire tablets, Fire TV streaming devices, and Echo devices, which house Amazon’s virtual assistant, Alexa.

Digital Content: Amazon provides digital content, including movies, music, and books, through its platforms like Amazon Music, Amazon Video, and the Kindle Store.

Amazon Fresh and Whole Foods: Amazon operates in the grocery sector with Amazon Fresh, its grocery delivery service, and Whole Foods, a supermarket chain it acquired in 2017.

Physical Stores: Beyond Whole Foods, Amazon has a physical retail presence through Amazon Books (a chain of bookstores), Amazon Go (a chain of cashier-less convenience stores), and Amazon 4-star (stores that feature products rated 4 stars and above, top sellers, or new and trending items on Amazon.com).

Amazon Logistics: Besides using third-party couriers, Amazon operates its own logistics network, including delivery vans, trucks, airplanes, and even drones under development for future delivery.

Advertising Services: Amazon runs an advertising business where advertisers can display their products to potential customers on Amazon’s websites and mobile apps.

Other Ventures: Amazon has numerous other ventures, including Amazon Studios (film and TV production), Amazon Game Studios (video game development), and more.

Financial Performance 2022 :

Net sales increased 9% to $514.0 billion in 2022, compared with $469.8 billion in 2021.
Operating income decreased to $12.2 billion in 2022, compared with $24.9 billion in 2021.
Free cash flow decreased to an outflow of $11.6 billion for the trailing twelve months, compared with an outflow of $9.1 billion for the trailing twelve months ended December 31, 2021.

“All-Inclusive” business model of Amazon Prime

Here is the PESTEL analysis of Amazon

A PESTEL analysis is a strategic management framework used to examine the external macro-environmental factors that can impact an organization or industry. The acronym PESTEL stands for:

Political factors: Relate to government policies, regulations, political stability, and other political forces that may impact the business environment.
Economic factors: Deal with economic conditions and trends affecting an organization’s operations, profitability, and growth.
Sociocultural factors: Relate to social and cultural aspects that may influence consumer preferences, lifestyles, demographics, and market trends.
Technological factors: Deal with developing and applying new technologies, innovations, and trends that can impact an industry or organization.
Environmental factors: Relate to ecological and environmental concerns that may affect an organization’s operations and decision-making.
Legal factors: Refer to the laws and regulations that govern businesses and industries.

In this article, we will do a PESTEL Analysis of Amazon.

PESTEL Analysis Framework: Explained with Examples

Regulatory Environment: Amazon operates in many different countries, each with its regulations. E-commerce, tax, and data protection policies vary significantly across regions. Compliance with these regulations is essential for Amazon to maintain its operations smoothly.
Trade Policies: Trade policies, including import-export regulations, tariffs, and trade agreements, significantly impact Amazon’s operations. For example, changes in US-China trade policies can affect Amazon’s supply chain costs and product pricing.
Political Stability: The political stability of the countries in which Amazon operates can influence its business. For instance, political instability can disrupt Amazon’s supply chains, increase operating costs, and harm the company’s reputation.
Tax Laws: Changes in tax laws in different countries can impact Amazon’s profitability. For example, US corporate tax rate changes or EU tax laws can significantly affect Amazon’s financial performance.
Data Privacy and Security Laws: As an internet-based company, Amazon handles enormous amounts of customer data, making data protection laws in different countries crucial to its operations. New regulations like the GDPR in Europe and the CCPA in California impact how Amazon collects, stores, and uses customer data.
Labor Laws: These laws can affect Amazon’s human resources practices, particularly around minimum wage, working hours, and working conditions. Amazon’s fulfillment centers have been in the spotlight in several countries due to allegations of poor working conditions, leading to increased political scrutiny.
Environmental and Sustainability Regulations: Governments worldwide are strengthening their environmental protection and sustainability regulations. These regulations may affect Amazon’s packaging, logistics, and waste management practices.

Global Economic Conditions: The state of the global economy significantly impacts Amazon’s performance. During periods of economic prosperity, consumers typically have more disposable income to spend, which can increase sales. However, during a recession, consumers may cut back on non-essential spending.
Exchange Rates: Amazon operates globally and is exposed to exchange rate fluctuations. A stronger dollar might mean lower sales in non-US markets due to increased customer prices. Conversely, a weaker dollar can make Amazon’s products more affordable in those markets.
Inflation Rates: Changes in inflation can affect purchasing power. High inflation can reduce consumers’ buying power and, consequently, the demand for Amazon’s products and services.
Unemployment Rates: High unemployment rates can decrease consumer spending power, reducing demand for non-essential products and services. On the other hand, low unemployment rates can increase consumer confidence and boost spending.
Interest Rates: Interest rates can affect Amazon’s costs. For instance, if Amazon borrows money to fund its operations or investments, higher interest rates increase the cost of borrowing and vice versa.
Consumer Confidence Index: The level of consumer confidence impacts how willing consumers are to make purchases. High consumer confidence can translate to increased sales for Amazon, while low confidence can have the opposite effect.
E-Commerce Market Growth: The growth rate and maturity of the e-commerce market in different regions affect Amazon’s potential for growth. For example, a rapidly growing e-commerce market in Southeast Asia presents significant growth opportunities.
Technological Infrastructure: The state of technological infrastructure in different countries, like internet penetration and digital payment systems, also impacts Amazon’s business.
Transportation Costs: Fuel prices, logistics costs, and infrastructure quality can influence Amazon’s shipping costs and delivery efficiency.
Amazon SWOT Analysis

Sociocultural

Consumer Attitudes and Behavior: Changes in consumer behavior, such as the increasing preference for online shopping and the expectation of fast delivery, play a significant role in Amazon’s growth. Amazon must stay attuned to shifts in consumer behavior to maintain its relevance and competitiveness.
Demographics: Demographic shifts such as age distribution, population growth rates, and income levels can influence Amazon’s market segments. For example, an aging population may increase the demand for certain products or services, while a younger demographic might be more inclined toward digital products and services.
Cultural Differences: Amazon operates globally, meaning it must understand and cater to various cultural preferences and norms. For instance, preferences for certain types of products, payment methods, or even the prominence of local competitors can vary substantially between countries.
Lifestyle Trends: Trends in how people live, work, and spend their leisure time can significantly impact Amazon’s business. For example, the trend towards remote work and home-based activities during the COVID-19 pandemic boosted demand for home office supplies, home entertainment, and online grocery shopping.
Ethical and Social Responsibility: There’s an increasing consumer expectation for companies to operate responsibly and sustainably. Issues like working conditions in Amazon’s warehouses, the environmental impact of its operations, and its role in the local communities it operates in can influence consumer perceptions and attitudes towards Amazon.
Health Consciousness: With growing health consciousness, there is an increased demand for health-related products, organic food, and fitness equipment. Amazon can leverage this trend by offering a more comprehensive range of such products.
Digital Literacy: The level of digital literacy among a population can affect the adoption rate of online shopping and digital services, impacting Amazon’s potential market size in different regions.
Amazon Competitor Analysis

Technological

Innovation in E-commerce: Amazon is renowned for its innovation in the e-commerce sector. As technology evolves, the company must keep up with or lead advancements in personalized shopping experiences, secure payment systems, and virtual reality shopping.
Advancements in AI and Machine Learning: Amazon utilizes AI and machine learning in its business, including recommendation algorithms, demand forecasting, fraud detection, and warehouse automation. The development and application of these technologies are crucial for Amazon to maintain its efficiency and competitive edge.
Cloud Computing: Amazon Web Services (AWS) is a leading player in the cloud computing market. Advances in this technology, such as edge computing and quantum computing, can provide significant opportunities for AWS to grow and innovate.
Digital Payment Systems: Technological advancements in digital payment systems can enhance the ease and security of online transactions, thereby improving the customer experience on Amazon.
Blockchain Technology: Blockchain can potentially impact Amazon in areas such as supply chain transparency and secure payment processing.
Internet of Things (IoT): The growth of IoT presents opportunities for Amazon in areas like smart home devices. Amazon’s Echo devices and Alexa voice assistant are examples of Amazon’s efforts in this area.
Logistics and Delivery Technology: Innovations in logistics technology, such as drone deliveries, autonomous vehicles, and advanced robotics, can help Amazon increase the efficiency of its supply chain and fulfillment processes.
Cybersecurity: As a digital company handling vast amounts of customer data, staying ahead of cybersecurity threats is essential for Amazon. Technological advancements in cybersecurity can help the company protect its operations and maintain customer trust.
Mobile Technology: The growth and advancement of mobile technology affect how consumers interact with Amazon. Enhancements in mobile connectivity (like 5G) can provide a faster and more seamless shopping experience for Amazon customers.

Environmental

Climate Change: Global climate change and associated regulations can significantly impact Amazon’s operations, particularly its supply chain, and logistics. Extreme weather events can disrupt its delivery network, and regulations to reduce carbon emissions might necessitate changes in Amazon’s operations.
Sustainable Packaging: There is increasing consumer and regulatory pressure to reduce packaging waste. Amazon, shipping millions of packages daily, faces significant scrutiny regarding its use of packaging materials. Innovations in sustainable packaging can allow Amazon to reduce its environmental footprint.
Renewable Energy: Amazon has committed to powering its operations with 100% renewable energy as part of its sustainability goals. Progress and innovations in renewable energy technologies can directly impact Amazon’s ability to achieve these goals.
Waste Management: As a major retailer, Amazon must consider the life cycle of its products, including disposal and potential for recycling. Consumer preferences are shifting towards products with minimal environmental impact, and regulations around electronic waste and single-use items are increasing.
Carbon Footprint: Amazon’s operations, particularly logistics and data centers, have a substantial carbon footprint. The company’s ability to reduce emissions can impact its reputation, regulatory compliance, and appeal to environmentally-conscious consumers.
Biodiversity and Conservation: Amazon’s operations can impact biodiversity through its supply chains. Attention to sustainable sourcing and efforts to mitigate habitat impacts can be significant.
Water Usage: Although less directly impactful for Amazon than for companies in sectors like manufacturing or agriculture, water usage can still be relevant, particularly in operating Amazon’s data centers.

Data Protection Laws: Amazon handles a vast amount of user data, so it must comply with data protection regulations in all markets it operates in. These include the General Data Protection Regulation (GDPR) in the European Union, the California Consumer Privacy Act (CCPA) in the United States, and similar regulations elsewhere.
Tax Laws: Amazon operates globally and is subject to different tax laws and regulations in various countries. Changes in these laws can impact Amazon’s profitability.
Consumer Protection Laws: Amazon must ensure its business practices comply with various consumer protection laws regarding product safety, marketing, and sales practices, as well as after-sales service.
Antitrust and Competition Laws: Amazon has faced scrutiny from competition regulators in several regions, including the US and EU, over its market dominance and business practices. Antitrust law and enforcement changes could have significant implications for Amazon’s operations.
Intellectual Property Laws: Amazon must navigate intellectual property laws to protect its own IP (like its technology and brand) and to avoid infringing on the rights of others (such as counterfeit goods sold through its marketplace).
Employment Laws: With its large workforce, Amazon must adhere to employment laws and regulations in different countries, including wages, working conditions, and labor rights.
E-commerce Regulations: As one of the world’s largest e-commerce companies, any changes in laws and regulations pertaining to online retail, digital services, and internet businesses can have a significant impact on Amazon.
Environmental Laws: Amazon must comply with environmental laws in various countries, which can relate to aspects like waste disposal, emissions, and product standards. For example, electronic products sold by Amazon must comply with electronic waste regulations.

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Amazon PESTLE Analysis: An Overview for E-commerce Giant

Updated on December 16, 2023

PESTLE analysis is one of the best known strategic business analysis tools. This article is a PESTLE case study , where we’ll go through the Amazon PESTLE analysis to see how this Political, Economic, Sociological, Technological, Legal and Environmental analysis of the e-commerce giant.

A PESTLE analysis is a framework that lets you understand the external environment surrounding your business. This wider realization of business strategies and their impacts can help your business to correct past mistakes and make the accurate decisions in the future. The effect of a (or multiple) PESTLE analysis (or analyses) can be a “wide opener event” for your company.

Due to the fact that you will be categorizing, researching and analyzing various types of external factors affecting your business, the analysis itself will require time, attention and effort. You are going to go through possible threats and opportunities facing your business.

These threats can help you realize to take immediate action and eliminate them. On the other hand, realizing untouched and unexploited opportunities can open new doors for you and your business. While you can minimize any threat’s impact, you can also maximize the impact of business opportunities whether they are financial, organizational or even social.

Useful PESTLE Tools

The exact categories of a PESTLE analysis are Political, Economic, Social (or Sociocultural), Technological, Legal and Environmental (or Ecological). If you are an owner of a business, a potential future CEO or a start up founder, you can conduct your own PESTLE analysis for your business as well!

The best and easiest way to do it is to list the factors in a spreadsheet in Microsoft Excel. Here, you can find an Excel template that provides you a simple yet professional looking design in order to conduct your own analysis. And it is completely free to use, download it now!

– This image is from Someka’s PESTLE Analysis Excel Template –

Perhaps, you are wondering how to start a PESTLE analysis. Here is a blog post all about it! The history of the concept, the different versions of the acronyms and their changing outcomes, how a PESTLE analysis can advance your business into the next stage, the pros and cons of the analysis, the comparison between a SWOT analysis and a PESTLE analysis and also a PESTLE analysis example of one of the biggest companies in the world are all in the blog post!

There is also an instruction section for you to start and conduct your analysis in seven easy steps. So, you can download the template and whilst reading the blog post, you can create your own PESTLE analysis step by step.

Similar “Threats” and “Opportunities”

If the PESTLE concept seems familiar with all the terms such as “threats” and “opportunities”, you are correct. A SWOT analysis lists the strengths, weaknesses, opportunities and threats of a company without categorizing them. It is a very general ‘all in’ analysis for someone to read and get a general idea of a company.

A PESTLE analysis can be more detailed and actually direct and specific on the factors that it depicts because they are categorized accordingly. Below, you can find the PESTLE analysis of the biggest ecommerce company in the world: Amazon.

Amazon PESTLE Analysis

Amazon.com , Inc. (or shortly Amazon) was founded by Jeff Bezos in Bellevue, Washington on July 5 th , 1994. The company started as an online marketplace for only books . However, as it grew, it expanded into selling electronics , furniture , jewellery and just about everything .

Let’s discover Amazon Pestle Analysis now!

Political (External) Factors

Being the biggest ecommerce company in the whole wide world forces Amazon to keep good and healthy relations with different countries. This means Amazon has to comply and obey the ‘suggestions’ or much more strict regulations of various governments. But that does not mean Amazon does not have dependent stability in and with some of the biggest countries and biggest Amazon buyers.

For example:

Amazon is a big force in the United States and that is an incredible opportunity which not many companies have in their hands.

Even though Donald Trump has benefited Amazon Inc. by cutting its taxes and helping the company to pay an incredible $0 in federal taxes in 2019, their relationship has not been perfect.

Trump does not like (at least he did not like when he was the President) American companies operating and manufacturing their products overseas. He focused on trade protectionism and put new regulations in order to keep ‘American jobs’ in the United States. Amazon’s operations, foreign imports and the number of tariffs was threatened by the administration. Good news for Amazon, Trump’s term as the

President has ended. Bad news for Amazon, Joe Biden won the Presidency.

Biden’s Labor Agenda

A company such as Amazon which pushes against its warehouse workers’ wishes to form unions can clash with the new President who promises to be “the most pro-union President” ever. Biden proposed various reforms regarding workplace conditions advancements and broaden the worker protections. He has policies planned to give more power and authority to workers in his new labor agenda.

Amazon has also its concerns over Biden’s determination on antitrust issues, breaking up monopolies and properly taxing the big tech companies. It is said that the Biden administration will be tougher on these issues than the previous two administrations (in which Biden was the Vice President in Obama’s term).

In fact, Amazon entered the Chinese retail market quickly. It was the most popular ecommerce company in the country. And then, services such as Alibaba’s Taobao and JD.com became popular and took the reins.

Additionally, Amazon has to compete with the giants as well as other local and smaller companies such as Pinduoduo and VIP.com. Amazon has a tough competition in China and it has struggled quite a bit.

So much that Amazon has actually shut down its marketplace in China . Its (Chinese) website can be accessed; however, all the products listed are imported from other countries overseas that still have a functioning marketplace for Amazon. That means China does not technically have Amazon, it only has deliveries from Amazon.

Economic Factors in Amazon Pestle Analysis

If your country’s economy flourishes, then everyone can make more money. An increase in salaries, wages, pensions and incom e can also increase the level of ‘disposable income’ for every household. Amazon can invest more in production, warehouses, storage and distribution systems in these developed markets such as the United States and majority of the European countries because they can and will steadily continue to buy.

You can buy the latest iPhone from Amazon’s website . Also, you can buy a weekly subscription of toilet papers delivered right to your house. And, you can even buy jewelry priced for hundreds of thousands of dollars as well. That is what makes Amazon, Amazon.

Continue to grow?

Amazon can still advance its techniques, operations and systems in developing markets. There is an enormous potential regarding financial gain for Amazon in some of the countries in Europe, Asia and Africa which do not have Amazon as their most popular ecommerce company. Amazon has conquered the United States as the ‘leader in online retail’ but there are a lot of countries in which Amazon is not placed as the most used ecommerce website among customers and citizens.

New tax laws can diminish Amazon’s profit significantly, if the new tax regulations are forced on Amazon. Warren’s taxation plan for Amazon was to introduce a 7% corporate tax which could create 698 million dollars. Even though Warren did not take the office, it is reported that Warren still gets in touch with Biden regarding a number of issues.

Social (or Sociocultural) Factors

The number of people who are buying products online are gradually increasing = An opportunity

The easier it gets for everyone to shop online, the more people are going to do it. It is an inevitable feature of the world wide web that so often gets people addicted to it. In addition to that, every new generation who gets their own smartphones or smart devices buy products online. And the most popular platform to buy your product from is Amazon.

Covid and Amazon

The pandemic caused an incredible number of stores, shops and companies to close down around the world. COVID-19 has done a lot of financial damage to local shops, average size companies and even some large corporations. But not Amazon! The pandemic actually helped Amazon immensely: Their quarterly profits doubled, its net sales has risen by 40% and Jeff Bezos became the first person to have a net worth to surpass $200 billion .

The vaccines have been created and the vaccination processes have started in various countries. However, it is not quite possible (for now) to figure out when everything will go to the ‘old normal’. That is why there are new lockdowns happening around the world (especially in Europe), quarantines do still continue and there are curfews in place in some of the countries.

And Amazon takes advantage of this situation (knowingly or unknowingly) due to the fact that it can deliver whatever you want right to your house and to your front door. This is an important factor in Amazon’s Pestle analysis .

The world stopped when the pandemic hit. Almost every institution had to close down temporarily or permanently and some of them were forced to lay off a quite amount of their employees. However, Amazon actually hired more employees . The company employed 427,300 more people between January 2020 and October 2020. Globally the number of its employees reached more than 1.2 million people.

Technological Factors

Amazon has an amazing and unique system of keeping track each of the production, distribution and delivery processes. Other than the technology it uses in its factories, Amazon is also developing and using new transportation technologies in regard to its delivery system. This means that you can see drones delivering your products right to your front door pretty soon.

So, Amazon is trying to figure out a faster way of delivery; an unmanned transportation system and a new age in technology. This can, without a doubt, change the delivery system of products. However, at the same time, it can also hurt one of the areas Amazon takes pride in.

As it was mentioned as one of the opportunities in the social factors, Amazon employs a lot of people. And it continues to hire more and more people. Changing the whole delivery system to drones can surely be the more profitable solution for Amazon. But on the other hand, it also eliminates employees.

Drone Delivery?

It is uncertain that Amazon can maintain the drone delivery system for a certain amount of time, so Amazon drivers are not going anywhere soon. But that ‘soon’ can be earlier than some of the people have thought. And even if Amazon gets rid of some of the delivery drivers, there can be protests and a lot of bad publicity in regard to the new air delivery system of Amazon.

A leak of Amazon user details can be a huge gift to cyber criminals to take control of the accounts of users. These hackers can go through all of the information a user stores in his or her account: Bank details, credit card numbers, phone numbers, detailed addresses, etc.

The other problem is phishing scams. An email sent to an unknowing user (seemingly by Amazon) informs them about the ‘opportunity to change their passwords’. The email details that their information has been leaked and their passwords have been compromised, so they need to change it.

And, in the Amazon PESTLE analysis perspective , they need to change it now. Then, an ‘Amazon customer service employee’ calls them in order to help them through the password change process. The user downloads and shares their screen with the customer service employee. So, what is the problem in this situation?

Unfortunately, the email did not come from an official Amazon email address. Also, the ‘Amazon employee’ does not work for Amazon. This is called a phishing scam. When the user gets into his or her Amazon account, the ‘customer service employee’ can look and note every detail. And (as it is not enough) they additionally charge them for the customer service they have provided.

Legal Factors

European Union formed the General Data Protection Regulation (GDPR) and in May 2018 it put an important regulation for companies operating in the countries in the European Union. It gave customers the right to demand a copy of all of their personal data from the websites they have created an account in.

This regulation also states that the data should be easy to understand for the user. The big tech companies such as Apple, Spotify, Google, YouTube and Amazon all changed their rules and complied with the new regulation. They made the user’s personal information available but there were some criticisms from the privacy campaign group “noyb” . They said that some of the data provided by the companies were “intelligible” and some of the data were not understood by the users.

Privacy issues?

Privacy issues have been on the news and caused an incredible amount of bad publicity to the ‘big tech’ companies. Perhaps the one company which took the most damage on the new privacy regulations and lawsuits was Facebook. But Amazon did not escape criticisms, lawsuits and

European Commission brought charges to Amazon as t he Commission claims the company violated European Union’s competition law . Even though Amazon denied the accusations, the Commission accused the company of using nonpublic data to give unfair advantage to big third party sellers rather than smaller ones.

These allegations, charges and lawsuits are not only happening in Europe. The United States Congress and the Federal Trade Commission also opened up investigations on Amazon’s treatment on third party sellers. After a 16 month investigation and deliberation period, the antitrust subcommittee concluded that Amazon is a monopoly force over the third party sellers present on its website.

And even though the European Union did not file legal charges for the company; the claims, the allegations and the charges brought still made the news and were covered by the reputable news outlets. That can harm a company’s image and brand, especially one of the big tech companies that had its issues with privacy and security in the past.

Environmental (Ecological) Factors

The good actions against climate change.

Amazon actually invests a lot of money into environmental and ecological programs and platforms that strive to reduce waste, diminish energy consumption and take on ecological challenges. Jeff Bezos himself donated 10 billion dollars to scientists, activists and nongovernmental organizations (NGOs) which focus their efforts to fight climate change.

These kinds of actions the company (and its founder) takes increases its popularity and the value of their brand as it supports a ‘low carbon lifestyle’. These energy saving policies also puts an emphasis on the business stability and the general sustainability of the company.

The ‘Not So Good’ Actions

These are all great efforts to fight the dangerous consequences; however, Amazon itself (its warehouses around the world, offices, vehicles, storages) emits so much carbon dioxide that it makes its efforts for climate change seem irrelevant. According to the report Amazon detailed, in 2018 the company emitted 44.4 million metric tons of carbon dioxide . That is almost equal to annual emissions of Norway.

Even though Jeff Bezos donates an incredibly large amount of money to a good cause, if the company hinders its efforts to do good to the environment, then all the donations and efforts mean nothing. The company tries to escape its responsibilities by throwing money to it. And, unfortunately, ecological issues such as climate change cannot be easily fixed only with money.

On top of that, one of Amazon’s most useful and utilized feature is Amazon Prime. The Prime subscription promises its customers a two day delivery. Therefore, its more than 100 million prime members receive their products that they ordered in a day or two. This increases the carbon emissions significantly.

FINAL WORDS FOR AMAZON PESTLE ANALYSIS

As you can see a PESTLE analysis can tell a lot of details and touch a lot of important areas of a company. Whether it is a huge company such as Amazon or your newly founded start up, a comprehensive, well researched and an accurate PESTLE analysis can be the thing your company needs. It can bring out past mishaps, controversies and mistakes to take notes on as well as future opportunities to be exploited and possible threats to carefully consider.

If you’re going to make a PESTLE analysis for your company, our PESTLE spreadsheets will help you.

You can instantly download:

PESTLE Analysis Template – Excel Version
PESTLE Analysis – Google Sheets Version

These templates have lots of benefits:

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Amazon PESTEL/PESTLE Analysis, Recommendations

Amazon.com Inc. PESTEL PESTLE Analysis, political economic sociocultural technological ecological legal external factors e-commerce case study

Amazon’s performance relates to the issues shown in this PESTEL/PESTLE analysis of the business and its remote or macro-environment. The PESTLE analysis model is a strategic management tool for identifying the external factors (political, economic, social/sociocultural, technological, ecological/environmental, and legal) that shape the conditions of the remote or macro-environment, which in this case is that of the e-commerce enterprise. Other markets or segments included in this external analysis of Amazon are cloud computing services, consumer electronics, and retail. As one of the largest players in the global market for information technologies and related online services, the company enjoys the benefits of extensive market reach, high capitalization, and high popularity. However, the online market is dynamic and continually presents new challenges for Amazon. Maintaining resilience and competence in addressing such challenges is essential to fulfilling Amazon’s mission statement and vision statement . Through tools like the PESTEL analysis model, the company’s decision makers can identify the most significant opportunities and threats based on external factors in the remote or macro-environment of the business.

This PESTEL/PESTLE analysis of Amazon reveals the significance of operations expansion into more markets to support the global growth of the e-commerce business. However, the company needs to address competition involving large and aggressive retail companies, like Walmart , as well as technology firms, like Google (Alphabet) , Apple , and Microsoft , which compete with Amazon’s cloud services and related technological products. Still, as shown in this PESTEL analysis, the competitive landscape presents opportunities to continue growing Amazon’s operations, including those of subsidiaries, like Whole Foods Market , in various market segments.

Political Factors Affecting Amazon’s Technology and Services Business

Amazon operates alongside political influence. This aspect of the PESTLE analysis model focuses on governmental activity and its effects on businesses and their remote or macro-environment. In Amazon’s case, the following political external factors are important in the development of the e-commerce industry:

Political stability of developed countries, especially the U.S.A. and European countries (opportunity)
Governmental support for e-commerce (opportunity & threat)
Increasing governmental efforts on cyber-security (opportunity)

Amazon benefits from political stability. In the PESTEL analysis framework, this condition creates an opportunity for the company to expand or diversify its business in developed countries. For example, Amazon could expand its brick-and-mortar operations in the United States to complement its e-commerce business. On the other hand, the external factor of overall governmental support for e-commerce is also an opportunity. Such governmental support facilitates Amazon’s continuing expansion in relevant markets. However, the same external factor threatens the company because of rising competition, such as that involving Chinese online retail firms that are expanding their operations. Nonetheless, governments present improved business conditions through efforts in fighting cybercrime. This aspect of the PESTEL analysis of Amazon shows major opportunities that the company can exploit to increase its resilience in the remote or macro-environment of the information technology services and e-commerce industry.

Economic Factors Important to Amazon

Amazon’s performance depends on the situation of the economies where it operates its online and non-online businesses. The effects of economic trends and changes on the remote or macro-environment are considered in this aspect of the PESTLE analysis model. In the case of Amazon, the following economic external factors are significant:

Economic stability of developed markets, especially the U.S. and European countries (opportunity)
Increasing disposable incomes in developing countries (opportunity)
Potential economic recession of China (threat)

The economic stability of developed countries increases the likelihood of success for Amazon. Based on the PESTEL analysis model, this situation minimizes economic issues in the remote or macro-environment, thereby minimizing risks to the company’s online retail business expansion. Amazon also has growth opportunities in developing countries. For example, the increasing disposable incomes in developing markets can boost the company’s financial performance. However, the potential economic recession of China threatens Amazon’s business. The company currently offers a limited set of products, including cross-border sales, to Chinese customers. Based on the external factors in this aspect of the PESTEL analysis of Amazon, opportunities for growth in developing countries must be included in the company’s strategy formulation.

Social/Sociocultural Factors Influencing Amazon

Social conditions are a determinant of Amazon. This aspect of the PESTLE analysis model identifies the impact of sociocultural changes or trends on the company’s performance as a leading online retailer and provider of information technology goods and services. Considering such trends in the remote or macro-environment, Amazon faces the following sociocultural external factors:

Increasing wealth disparity (threat)
Increasing consumerism in developing countries (opportunity)
Increasing online buying habits (opportunity)

The increasing wealth disparity refers to the increasing gap between the rich and the poor in many countries. This PESTEL analysis considers such a sociocultural trend a threat against Amazon in terms of the potential stagnation of disposable income levels and the corresponding stagnation of the remote or macro-environment of the industry. Higher disposable income levels are more favorable in increasing the e-commerce company’s potential revenues. In addition, an increasing degree of consumerism creates opportunities for growing the e-commerce and IT services business. For example, higher consumerism in developing markets increases the potential success of Amazon’s generic competitive strategy and intensive growth strategies , as the company looks to expand its global online retail operations in these locations. Also, the company stands to benefit from increasing online buying habits, as more people around the world prefer to buy products through the Internet. The external factors in this aspect of the PESTEL analysis of Amazon indicate the benefits of focusing on market penetration and expansion in developing countries.

Technological Factors in Amazon’s Business

Technological advancement directly affects Amazon, considering the centrality of technology in its business. The consequences of technologies and related trends on the remote or macro-environment are covered in this aspect of the PESTEL analysis of the e-commerce company. The technological external factors important in Amazon’s business are as follows:

Rapid technological obsolescence (threat & opportunity)
Increasing efficiencies of IT resources (opportunity)
Increasing rates of cybercrime (threat)

Amazon faces the threat of rapid technological obsolescence, which imposes pressure on the company to continuously develop its technological assets. However, in the context of this PESTLE analysis, such a condition is also an opportunity in optimizing the business. For example, the corporation’s continued heavy investment in information technology can boost its competitive advantage and protect the business from new entrants in the e-commerce industry. Amazon also has opportunities to further improve its performance based on the rapid increase of IT resource efficiencies. For instance, new computing technologies can maximize online retail productivity and minimize operational costs. However, the company also faces the constant threat of cybercrime. This external factor threatens the quality of customer experience as well as the integrity of Amazon’s business. Thus, significant investment in appropriate technological measures is critical to the company’s long-term survival despite technology-related issues in the industry’s remote or macro-environment. Based on this aspect of the PESTLE analysis, Amazon needs to emphasize continuous improvement of its technologies.

Ecological/Environmental Factors

Even though Amazon is mainly an online business, its operations are subject to the influence of the natural environment. This aspect of the PESTEL analysis model presents how the company’s remote or macro-environment relates with ecological changes. Amazon considers the following ecological external factors in its strategic formulation:

Rising interest in environmental programs (opportunity)
Rising emphasis on business sustainability (opportunity)
Increasing popularity of low-carbon lifestyles (opportunity)

Amazon has opportunities to improve its environmental impact in response to the rising interest in environmental programs. Such interest is a direct consequence of ecological challenges, such as waste management and energy consumption. Based on this external factor, an improvement in Amazon’s corporate social responsibility strategy could enhance the company’s environmental impact. Also, this PESTLE analysis notes major opportunities in the area of business sustainability. For example, higher sustainability standards can further improve environmental impact and strengthen the brand image of the e-commerce organization, based on the business strengths identified in the SWOT analysis of Amazon . Furthermore, the increasing popularity of low-carbon lifestyles provides opportunities for the company to boost its corporate image as a leader in the e-commerce industry. The company could implement extensive energy-saving policies in its operations for this purpose. This aspect of the PESTLE analysis of Amazon shows the significance of a comprehensive corporate social responsibility strategy to increase the company’s competence in addressing the ecological concerns its remote or macro-environment.

Legal Factors

Amazon’s e-commerce operations must adhere to legal requirements. The effects of regulations on the remote or macro-environment are determined in this aspect of the PESTEL analysis model. In Amazon’s case, the following legal external factors are significant:

Rising product regulation (opportunity)
Changing import and export regulations (opportunity)
Rising environmental protection regulations on businesses (opportunity)

Rising product regulation is seen as a result of societal demands on consumer safety and customer security. In the PESTLE analysis framework, this external factor creates opportunities for Amazon to intensify its efforts in reducing counterfeit merchandise on its online marketplace. Also, the company has opportunities to grow, based on the external factor of changing import and export regulations. For example, Amazon can expand its global operations to exploit the increasing ability of sellers to access overseas suppliers. Moreover, the e-commerce company has opportunities to strengthen its brand image through appropriate corporate social responsibility policies that address rising environmental protection regulations. Such effort can increase business competitiveness in the remote or macro-environment. Based on this aspect of the PESTLE analysis model, Amazon can ensure long-term e-commerce success through regulatory compliance.

PESTLE/PESTEL Analysis of Amazon – Recommendations

Amazon remains the top player in the online retail market. The company has shown resilience despite increasing competition with companies, like Walmart. This PESTLE analysis of Amazon identifies key issues that are critical to the company’s long-term success. A recommendation is to expand the company’s operations into developing markets, which present rapid economic development and high e-commerce growth potential. Also, the company must address IT security issues by continuing and enhancing its current strategies for IT security and integrity. These issues affect consumer confidence and the stability of the company’s remote or macro-environment. In addition, based on the external factors in this PESTLE analysis, it is recommended that Amazon boost its brand strength through a corporate social responsibility strategy that addresses current issues that link the business to the natural environment.

Amazon.com, Inc. – Form 10-K .
Amazon.com, Inc. – Our Positions .
Amazon.com, Inc. – Public Policy .
Fu, H. P., Chang, T. H., Lin, S. W., Teng, Y. H., & Huang, Y. Z. (2023). Evaluation and adoption of artificial intelligence in the retail industry. International Journal of Retail & Distribution Management, 51 (6), 773-790.
Martinez-Contreras, R. M., Hernandez-Mora, N. C., Vargas-Leguizamon, Y. R., & Borja-Barrera, S. M. (2022). PESTEL Analysis and the Porter’s Five Forces: An Integrated Model of Strategic Sectors. In Handbook of Research on Organizational Sustainability in Turbulent Economies (pp. 292-314). IGI Global.
U.S. Department of Commerce – International Trade Administration – Retail Trade Industry .
U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry .
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Amazon PESTEL Analysis In A Nutshell

Amazon’s future success is influenced by Political (new regulations and potential breakups of the company), Economic (new global economic dynamics influencing e-commerce adoption), Social (changing consumer behavior at a global level), Technological (new technological challenges, like last-mile delivery at scale), Environmental (enabling sustainable operations), and Legal (compliance with international laws).

Table of Contents

Amazon PESTEL Analysis Introduction

This article will evaluate the global retail giant Amazon in the context of a PESTEL Analysis.

Amazon PESTEL Analysis

Let’s now perform a PESTEL Analysis on Amazon, addressing each factor in more detail.

Political factors encompass the level of governmental intervention in an economy.

This may include policy decisions relating to foreign trade and tax or laws relating to labor or the environment.

As a global retailer, Amazon is not immune to political factors.

Politically stable western countries with similar laws to the USA offer Amazon expansion opportunities.

However, the company has faced stiff competition in China where the government tends to back Chinese e-commerce companies.

Economic factors are those that directly impact the performance of the economy.

In turn, these factors influence the profitability of an organization.

Economic factors may include unemployment rates, raw material costs, and foreign exchange rates.

In the wake of the coronavirus pandemic, Amazon has benefitted tremendously from economic stimulus measures that have increased consumer discretionary income .

However, this income has also allowed competitors to enter the market.

Social factors describe the general beliefs and attitudes of a population, most often related to cultural and demographical trends.

These factors ultimately determine and then drive consumer behavior.

With the shift toward convenient, fast, and contactless delivery, Amazon has again taken advantage.

Savvy and computer literate millennial consumers are also driving huge growth in mobile shopping as the availability of 5G networks increases.

Technological

This describes the rate of technological innovation and development and how it might influence a given market.

amazon-vision-statement-mission-statement (1)

Digital technology is often the focus, but non-tech companies also look for advances in distribution , manufacturing, and logistics.

Amazon is highly innovative within the retail sector.

The company has invested heavily in drones to deliver parcels.

It has also created an unattended locker system called Amazon Hub so that consumers can receive parcels when it is convenient for them to do so.

Environmental

In the 21st century, environmental factors are becoming increasingly prevalent.

They encompass such things as carbon footprint, waste disposal, and sustainable access to raw materials.

Climate change has also meant that businesses must be more adaptable to frequent natural disasters.

As Amazon’s distribution network grows, the company must sustainably address its greenhouse gas emissions.

In the United States, Amazon Prime is particularly polluting because of the promise of 1 or 2-day delivery.

Large organizations that operate in many countries must have a detailed understanding of the laws applicable to each.

This is especially true in countries where employment, consumer, tax, and trade law directly impacts on business operations.

Amazon has had to deal with legal challenges regarding its tendency to subvert tax law and move profits into tax havens such as Luxembourg.

The company was also recently investigated by the US Federal Trade Commission for misleading discount claims on over 1000 of its products.

Key takeaways:

The PESTEL analysis is a tool that businesses use to analyze macro-environmental factors that have the potential to impact on performance.
PESTEL is an acronym for six factors: political, economic, social, technological, environmental, and legal.
As a large, global retail company, Amazon has been able to take advantage of the shift toward convenient and contactless consumer goods delivery. However, it’s global reach also leaves it vulnerable to sustainability trends and investigation for tax evasion.

Key Highlights

Amazon’s future success is influenced by a range of external factors, including Political, Economic, Social, Technological, Environmental, and Legal factors.
These factors can have significant impacts on Amazon’s operations, growth , and profitability.
A PESTEL analysis is a framework used by businesses to assess macro-environmental factors that affect their operations.
It helps businesses identify potential threats and weaknesses and gain a broader understanding of the marketing environment.
PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal factors.
These factors collectively impact a company’s performance and strategy .
Political factors refer to governmental intervention in the economy, including policies related to trade, tax, labor, and the environment.
Amazon’s global reach exposes it to varying political conditions, such as favorable expansion opportunities in stable western countries and competition challenges in regions like China.
Economic factors encompass elements that directly affect an economy’s performance and subsequently influence a company’s profitability.
Amazon’s diversified business model includes various revenue sources, with online stores, AWS, and other segments contributing to its revenue mix. Economic stimulus measures and increased consumer income from the pandemic have benefited Amazon while also inviting new competition.
Social factors encompass cultural and demographic trends that shape consumer beliefs and behaviors.
Amazon has capitalized on the shift towards convenient and fast delivery, especially with tech-savvy millennial consumers and the rise of mobile shopping due to improved networks like 5G.
Technological factors focus on the pace of innovation and how it impacts markets.
Amazon’s commitment to customer-centricity and convenience drives its investment in technological advancements like drone deliveries and unattended locker systems.
Environmental factors, increasingly relevant in the 21st century, include sustainability, carbon footprint, waste management , and adapting to natural disasters.
Amazon faces challenges in sustainability as its distribution network expands, particularly concerning greenhouse gas emissions and fast delivery promises.
Legal factors pertain to understanding and complying with laws in various countries, especially in areas such as employment, consumer protection, tax, and trade.
Amazon has faced legal issues related to tax evasion and misleading discount claims on its products, highlighting the complexities of operating across jurisdictions.
PESTEL analysis is a tool to assess macro-environmental factors’ potential impact on a company’s performance.
Amazon’s ability to adapt to changing consumer preferences and embrace technological innovation has been instrumental in its success.
However, the company also faces challenges related to sustainability, legal compliance, and competition in various markets.

Read also : Amazon Business Model , Amazon SWOT Analysis , SWOT Analysis

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A Pragmatic and Substantial PESTLE Analysis of Amazon

Amazon Overview

The e-commerce sector has achieved tremendous popularity throughout the world. This popularity can be credited to the faster internet, high smartphone penetration, and recently the emergence of COVID which caused a fear among the general public to visit physical stores. All these reasons combined have popularized online shopping. The major company that has accrued the benefits to establish a leadership position is Amazon .

As most of us already know, Amazon is headed by Jeff Bezos who is an iconic entrepreneur and is regularly involved in the discovery of new products and technologies. Currently, Amazon is worth high with a market capitalization of more than $1 trillion. The company serves customers throughout the world from its online platform and it also has started to build physical stores in the US with the unique cashier-less concept to provide ease in shopping to the customers.

The companies need to formulate strategies while expanding into new markets or while increasing their business in the existing markets. The strategy formulation can be effectively done by conducting a PESTLE analysis and this article would analyze the political, economic, social, technological, environmental, and legal components prevailing in the market of the US and China and what impact they can have on the e-retail industry. Besides, if you want to learn about the PESTLE analysis tool in detail, you should definitely read our all-inclusive PESTLE Analysis Guide .

For now, let us proceed with the PESTLE Analysis of Amazon

Political factors affecting amazon, economic factors affecting amazon, social factors affecting amazon, technological factors affecting amazon, legal factors affecting amazon, environmental factors affecting amazon, an engaging pestle analysis of amazon.

The US is among the top economies of the world. In fact, the US can be termed as a hot destination for conducting business because of the adequate support from the government. Recently, at the time of COVID businesses were assisted with financial as well as other required support. Furthermore, taking into account the decline in the income of most companies, the federal government of the US has initiated a positive step recently by reducing the corporate tax rate from 35% to 21%. Moreover, the companies currently operating or looking to expand their base in the US can highly benefit from the fact that the country has free trade agreements with many nations and has also entered into double tax avoidance agreements with close to 90 nations, meaning that the companies would be charged no or little tax for the income generated in the source countries. Hence, this can have a positive impact on the financials of the company.

To add, the positive news for the e-commerce players is that the government is serious about stopping organized crime and has made it mandatory for the e-commerce players to verify the third party sellers by sourcing the government ID, tax ID, and bank account information, and contact information from them. This would help in reducing fraud and the image of the online retailers would not hamper (CNBC, 2021).

Besides, the other major market for retailers in terms of the consumer base is India. The recent decision by the government of India wherein the companies are not allowed to conduct flask sales for marketing and selling their products and companies are also not allowed to advertise those sellers offering discounts. This could have an impact on their advertising business and revenues as well. Further, the companies are also not allowed to sell the products of the company in which they have the shareholding and this could act as a major loss-making decision for some companies (The Economic Times, 2021).

The number of transactions for e-commerce is growing in the US which is evident from the fact that as per the Census Bureau of the Department of Commerce, the Q1 of 2022 witnessed an increase of 2.4% in sales over the last quarter and the total sales amounted to a whopping $250 billion.

However, the per capita income in India is declining and in 2021, according to the Business Standard , it was below the pre-COVID level, highlighting the decline in the purchasing power of the customers which would ultimately impact the sales of the retail companies. Furthermore, the stats from the White House favor the retail companies as in 2021, there was a huge increase in the income level of the people because of the rise in the employment level. The positive news from this is that there was a more than a 10% increase in the income level in the income of the people in the bottom 50%.

This is an opportune time for e-commerce retailers to optimize their return on investment given that economies are recovering from the slump brought by the COVID-19 pandemic and the projected growth of the e-commerce industry is promising.

Besides, the revenue projections of the E-Commerce industry in the US are illustrated in the graphic below

As per the report of the World Economic Forum , the customers prefer the use of both technologies as well as a personal visit to stores for purchasing the products. The number of people preferring in-store shopping amounts to 46% while there is a huge demand for ordering through different gadgets as well, 34% of people like to order online via PC, 38% via tablet, and 44% via smartphone. Alongside, the smart home voice assistants are also popular among the buyers with 42% of people preferring to order online via smart home voice assistants such as Amazon Echo, Google Home, and Samsung SmartThing.

Further, after the COVID more people have been shifting to online shopping which can be substantiated by the fact that in 2021, e-commerce sales in the US grew by 50.5% over 2019 (Goldberg, 2022). Hence, this presents an excellent opportunity for the companies that have an adequate online presence and further, they must also ensure that they have an abundant number of physical stores as well to cater to people of all segments.

Further, in India, there has been a shift in buying behavior over a period of time because of an increase in awareness about the environment. Around 62% of Indians are preferring to pay the premium price for buying sustainable products. This signifies the need for the companies to adopt sustainable practices which can be in the form of eliminating the use of plastic or delivering the products through green vehicles.

The US is considered one of the largest spenders on Research and Development. The companies spend around $500 billion researching various new products and technologies to enhance the efficiency of their respective industry (Edwards, 2021). The various trends that are shaping the retail industry, especially the e-commerce segment include the facility of personalized product recommendations on the website as well as the app. The recommendations are provided to customers by tracking their shopping behavior.

Further, many companies are concerned about the rise in expenses nowadays which can be reduced by introducing chatbots. These chatbots are conversation robots that have the ability to interact with the customer just like the customer service representatives. Hence, implementing this technology would enable the companies to function without needing many customer service representatives.

In addition, the emergence of voice assistants like Alexa and Chromecast have provided more options to the customers for ordering and now they can order from their devices just by speaking. The thing that is lacking while shopping online is the personal touch and this problem can be solved by the companies by implementing augmented reality wherein the customers can be provided the options to visualize the products and get their real feelings. This can be beneficial to the companies as customers would be more confident and satisfied while making the purchases, hence it would reduce the chances of cancellations or returns.

Furthermore, the trend of blockchain is gaining trend for recording transactions and moreover, the digitization of the payment system minimizes the chances of fraud. Moreover, the delivery system has been made much more efficient with the introduction of the drone facility. With this, the courier can be sent speedily (Lastovetska, 2021).

The gist of the matter is that to make the most of the emerging technologies in the industry, companies would need great clarity on their change management approach.

The anti-competitive practices in the US are forbidden by law and as per the Department of Justice are governed by two acts namely The Sherman Act under which the companies are not allowed to indulge in price fixation or rig bids. Further, the Clayton Act prohibits the companies from indulging in mergers and acquisitions that hinder the spirit of competition in the market and would allow the companies to create a monopoly for themselves.

The merger that would result in an increase in the prices of the goods for the customers would require approval from the Antitrust Division and also the Federal Trade Commission.

Further, the California government passed the California Consumer Privacy Act in 2018 which empowers the customers with the right to know why their personal information is to be collected and even the customers now have the right to delete or opt out of the sale of their personal information. This decision would make marketing more difficult for the companies because of the laminations with regard to the use of the customer’s personal data (Banta, n.d.).

Besides, the Indian government passed the Consumer Protection Act in 2019 wherein the companies are liable to pay compensation or damages for a product that is of inferior quality or if it harms the customer in any way. Hence, the companies must be careful while designing or selling the products to avoid financial penalties.

The retailers emit lots of carbon emissions from their operations through excessive use of energy and use of plastic for packaging and carry bags along with dumping the solid wastes in landfills. Various state governments in the US such as New Mexico and Oregon have banned the use of single-use plastic bags less than 2.25mm in thickness.

This means that the companies would have to search for new suppliers of bags. Further, the federal government of the US has announced a national recycling strategy wherein companies are required to recycle the waste rather than dispose of it (Shewmake, 2021). It is time that leaders show transformational leadership capabilities to make their businesses far more sustainable and environment friendly to acquire a competitive advantage

To conclude, the retailers stand out as an excellent chance to enhance their presence, especially in the e-commerce segment because of the change in the consumer dynamics wherein more and more people have started preferring shopping through online channels because of the risk of COVID. The companies need to be cautious about the fact that the customers are shifting toward sustainable shopping behavior, so they must also adopt green business practices to gain the trust of the consumers. Besides, if you want to analyze the internal strengths and weaknesses of the company, you can go through our intelligible Amazon SWOT Analysis . The analysis will provide you fruitful insights into the internal strengths and weaknesses of the company along with the threats and opportunities prevailing in the external business environment.

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Amazon PESTEL Analysis

PESTEL is a strategic analytical tool and the acronym stands for political, economic, social, technological, environmental and legal factors. Amazon PESTEL analysis involves the analysis of potential impact of these factors on the bottom line and long-term growth prospects of the e-commerce giant.

Political Factors in Amazon PESTEL Analysis

The range of political factors that affect Amazon include but not limited to the political stability or instability in the country, the influence of home market lobbying and pressure groups and the attitude of the government towards e-commerce and retail industries in particular. Additionally, the freedom of press, trade unions and their activities and the extent of corruption belong to the list of political factors with potential implications on Amazon business practices.

Due to the scope and scale of its business operations, Amazon plays an indirect role in politics in USA, Europe and some other regions. In other words, in markets where Amazon has a strong presence, the ruling government usually has a certain stance towards the e-commerce giant in particular among internet retailers.

Stance of governments towards Amazon

Most people either love or hate Amazon and this extends to politicians and government officials as well. Former US President Donald Trump was vocal in his dislike of the tech giant and sometimes criticised the company and its then CEO Jeff Bezos on Twitter. The current President Joe Biden also criticizes Amazon for paying low taxes and its opposition towards formation of labour unions. In February 2021 Biden “released the 2 ½-minute video. While he omitted the name of the powerful e-commerce giant, his remarks were seen as an unmistakable show of solidarity with a labour movement that failed to secure anything similar from his recent predecessors.” [1]

The company has hired the former press secretary of the US President, Jay Carney on February 2015 as a senior vice president of Worldwide Corporate Affairs to deal with the political issues that are impacting the business. [2]

Efforts of Governments on Cyber-Security

Increasing integration of internet and internet-based products and services into various aspects of personal and professional lives of people has prompted the emergence of cyber-crimes in various forms. At the same time, governments are fighting cyber-crimes through various measures, although the extent of range of measures employed and the extent of effectiveness of their application vary from country to country. Efforts of governments around the world to enhance cyber-security have positive implications on the performance of e-commerce companies such as Amazon through increasing consumer trust on online transactions.

Amazon Lobbying Practices

The tech giant engages in lobbying practices to attempt decrease the negative implications of political factor described above on the bottom line for the business. As it is illustrated in figure below, Amazon has been increasing its lobbying budget in the US for almost two decades with only a slight decrease in 2008. In 2021 The e-commerce giant spent more than USD 20 million attracting more than 80 lobbyists. The largest internet retailer in the world by revenue focuses its lobbying efforts on the whole range of policy issues including its tax battles, corporate tax reform, antitrust lawsuits and others.

Changes in annual lobbying budget in Amazon [3]

Economic Factors in Amazon PESTEL Analysis

There is a whole host of economic factors such as taxation and inflation rates, overall and industry-specific economic growth, unemployment levels and changes in currency exchange rates that directly affect the volume of revenues and growth prospects of Amazon.

Changes in Currency Exchange Rates

In 2021, net sales from international business accounted for more than 31% of Amazon consolidated revenues. Therefore, the business is subjected to currency exchange risks to a great extent. For example, if the U.S. Dollar weakens year-over-year relative to currencies in Amazon international locations, its consolidated net sales and operating expenses will be higher than if currencies had remained constant.

Likewise, if the U.S. Dollar strengthens year-over-year relative to currencies in Amazon international locations, its consolidated net sales and operating expenses will be lower than if currencies had remained constant. For instance, as a result of fluctuations in foreign exchange rates throughout the period compared to rates in effect the prior year, International segment net sales in Q2 2020 decreased by USD446 million in comparison with Q2 2019. [4]

Cost of Labour

Cost of labour is another important economic factor that affects the e-commerce and cloud computing company. Amazon is able to operate with razor-thin profit margin of about 7,1% due to saving in the costs of resources, including human resources. The median wages paid to 1,3 million Amazon employees equalled to USD 29,007 in 2020, an increase of only USD 159 compared to the previous year [5] . In contrast the median wages of Google and Facebook employees are USD 133,066 and USD 124,000 respectively.

Increase in the cost of labour is going to jeopardize the profit for the e-commerce giant with direct implications on the long-term growth of the business. Amazon senior management decided to adopt a proactive, rather than reactive approach towards external economic factor of cost of labour. Specifically, in 2018 the largest internet retailer in the world by revenue increased hourly wages of employees, including seasonal workers in US to USD 15,00.

Changes in Taxation

In June 2017, former US President Donald Trump spoke of a necessity to introduce ‘internet tax’, specifically referring to Amazon. Analysts noted that “one possibility is that Mr. Trump was thinking of a proposal to allow state governments to force internet retailers to collect sales taxes from their customers” [6] . As of March 2022, The largest internet retailer in the world by revenue started collecting sales tax nationwide. This instance can be referred to as an illustration of potential implications of economic factor, namely taxation on Amazon.

Amazon.com Inc. Report contains a full version of Amazon PESTEL analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Amazon . Moreover, the report contains analyses of Amazon business strategy, leadership, organizational structure and organizational culture. The report also comprises discussions of Amazon marketing strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Cadelago, C. & Rainey, R. (2021) “Inside Joe Biden’s decision to dive into the Amazon union drive” Politico, Available at: https://www.politico.com/news/2021/03/01/biden-amazon-union-video-472315

[2] Kusek, K. (2015) “Amazon Hires Ex-White House Spokesman Jay Carney” Forbes, Available at: http://www.forbes.com/sites/kathleenkusek/2015/02/26/bezos-hires-carney-former-white-house-spokesman-to-lead-amazon-corporate-affairs/#4f5b943133f6

[3] Open Secrets (2020) Available at: https://www.opensecrets.org/federal-lobbying/clients/summary?id=D000023883

[4] Quarterly Report for Q2, 2020, Amazon Inc.

[5] Dailey, N. (2021) “Amazon reveals how much it paid its median employee last year: USD29,007” Business Insider, Available at: https://www.businessinsider.com/amazon-employee-salary-pay-median-worker-compensation-compared-jeff-bezos-2021-4

[6] Cohen, P. (2017) “Trump, Amazon and ‘Internet Taxes’: What Did He Mean ?” The New York Times, Available at: https://www.nytimes.com/2017/06/28/business/trump-internet-tax-amazon.html

Pestle Analysis of Amazon

In this Amazon Pestle Analysis we will discuss the opportunities and threats of external environment of this e-retail business.

Amazon is an e-commerce industry leader founded by Jeff Bezos in 1994. Started as bookstore and diversified its business model to everything you can imagine. E-commerce platform has simplified the shopping experience of consumers. If a consumer is not willing to go outside for shopping he can still get what he wants. He tries to find a product and analyze the reviews and rating and takes the final decision.

Amazon has become the top ecommerce retailer but it is not sticking to it any more. Amazon is now investing in stores to increase its customer base and market share. Let us discuss the pestle analysis of Amazon to identify the external factors in its macro environment. If you are interested please check Swot Analysis of Amazon .

Table of Contents

How Political Factors Affect Amazon

Amazon is an e-tailing platform which is serving millions of customer worldwide. The company has to face political influences and government activities that can affect Amazon success.

Political stability can affect Amazon e-commerce business. For example the political stability of developed countries like Australia gave Amazon.com an opportunity to expand its business in the region. Even a stable political governments can create threats for a company. The European Union is investigating Amazon.com regarding the use of retailers’ data who sell on Amazon Marketplace . If the regulators found Amazon guilty it can face severe consequences. Such political issues are affect Amazon brand image and profitability at the same time.

Another political factor that is worth mention is the government laws for e-commerce businesses. For example, few months back the Indian government stopped Amazon and Flipkart for selling products of those companies they have equity stakes. Government supports companies like Amazon due to their huge investments but it still have to comply with government laws and regulations which is sometimes very difficult. However this political factor becomes a threat when its supports other companies in the industry. For example, in China government support Chinese e-commerce companies to flourish their businesses.

Other external environment factors that can affect Amazon Inc. is cybercrime. If any government what to improve the e-tailing business environment it must fight against cybercrime. This can create an opportunity for the businesses.

How Economic Factors Affect Amazon

Amazon will grow fast if the economic conditions are positive in the areas where it is operating. Retailing is a medium how producers offer their products and services to consumers. Consumer buy from retailers in any economic condition and sometimes the retail business survive even in the worst economic conditions.

Consumers’ disposable income is increasing which is a great opportunity for Amazon.com. Higher disposable income means consumer will shop products of their choice. This will provide companies like Amazon, Walmart , Ebay an opportunity to expand its business to increase their market share and brand presence . According to the National Retail Federation, the U.S retail sales is expected to reach $3.8 Trillion in 2019.

No doubt Amazon is advanced Technology Company and facing criticism for offering fewer job opportunities and prefer to use technology where it is possible. The company denied the news and replied the Amazon is looking forward to hire highly skilled staff in the UK. But in May 2019 the company announced a program for those employees who want to quite. It will offer $10,000 plus three months gross salary for those who want to quit jobs and start their own delivery services for Amazon Packages.

Economic recession is another key macro environment indicator that can affect Amazon. For example Chinese economy is slowing these days and this Chinese recession is considered a threat to Amazon business expansion. Chinese market is one of the key markets where Amazon want to penetrate.

Flourishing retail industry creates opportunities but not only for Amazon. It means more competition for Amazon. Like retailer industry retailers are also flourishing their business and create more competition in the market. For example Walmart is increasing its online presence to not only compete with Amazon but also to improve their thin profit margins.

How Social Factors Affect Amazon

Social factors , trends and behaviors can affect the performance of Amazon negatively and positively. Amazon made people lazy, allow them to stay at home and Amazon delivery system will take care of everything like streaming movies, food itmes and groceries. Staying at home and eating junk food affected the health of American adults and children. The government is under immense pressure to take necessity measure to improve the lifestyle of every citizen.

Young generation is enthusiast and crazy for online shopping. The easy internet access and mobile devices increased this ratio. The senior citizens who don’t walk or don’t like to go outside can also use Amazon online shopping facility. Online shopping is becoming a hobby these day. Amazon can capitalize this opportunity to reach more and more people around the globe.

According to SurveyMonkey/Recode Poll , 20 percent Americans believe that Amazon have a positive impact on society as compared to any other Tech company like Google, Apple, Facebook or Microsoft.

How Technological factors Affect Amazon.com

Technology is the backbone of Amazon . Technology made amazon one of the most profitable company in the globe. Amazon is focusing on technology in terms of cloud computing (amazon web service) anvery system to satisfy its customers .

Amazon is looking to use technology to the fullest for the delivery systems. Amazon Prime Air is a new future delivery system to deliver packages to consumers using Unnamed Aerial Vehicles also known as drones. Amazon is working with different regulatory authorities to comply their requirements and design a sound air traffic management system.

Cybercrime is a threat to Amazon. The whole business model is on stacks. Amazon consumers and third party sellers have concerns about their sensitive data like credit card and debit card and any personal / confidential information stored on Amazon website. In this amazon pestle analysis cybercrime is a real threat to Amazon. According to CJ Rosenbaum, A Lawyer who is working for Amazon sellers, said that his several clients informed him that they were hacked and lost their monthly sales.

Technology obsoletes with the passage of time and amazon is facing the same issues which pressurize it to regularly work on technological assets. All the investments in information technology creates a competitive advantage for amazon.

How Environmental Factors Affect Amazon

Amazon Inc. has resisted pressure from investors and other stockholders to disclose information relevant to environmental impact . Recently Amazon.com committed that it will disclose all such information later this year. Another challenge for Amazon is reducing organizational emissions. It is quite complicated to estimate the emission form e-commerce business. Ordering online requires less energy than driving to physical stores and buy or pick up groceries.

Amazon is also looking for half of its shipment emission free by 2030. Amazon has more than 100 million prime members who are eligible for two days delivery. As a result “When customers want to receive a product in one or two days, the carbon emissions increase substantially,” he said. “If you are willing to wait a week, it’s like killing just 20 trees instead of 100 trees.”

How Legal Factors Affect Amazon Inc.

Amazon business operations must comply with different laws and regulation. There are many legal factors that can affect Amazon for example anti-trust laws, discrimination laws, consumer protection laws for ecommerce businesses, data protection laws.

Counterfeit product regulations are necessary and demand of the consumers. This can be considered as an opportunity for amazon to increase its efforts to minimize the counterfeit sales on e-commerce platform. Amazon has already an Anti-counterfeit policy in placed. Every product offered by sellers on amazon platform must be authentic. The sale of such type of products is strictly prohibited.

There are different Consumer Privacy Acts that could create a threat in the macro environment of Amazon. California Consumer Privacy Act 2018 is one of them and will take effect from 2020. Giant Tech Companies like Amazon, Apple and Facebook will be required to inform users what type of data they collect and how they share or use this data.

Another legal factor is EU GDPR (General Data Protection Regulations) affects Amazon and all those companies who collect customer data like name, emails and bank information. All the consumer data must be protected. The European Union launched an investigation and fined Google and Facebook. This is considered a huge threat to Amazon.

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PESTEL Analysis for Amazon: See the Affected External Factors

As we all know, Amazon is a well-known name in retail and e-commerce. It has grown its business over time. It has also participated in cloud computing, digital streaming, and other activities. The business has established itself in e-commerce. They also use Amazon PESTEL analysis to research remote macro-environments. This way, it enables them to recognize their flaws. So they can focus on enhancing the consumer experience. So, if you want to discover the PESTEL analysis of Amazon, try to read this post. You will learn more about Amazon. Also, we'll give a detailed analysis of each factor for Amazon. Then, in the later part, you will discover the best tool to utilize for creating a PESTEL analysis for Amazon . To get all the information, begin reading the post now.

Part 1. Introduction to Amazon

Part 2. pestel analysis of amazon, part 3. best tool to create pestel analysis for amazon, part 4. faqs about pestel analysis for amazon.

Amazon is one of the successful online retailers in the world. Also, it is a well-known cloud service provider. It began as an online book retailer. After that, Amazon changed into an online-based company. They offer E-commerce, cloud computing, digital streaming, and artificial intelligence services. Customers can buy almost anything thanks to it. It comprises apparel, cosmetics, upscale food, jewelry, literature, motion pictures, and more. Additionally, they can buy furniture, electronics, pet supplies, and more.

On July 16, 1995, Amazon launched as an online bookseller. After incorporating the business, Bezos changed the name to Amazon from Cadabra. Bezos has scanned a dictionary for a word beginning with A for the value of alphabetic placement. He chose the name Amazon because it was unusual and exotic. As well as a nod to his intention to make the corporation the size of the Amazon River. One of the world's largest rivers. The company has always lived according to the motto ”Get Big Fast.”

Amazon PESTEL Analysis

View detailed Amazon PESTLE diagram

Political Factor

Amazon operates in conjunction with political influence. Governmental action is the topic of this PESTEL analysis model component. It also covers how it affects nearby or macro-environments for enterprises. The following political outside influences are crucial for the growth of the industry:

1. Political stability in wealthy nations, particularly in the United States and Europe.

2. Government support for online shopping.

3. Stepping up government efforts to improve cyber security.

Amazon gains from a stable political environment. According to the PESTEL research, this circumstance presents a chance for the organization. Its goal in industrialized nations is to grow or diversify its company. To complement its e-commerce company, Amazon, for instance, could grow its operations there. The government's backing for e-commerce is another external aspect that presents an opportunity.

Economic Factor

The state of the economy influences performance at Amazon. This analysis considers the effects of economic trends and changes on the macro-environment. The economic factors are listed below.

1. Economic stability in developed markets, particularly in the United States and Europe.

2. Growing levels of disposable income in developing nations.

3. China's economy could be in recession.

The economic stability of wealthy nations increases the possibility of Amazon's success. This circumstance minimizes the economic problems in the distant or macro-environment. Lowering the likelihood of hazards to the company's growth in online retail. There are expansion possibilities for Amazon in poorer nations as well.

Social Factor

Amazon also needs to consider social factors. It pinpoints how socio-cultural shifts affect the effectiveness of the business. It is important since it is a major online seller. It is also a supplier of products and services related to information technology. Given these macrotrends, Amazon must contend with the following sociocultural external factors:

1. An expanding wealth gap.

2. Consumerism is rising in developing nations.

3. Rising online purchasing patterns.

The growing wealth gap is the widening divide between the poor and the wealthy in many nations. Rising consumerism opens new opportunities to expand the IT services and e-commerce industries. Also, the business will enjoy rising online shopping trends. It is because more individuals prefer to buy goods online globally.

Technological Factor

Given the importance of technology to Amazon's company, technological innovation also impacts it. The following are some crucial external technology variables for Amazon's operations:

1. Technology that develops quickly.

2. Enhancing the effectiveness of IT resources.

3. An increase in cybercrime.

Amazon is at risk from quick technological change. It puts pressure on the business to advance its technology resources. Additionally, Amazon has room to enhance its performance-based. Efficiency in IT resources is the reason. The new technology can maximize the productivity and expenses of online retail. But, cybercrime remains a continual threat to the business. The quality of the consumer experience is in danger from this external element. It incorporates Amazon's company's moral character. The company must make a large investment in adequate technology measures.

Environmental Factor

Amazon is a website-based company. But the natural environment can have an impact on how it operates. This element illustrates how the company's macro environment interacts with environmental changes. Amazon takes into account the following ecological external elements when forming its strategy:

1. Growing support for environmental initiatives.

2. Increasing focus on corporate sustainability.

3. Low-carbon lifestyles are becoming more and more popular.

Amazon has the chance to lessen its influence on the environment. The increased interest in environmental programs is the reason for it. This interest is a result of ecological issues. It includes waste management and energy use. This PESTEL research also identifies prospects for company sustainability. The growing acceptance of low-carbon lifestyles also presents chances for the business. It will enhance the company's reputation as a pioneer in the e-commerce sector.

Amazon PESTEL Analysis

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1. Introduction

PESTEL analysis or PEST analysis is a strategy carefully designed for business growth and expansion. Similar to SWOT analysis, this framework provides companies a general overview of their strengths and weaknesses analyzing various factors that determine the success of the particular organization.

Such strategies are vital for the companies to understand their present state and work, to improve their services and performance. It considers the macro, remote environment and presents the risks and opportunities to the companies monitoring the different aspects. In this Amazon PESTEL analysis , it gives the detailed explanations of why Amazon can stand out in such fierce competitions from six perspectives.

2. Background of Amazon

Amazon is an e-commerce giant that has made it big in the retail market. Over the years, Amazon has expanded its business and has also been involved in cloud computing, digital streaming, and more. The firm has made its mark on e-commerce. Despite having a stable position in the market, this multinational technology company deals with increasing competition in the field. Amazon PESTEL analysis helps the company to study the remote macro-environment and steadily deal with the competition. It also helps them identify their drawbacks and work on improving customer experience.

2.1 Basic Information of Amazon

3. amazon pestel analysis.

The various factors that PESTEL analysis includes are- Political, Ecological, Social, Technological, Economical and Legal:

Political Factors:

The government, its policies, and its rules determine the growth of an organization in any given state or country. It includes tax rules and regulations, corruption, foreign trade policy, labor law, and all these components are the political factors of a PESTEL analysis.

It studies the government intervention and the scope of the industry at flourishing in that particular area.
Governmental support cybersecurity and smooth operation of e-commerce, which favors Amazon's business. Moreover, the political stability of developed countries works in favor of Amazon.
The growing popularity of the online retail business is a result of governmental encouragement. However, this growing industry of online retailing can also prove to be a risk for Amazon facing tough competition from big brands, especially foreign companies making their way into online retail.

Ecological Factors:

Challenges like pollution, climate change have raised more concern about environmental factors. The ecological factor examines if the company stands a good chance of thriving considering its ecological sensitivity. Companies that focus on environment-friendly products and services, utilize renewable energy, and think about a sustainable future have an additional benefit.

According to PESTEL analysis, Amazon has growth opportunities assessing its ecological factor. Its increasing interest in environmental programs, promotion of business sustainability, and low-carbon lifestyle and waste management strategies could enhance its growth opportunities.

Social Factors:

Understanding consumer behavior leads to an understanding of the need and demand of products. Primarily it is determined by the socio-cultural background of a place. Social factors like people's cultural change, education level, population help companies assess the potential market.

Amazon depends on technology to replace employees. The rate of decreasing job opportunities can be a threat for the company in terms of social factors.
On the other hand, the growing tendency of online shopping and increased consumerism will benefit the company. Easy availability of products and doorstep delivery are some reasons behind the popularity of Amazon among the young ones and aged people for whom leaving home is a concern.

Technological Factors:

Technological advancement is another crucial factor in determining an organization's strengths and weaknesses. Automation, technical innovation, change, and technical awareness are the factors that help companies to plan for their future intelligently. It guides them to adopt new technologies, plan their manufacturing, logistics, and distribution.

The expansion of operations of Amazon has led it to face challenges even from the technology firms. Amazon's innovative and creative ways to reach out to its customers are unparalleled. They are ever exploring new and effective ways of shipping and delivering packages.
The live chat option makes them easily accessible. Therefore, Amazon has plans to hire more people for technological advancement. It will help them to ensure a better customer experience.

Economic Factors:

Economic factors are directly related to the company's revenue. It includes unemployment rates, interest rates, raw material costs, and more. This factor gives the company an idea about the consumer's purchasing power and plans prices, products, and services accordingly. It directly influences the company's profitability.

Though Amazon has extended its services worldwide with the help of government aid, the taxes remain a constant challenge with its ever-changing number, especially in Asian countries.
The large variety that Amazon offers attracts consumers even when they are not seeking something expensive. In developing countries, economic stability has growth opportunities for Amazon.

Legal Factors:

Legal factors similar to political factors deal with rules and regulations. Organizations must abide by the laws such as industry regulation, health & safety of the employees, consumer law, and more to have thorough knowledge about the dos and don'ts of operating in a particular area.

While expanding its wings worldwide, Amazon abides by the rules and regulations. It focuses on cybersecurity, keeping the safety of the consumers in mind.
Efforts such as complicating the environmental protection regulations have helped it to strengthen the brand image. Besides this, changes in the import and export policies will lead the company to face challenges from the competitors easily.

4. Key Takeaways

For competitive advantage, companies must carry out PESTEL analysis on an interval of 6 months to measure the effectiveness of their strategies in the changing environment. Through PESTEL, the company can identify its threats and determine the opportunities assessing all the macro-environmental factors. Amazon PESTEL analysis points out the key issues that might pose a problem in it also helps in producing strategies that will help achieve its long-term goal. At the same time, it highlights the factors such as technological and social that will help the top player to hold its place in the online retail market.

Use EdrawMax Online to create a PESTEL analysis diagram, or create any other diagram with ease! There are massive PESTEL templates and symbols to choose from, and creating a PESTEL analysis diagram could be really simple. Also, you can find substantial PESTEL templates in our template community to have a quick start.

5. References

Cuofano, V., 2021. 'Amazon PESTEL Analysis In A Nutshell', Four Week MBA , [online]. Available at: https://fourweekmba.com/amazon-pestel-analysis/ (Accessed 16 June 2021).

Frue, K., 2021. 'PEST Analysis Of E-Retail Leader Amazon' PESTLE Analysis [online]. Available at: https://pestleanalysis.com/pest-analysis-of-eretail-leader-amazon/ (Accessed 16 June 2021).

Panmore Institute. 2021. 'Amazon.com Inc. PESTEL/PESTLE Analysis Recommendations' Panmore Institute [online]. Available at: http://panmore.com/amazon-com-inc-pestel-pestle-analysis-recommendations (Accessed 16 June 2021).

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PESTLE Analysis Examples

Before We See PESTLE Analysis Examples, Let’s Recap on the Basics.

A PESTLE analysis looks at the macro trends in the surrounding environment of a certain business or organization. It examines the political, economic, social, technological, legal, and environmental elements of the operating market that may have either positive or negative effects on your company or organization.

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A PESTLE analysis is often used as an extension of a SWOT analysis . Remember that the external matrix of the SWOT evaluates and creates awareness about the opportunities an organization should take advantage of, as well as the threats it should avoid. This external analysis is part of evaluating your organization’s strategic position within its market, industry, and larger operating environment.

Here, we will take a deep dive to examine what you should feature in your own PESTLE analysis. We’ll examine some PESTLE analysis examples from some of the most successful companies of our time.

Definitions and General PESTLE Analysis Examples:

A PESTLE analysis will look different for each industry, and it must be approached differently as well. Consider your organization’s unique position, market, and needs when conducting a PESTLE analysis.

It is easiest to begin with a SWOT analysis and then use your PESTLE as a companion piece to dig deeper into the external megatrends—both threats and opportunities—that the market and operating environment will present to your organization.

From our PESTLE analysis examples, here are some factors you may consider using:

Examples of Political Forces

These are the external forces affecting your organization that are brought on by government. They may include laws, policies, regulation or de-regulation trends, governing bodies and leadership, foreign trade and foreign relations, political issues and trends, tax policy—any political factors that could influence your organization’s opportunities or threats.

Examples of political forces include:

Changes in government/election cycles: Will the possibility of shifting party majorities in upcoming or recent elections affect regulation or de-regulation in your industry or a related industry? Does this create a threat or an opportunity?
Fiscal policies: How might changes in tax codes affect your budget and profits? How can you prepare for this?
Wars and conflicts: What recent or current conflicts might affect foreign relations and/or trade in your industry? What can you do to create stability?
Legislation changes: Is there legislation (proposed or passed) that would substantially affect your operations or your customers?
Trade agreements: Do you see any upcoming opportunities in the form of new foreign markets? Or conversely, do you see any threats to your foreign markets?
Political movements: What issues are becoming increasingly important to the people in your target audience? How does this affect their relationship with your brand?

Examples of Economic Forces

The economic environment you operate in includes several factors to consider, such as general economic climate, taxation, and globalization. Inflation rates, shifts in consumer spending, supply chain issues, demand curves, and global economic health may all be a part of your economic analysis.

Examples of economic forces include:

Employment rates and compensation: Do you have a ready labor market, or are good team members hard to come by? Which direction is the trend heading? What do you need to consider in terms of compensation to bring on and keep talent in your industry?
Inflation: How is inflation affecting the price of your materials? How is it affecting your customers and their spending?
Currency devaluations: How is your currency—and the currency of your customer base—performing? How might this affect your costs and revenue?
Stock market and market values: What recent or predicted trends in the stock market do you see impacting your industry and your organization?

Examples of Social Forces

Social forces focus on the opinions and attitudes of consumers that relate to your product, as well as the changing population and demographics of your operating market. Your analysis might consider social justice movements and other trends, both in your immediate environment and in the broader environment your customers are coming from.

Examples of social forces include:

Demographic changes: What are the ages, experiences and backgrounds, and racial and gender identities of your customer base? Have any of these shifted or are they projected to shift? If so, how and why? What do you need to do to accommodate customers coming in?
Religious beliefs: Are there religious or spiritual beliefs that intersect with your organization or your product? How can you be sensitive to those?
Consumer opinions: How do consumers feel about your product (or products like yours)? Are there positive or negative changes in this general sentiment?
Purchasing patterns: Due to economic or other factors, are your customers spending less in your market? More?
Popular media: What current events, celebrity opinions, or other media influences will your consumers be tuned into? Are there any that might affect thoughts, ideas, and feelings about your organization, product, or brand?

Examples of Technological Forces

This focus area considers how technological forces may be impacting your organization. Changes in technology can affect your positioning as an organization. Some recent examples are the rise of cryptocurrency, the emergence of work-from-home technology, AI developments, and even concerns over cyber security.

Examples of technological forces include:

Increased emergence of AI: What capabilities do you see as opportunities for your organization?
Energy usage: What new technologies would allow you to save on energy costs (both to your organization and to the environment)?
Cloud software: What developments have been made to cloud storage to make it more effective, and are you taking advantage of those developments? Conversely, are there security threats to be aware of in this software for your organization’s data?
Internet: What improvements are available to maximize speed and reliability for the online work of your team?
Technology usage incentives: Are there incentives available to encourage certain technology use?
New machinery or tech: Are there emerging industry-specific technologies or equipment that would improve the quality, cost, or efficiency of your organization’s work?

Examples of Legal Forces

While similar to the political aspects, the legal elements in your PESTLE analysis examine the practical application of those political factors into rules and regulations that impact your organization’s business or customers. Depending on your business, you may need to consider local and state laws as well as federal laws.

Examples of legal forces include:

Patent and intellectual rights laws: How might developments or decisions in intellectual property law affect you and/or your competitors?
Protection laws: Are there consumer protection laws that would affect the way you interact with and do business with your customers?
Occupational safety laws: What occupational safety laws do you need to be aware of to conduct business in a way that protects both your employees and your organization?
Import and export laws: What legal parameters are there for ordering goods from other countries, as well as for selling your product in other countries?
Licenses: What licenses do you, your employees, and your organization need in order to fill the roles that are needed?

Examples of Environmental Forces

Environmental factors are affected by weather, geography, climate change, and health crises. In addition to the public health crisis caused by the pandemic, the world has also been impacted by wildfires and other natural disasters across the globe. As an organization, you ought to consider the short-term and long-term impacts of these accelerating changes.

Examples of environmental forces include:

Climate change: How might short- and long-term effects of climate change, including rising sea levels and increasing frequency of extreme weather, impact your organization and customers?
Consumption of non-renewable resources: What necessary resources could become limited or depleted in the future that would impair your business?
Energy alternatives:
Gas emissions: How does your organization contribute to, and how is it affected by, gas emissions? What steps could be taken to reduce emissions and to prepare against the effect of emissions?
Natural disasters: What natural disasters pose a threat in your area, or in the areas where many of your customers are located? How can you be prepared for these threats?
Environmental hazards: What other hazards in your environment could prove threatening to your organization?

*Bonus: Ethical Factors to Consider

Over the last few years, business and marketing strategy experts have added a third ‘E’ to the PESTLE analysis – the ethical factor . This can include things such as fair-trade practices, child labor issues, increasing demand for conscious business models, and corporate social responsibility. As these issues come to your attention, examine the megatrends and take the opportunity to evaluate them within your organization’s environment.

Examples of ethical forces include:

Workers’ rights: What strides can your organization make (or what strides is your organization already making) to take care of those who work for you?
Fair trade laws: Especially concerning overseas trade, what issues do you need to be aware of in order to promote ethical and responsible practices?
Human rights issues: How far have you followed the organizations you partner with, contract with, buy supplies from, and do other business with? Are there any organizations whose relationships need to be reconsidered due to human rights violations?
Corporate social responsibility:
Diversity, equity, and inclusion: What practices and attitudes are being adopted successfully to promote diverse, equitable, and inclusive workplaces? Conversely, are there practices and attitudes that are backfiring? Which might you best adapt for your organization?

6 Real-World PESTLE Analysis Examples from 8 Successful Companies:

Food and beverage industry pestle analysis examples:, starbucks pestle analysis example.

For Starbucks, lowering costs and staying aware and sensitive to the issues that are important to its customer base are two courses of action that become clear after an environmental analysis.

Sourcing raw materials and following fair trade practices , which has gained a lot of attention from politicians in the West.
Keeping up with laws and regulations in other countries from which Starbucks buys its raw materials.
Economic recession , which has led many customers to seek cheaper alternatives.
Rising labor and operational costs due to inflation.
Retiring of the Baby Boomer generation, along with changing family patterns and lowered birth rates leading to fewer spending customers.
Changing workstyles and lifestyles, including increased remote work .
Enabling mobile payments , which increases the potential customer base.
Agricultural developments that might impact raw material production.
Introduction of caffeine consumption-related policies by health organizations.
Industry licensing regulations.

Environmental

Natural disasters in countries that produce coffee beans .
Environmental laws and regulations related to packaging and waste .

Beyond Meat PESTLE Analysis Example

A California-based producer of plant-based meat substitutes, Beyond Meat is poised to take advantage of many environmental trends that could provide an opportunity to expand.

Animal farming is receiving political pressure to cut back on expansion.
Laws and regulations about greenhouse gas emissions.
Vegan meat is projected to grow from 1% to 10% of meat consumption by the end of the decade.
Vegan meat has the potential to be cheaper than animal meat , but would need drastic changes to its efficiency to realize this.
Rise of veganism in developed countries.
Increasing awareness and vocality of environmentally conscious citizens.
An extensive amount of technology in R&D for this industry.
Social media and other technological platforms for advertising and brand-building .
New food safety standards to classify plant-based meat products.
Soy farming has raised some concerns about deforestation and soil degradation.
Plant-based products shown to be much more environmentally friendly than animal meats.

Retail Industry PESTLE Analysis Examples:

Walmart pestle analysis example.

Due to its size and profitability, Walmart has a uniquely competitive edge , yet its growth and continued profitability are sensitive to several external factors .

Global differences in government regulations , such as banned products in some countries.
Emergency curfews closing stores early.
Inflation raising costs; brand appeal is based on low prices.
Supply chain issues. Continued pressure on the supply chain and inflation is causing increased overhead costs.
Business model rejected in some places, such as Germany.
Increased trend toward online shopping , especially post-pandemic.
Consumer push for same-day delivery of products.
Adoption of automation for basic tasks.
Expansion of mobile app and online services.
Expansion of available technology in distribution and warehouse centers.
Proposed legislation to raise minimum wage .
Recent labor lawsuits open doors for further litigation.
Call to reduce waste and use of nonrenewable energy.
Weather and climate considerations in a wide number of locations.

Amazon PESTLE Analysis Example

The technology and online retail giant has many opportunities to capitalize on , with a few threats to monitor .

Government pressure on anti-trust and monopolies for major corporations.
Pressure from the federal government and local government about employment practices .
Governmental regulations on cybersecurity and privacy protection.
Increasing disposable incomes in developed countries.
Inflation and supply chain issues impacting online stock.
Macro-trend for organizations to seek and purchase cloud computing products and solutions.
Increasing consumerism in developed economies and emerging economies.
Increasing demand for same-day delivery of products to consumers.
Increasing dependence on technology , cloud computing, and AI.
Expansion of robotic automation for picking, packing, and delivery of the product.
Expansion of AI to serve Amazon Web Services.
Unionization and labor laws impact Amazon’s workforce.
Changing import and export regulations .
Import and export tax on goods sold.
Increasing energy costs increase the cost of supply chain delivery.
Environmental impact of plastic and plastic packaging .
Carbon emissions and new fuel options as an organization.

Tech Industry PESTLE Examples:

Apple pestle analysis example.

Like other big tech companies, Apple stands to gain from growing reliance on digital technologies and movement toward energy efficiency—but so do its competitors .

Trade disputes , especially between the U.S. and China.
Pressure from federal regulators on antitrust .
Increasing political pressure on consumer privacy protection and data.
Changing economic tides and changing economic forecasts create uncertainty in the tech sector.
Supply chain scarcity and resource constraints on product production.
Stagnant changes to income of Apple’s buyer pool for luxury products.
Rapid growth in emerging markets for entry-level products.
Rising global use of mobile access across the globe.
Increasing global dependence on digital ecosystems.
Anti-Apple sentiment due to exclusivity and price.
Growing technological and development capabilities of the competitive set .
Pressure from cybercriminals threaten the data security of Apple products.
Increasing privacy regulations and protections.
Legal challenges to Apple’s policies and practices related to the app store .
Ethically and efficiently recycling broken and unused electronic devices , especially those containing lithium batteries.
Environmental impacts of manufacturing products in China.
Climate change impacting shipping and supply chain routes .

Airbnb PESTLE Analysis Example

The unique matchup business model of Airbnb, as well as companies like Uber and Lyft, have taken the market by storm—but have also incurred significant legal battles .

Housing laws and vacation rental bans in some markets conflict with business model.
Varying tax rates from counties and countries.
The housing crisis and crunch in the housing market.
Varying prices and availability of hotels as a primary competitor.
Increase access and desirability of travel .
Resistance from locals about the impact of vacation rentals in residential areas .
Social acceptance of ridesharing and travel sharing business model.
Increased reliance on mobile apps and other digital solutions .
Increasing security of online payment systems.
Legal challenges in some states and countries.
Environmental impact of single-use products for hospitality .

What is the purpose of conducting a PESTLE analysis? 

A PESTLE analysis can help you understand where your organization stands in the external market and assess the macro-trends that could potentially affect your business/product.

What are all the components of a PESTLE analysis?

A PESTLE analysis looks at six aspects of the environment that could impact your organization: Political, Economic, Sociological, Technological, and the two newly added — Legal and Environmental. Some PESTLE analyses even incorporate ‘ethics.’

What does PESTLE stand for?

Two things you should always consider as you’re going through each aspect of the PESTLE analysis are: where am I now, and where do I want to go? These two questions will guide you in figuring out your current state in the macro environment and your ideal state. Next, it’s important that with each factor or event you outline in your PESTLE, you also consider whether they pose an opportunity or a threat.

Thanks for sharing….extremely useful

Thank you for sharing ..it has helped

Thanks very helpful for understanding the concept of PESTLE analysis.

Very insightful and pratical. Helpful indeed Thank you

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Amazon as an employer description.

Amazon was the biggest Internet-based retailer in the United States and had frequently been featured on lists of the most admired companies. In 2015, The New York Times published an article that portrayed Amazon as a ruthless employer with brutal human resource management practices and a toxic work atmosphere. Employees were divided in their opinions: some found the culture invigorating and others found it hard to survive in. Leaders in the industry came to Amazon's defence, while employees at other organizations began to disclose their own experiences of toxic work environments. Could Amazon continue to grow, thrive, and retain employees if it maintained its current employee management strategy? Did stress foster innovation, and, if so, at what point did that stress become destructive?

Case Description Amazon as an Employer

Strategic managment tools used in case study analysis of amazon as an employer, step 1. problem identification in amazon as an employer case study, step 2. external environment analysis - pestel / pest / step analysis of amazon as an employer case study, step 3. industry specific / porter five forces analysis of amazon as an employer case study, step 4. evaluating alternatives / swot analysis of amazon as an employer case study, step 5. porter value chain analysis / vrio / vrin analysis amazon as an employer case study, step 6. recommendations amazon as an employer case study, step 7. basis of recommendations for amazon as an employer case study, quality & on time delivery.

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Case Analysis of Amazon as an Employer

Amazon as an Employer is a Harvard Business (HBR) Case Study on Leadership & Managing People , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Amazon as an Employer is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Amazon as an Employer case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Amazon as an Employer will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Amazon as an Employer case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Leadership & Managing People, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Amazon as an Employer, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Amazon as an Employer case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Leadership & Managing People Solutions

In the Texas Business School, Amazon as an Employer case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Amazon as an Employer

Step 1 – Problem Identification of Amazon as an Employer - Harvard Business School Case Study

The first step to solve HBR Amazon as an Employer case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Amazon Toxic is facing right now. Even though the problem statement is essentially – “Leadership & Managing People” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Amazon Toxic, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Amazon as an Employer. The external environment analysis of Amazon as an Employer will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Amazon as an Employer case study. PESTEL analysis of " Amazon as an Employer" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Amazon as an Employer macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Amazon as an Employer

To do comprehensive PESTEL analysis of case study – Amazon as an Employer , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Amazon as an Employer

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ Amazon as an Employer ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Amazon Toxic is operating, firms are required to store customer data within the premises of the country. Amazon Toxic needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Amazon as an Employer has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Amazon Toxic in case study Amazon as an Employer" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Amazon Toxic in case study “ Amazon as an Employer ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Amazon Toxic in case study “ Amazon as an Employer ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Amazon as an Employer ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Amazon Toxic can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Amazon as an Employer case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Amazon Toxic needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Amazon as an Employer

Social factors that impact amazon as an employer, technological factors that impact amazon as an employer, environmental factors that impact amazon as an employer, legal factors that impact amazon as an employer, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: amazon as an employer case study solution.

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Amazon Go Venturing into Traditional Retail PESTEL Analysis

Posted by Zander Henry on Aug-22-2018

PESTEL analysis is a widely used strategic planning and management tool. It is an acronym for political, economic, social, technological, environmental and legal factors that shape the macro business environment. Amazon Go Venturing into Traditional Retail. operates in a complex and dynamic environment characterized by regulatory changes, growing environmental activism, collective social trends, technological changes and evolving legal system.

2 Application of PESTEL to Amazon Go Venturing into Traditional Retail.

The application of PESTEL analysis can help Amazon Go Venturing into Traditional Retail. identify the major external environmental forces that shape the strategy and competitive landscape and support its strategic decision making process. As Amazon Go Venturing into Traditional Retail. looks to expand and leverage its competencies and core capabilities, conducting the PESTEL analysis is imperative for developing effective strategies and achieving long-term growth objectives.

2.1 Political factors

2.1.1 importance of political factors in the pestel framework.

Within PESTEL analysis, political factors exert a strong influence on the long-term sustainability and profitability of Amazon Go Venturing into Traditional Retail. The presence at international stage increases the company’s sensitivity to changes in political environments of different countries. In a political context, the key to success in a dynamic international business environment is to diversify the systematic risks. The political environment of a country comprises multifaceted factors. Amazon Go Venturing into Traditional Retail. needs to consider the following political factors during the strategic planning process:

2.1.2 Political factors that influence Amazon Go Venturing into Traditional Retail.

2.1.2.1 political stability.

High political stability provides a stable and friendly business environment with predictable market growth trends. However, when there is political chaos, it deters the investors and harms the stakeholders' trust in economic and consequent organizational performance. Currently, Amazon Go Venturing into Traditional Retail. is present in different countries, each having own political tensions. Growing tensions and instabilities in the global political environment can affect the Gold industry growth and limit the growth opportunities available to Amazon Go Venturing into Traditional Retail.

2.1.2.2 Changing policies

Frequent changes in government policies harm business performance by increasing environmental uncertainty. It is important for Amazon Go Venturing into Traditional Retail. to study the current trends in the country's political scenario as changes in government may alter the government's priorities towards the development of different industries.

2.1.2.3 Protests/pressure groups and governance system

Amazon Go Venturing into Traditional Retail. should carefully analyze the protests by pressure groups, social/environment activists and worker unions as such protests play an important role in the policy making process. Close collaboration with such groups may enhance the Amazon Go Venturing into Traditional Retail.’s ability to collaborate with community and achieve long-term corporate goals. Moreover, a well-developed governance system with a democratic political environment makes the business environment more comfortable for international business organizations like Amazon Go Venturing into Traditional Retail.

2.1.2.4 Bureaucracy and corruption

Bureaucracy and corruption negatively influence the business environment. Operating in countries with high corruption level and weak law enforcement makes the business environment increasingly unpredictable for Amazon Go Venturing into Traditional Retail. due to jeopardized public trust on business organizations and overall political and economic structure. The corruption can influence various business operations, ranging from licensing, contracting, fraudulent deals to frequent lawsuits. If Amazon Go Venturing into Traditional Retail. decides to enter in markets with the corrupt economic, political system, it will threaten the organization's sustainable development by destabilizing the society, harming justice system and endangering the rule of law.

2.1.2.5 Taxation, trade restrictions and intellectual property protection

Entering in countries with high taxation level will directly influence the profitability of Amazon Go Venturing into Traditional Retail. High taxation affects international trade and prevents exports. Amazon Go Venturing into Traditional Retail. can enter in low taxation markets and benefit from high profits that can be invested in research and development activities. The organization may also study the industry specific taxation policies to understand the host government's priorities and interest in developing industries. Similarly, high trade restrictions can make the business environment more complex by affecting the exports and harming relationships with foreign trade partners. Moreover, if the government of the country under consideration is not serious about protecting the intellectual property rights of business organizations, it will deter the entrepreneurs from investing in organizations due to high risk of ideas being stolen. Hence, Amazon Go Venturing into Traditional Retail. should study how intellectual property rights are protected in the host country and make the business strategies accordingly.

2.2 Economic factors

2.2.1 importance of economic factors in the pestel framework.

It is important for Amazon Go Venturing into Traditional Retail. to understand economic factors such as foreign exchange/interest rate, labor market conditions, inflation and saving rates etc. as they determine the overall economic environment of the country. A detailed understanding of the economic environment can help Amazon Go Venturing into Traditional Retail. estimate the growth trajectory of industry and organization. Following economic factors need to be considered by Amazon Go Venturing into Traditional Retail. to make informed decisions:

2.2.2 Economic factors that influence Amazon Go Venturing into Traditional Retail.

2.2.2.1 economic/business cycle stage.

The economic development of a country directly influences organizational performance. Growing economies offer wide-ranging growth opportunities to the Amazon Go Venturing into Traditional Retail. Similarly, it is important to understand the industry lifecycle stage. Entering in mature industries can be more challenging due to market saturation than industries at the growth stage. Moreover, the business performance of Amazon Go Venturing into Traditional Retail. is also influenced by the extent to which the host country government has spent on core infrastructure development. A well-developed infrastructure facilitates the business environment and increases the growth potential of the gold industry in the respective country.

2.2.2.2 Inflation/employment/interest/exchange rates

The GDP growth rate will determine the Amazon Go Venturing into Traditional Retail.’s ability to pursue its long-term growth strategies. High GDP also signals the consumers’ ability to spend more on offered products. High unemployment signals the availability of surplus labor at comparatively lower wages. Operating in such a market can lower the production cost of Amazon Go Venturing into Traditional Retail. The organization should also carefully consider the interest rate and its influence on borrowing ability and attitude towards investment. The high interest rate will encourage the attitude towards investment and increase growth opportunities for Amazon Go Venturing into Traditional Retail. Finally, the exchange rate fluctuation can also influence the profitability and international trade. The high fluctuation on local currency can be a cause of serious concern for Amazon Go Venturing into Traditional Retail.

2.2.2.3 Labor market conditions

The demand and supply of labor determine the wage rates and supply of skilled workforce. Amazon Go Venturing into Traditional Retail. must study and predict the labor market conditions to understand how it can attract talented workers and leverage their skills to improve business performance. When labor markets are flexible, Amazon Go Venturing into Traditional Retail. can take advantage of higher labor productivity. Whereas, operating in rigid labor markets may cause labor wage and other issues raised by powerful labor unions. Amazon Go Venturing into Traditional Retail. should also carefully analyze the availability of skilled human capital as a shortage of skilled labor can affect business efficiency and make talent attraction and retention more challenging.

2.2.2.4 Financial markets efficiency

The global expansion strategies of the Amazon Go Venturing into Traditional Retail. are influenced by the financial market efficiency as operating in highly efficient financial markets leads towards improved liquidity position and strengthened ability to enter new markets. The health and efficiency of financial markets will determine Amazon Go Venturing into Traditional Retail.’s ability to raise the capital at fair prices.

2.2.2.5 Economic structure

The business practices of the Amazon Go Venturing into Traditional Retail. are influenced by the prevailing economic structure. The economic and regulatory environment in a monopolistic or oligopolistic structure will be different from the monopolistic competition and perfect competition.

2.3 Social factors

2.3.1 importance of social factors in the pestel framework.

Organizational culture derives strong influence from the societal norms, values and trends. Understanding the demographic trends, power structures, consumers’ spending patterns and shared beliefs can help Amazon Go Venturing into Traditional Retail. design effective marketing messages and fulfil corporate objectives through informed PESTEL analysis. The marketing department of Amazon Go Venturing into Traditional Retail. can use the information retrieved from social, environmental analysis to target the consumer groups and increase the appeal of offered products to potential buyers. Amazon Go Venturing into Traditional Retail. must consider the following social factors to conduct macro-environmental analysis:

2.3.2 Social factors that influence Amazon Go Venturing into Traditional Retail.

2.3.2.1 demographic trends.

Changes in demographic patterns like aging population, migration trends and socio-economic variables have paramount importance for international business organizations like Amazon Go Venturing into Traditional Retail. Studying the demographic characteristics can help Amazon Go Venturing into Traditional Retail. in choosing the right market segment/segments with high growth potential. The business and marketing strategies are also influenced by migration. It is important for Amazon Go Venturing into Traditional Retail. to understand the people’s general attitude towards migration as it can influence firms’ ability to bring international managers to host country.

2.3.2.2 Equality and power distance

The power distance within any society shows the acceptance of hierarchy and income inequality. Amazon Go Venturing into Traditional Retail. must adjust its business management practices while entering in markets with high or low power distance. The growing inequality in many countries is altering the power structure, which has serious implications for international business organizations like Amazon Go Venturing into Traditional Retail.

2.3.2.3 Gender Roles

Amazon Go Venturing into Traditional Retail. need to study the traditionally assigned gender roles to align its marketing and communication practices accordingly. Marketing and human resource strategies in a traditional, patriarchal society with clearly distinguished gender roles will be different from societies with low gender stereotypes.

2.3.2.4 Societal norms and class distribution

Culture is considered an important variable by international marketing managers. Each society has distinctive norms and values that play an important role in shaping consumer behavior. Amazon Go Venturing into Traditional Retail. should develop local teams and develop local partnerships for understanding the societal attitudes and norms to tailor marketing strategies according to unique cultural context. The observation of social class stratification is also important for Amazon Go Venturing into Traditional Retail. Offering luxury products at premium prices to a market where the high-end market is considerably small in number will require Amazon Go Venturing into Traditional Retail. to adopt the niche marketing strategies. Similarly, market segmentation based on social class may be ineffective where social class stratification is low.

2.3.2.5 Online shopping

The advent of social media and e-commerce has encouraged online shopping behavior among customers. Amazon Go Venturing into Traditional Retail. needs to understand the online shopping behavior by considering the generational differences as younger consumers are more inclined to shop online than older customers. The growing use of mobile phones and social networking sites must be considered when developing marketing and communication strategies.

2.3.2.6 Spending patterns and behavior

The consumers’ spending patterns are influenced by their purchasing power of money. Studying and forecasting the consumers’ purchasing power based on relevant economic indicators is important to analyze the customers’ interests and spending patterns. In some societies, consuming the offered product is considered a status symbol, while, some people use the same products for functional aspects. Amazon Go Venturing into Traditional Retail. should invest time on understanding the consumption motivations and social trends that define the consumption behavior. Amazon Go Venturing into Traditional Retail. should also attempt to understand the degree of consumer ethnocentrism and consider the country of origin effect to determine local consumers’ evaluation of foreign products. Lastly, Amazon Go Venturing into Traditional Retail. should study the consumers’ leisure interests and should focus more on enhancing the customer experience if customers prefer experiential products over traditional product offerings.

2.4 Technological factors

2.4.1 importance of technological factors in the pestel framework.

‘Technology' is the fourth factor of PESTEL analysis. The rapid technological advancement and technological diffusion across the globe have increased the importance of understanding technological factors during the strategic decision making process. A detailed analysis of the technological environment can help Amazon Go Venturing into Traditional Retail. capture the technological trends to achieve certain business advantages, such as- increasing profitability, boosting innovation process and enhancing the operational efficiency. Following technological factors can influence the business performance of Amazon Go Venturing into Traditional Retail.:

2.4.2 Technological factors that influence Amazon Go Venturing into Traditional Retail.

2.4.2.1 social media marketing.

The development of information and communication technologies has led towards the adoption of innovative marketing techniques to enhance collaboration with customers. Use of social media has become common in a modern business environment. Amazon Go Venturing into Traditional Retail. can leverage the opportunities offered by social media marketing to improve business performance. Technological trends can be used to start the creative social media campaigns for developing online brand communities.

2.4.2.2 Technological innovations and development level

Amazon Go Venturing into Traditional Retail. should carefully consider the on-going technological innovations to stay ahead of the competition. A close eye should be kept on analyzing the 5G and determining its potential to deliver positive business outcomes through enhanced user experience, increased speed and expanded access. Technological innovations like this can bring major transformations in the industry and reset the success rules for market players. Moreover, considering the development and maturity level of technology in the respective market is also important. Entering in markets where technological advancement has not reached the maturity means Amazon Go Venturing into Traditional Retail. can increase the market share by focusing on emerging technological innovations.

2.4.2.3 Research and development on technology and impact on cost structure/value chain

Amazon Go Venturing into Traditional Retail. needs to consider the investments made by competitors on a micro and macro level to understand how new technologies influence the firm’s value chain and prevailing cost structure. Research and development activities are highly important in an environment characterized by creative disruption. In such an environment, Amazon Go Venturing into Traditional Retail. should invest in disruptive technologies to maximize the profits and re-invest the profits for future disruptive technologies.

2.4.2.4 Shortened product life cycles

The adoption of new technologies has shortened the lifecycle of new product development. Today, new products are developed quickly, and supply chain partners have also gained more power. It pressurizes the Amazon Go Venturing into Traditional Retail. to develop new products quickly, increase product range diversity, integrate flexibility into the value chain and develop healthy business relationships with value chain partners.

2.5 Environmental factors

2.5.1 importance of environmental factors in the pestel framework.

The growing environmental consciousness and changing climatic conditions have made ‘environmental analysis’ an important part of the PESTEL analysis. The environmental standards, laws and regulations vary across different markets. The international presence of Amazon Go Venturing into Traditional Retail. require the organization to consider these differences to avoid undesired circumstances carefully. Detailed environmental analysis is imperative before deciding to enter a new market or start a new product line. Some examples of environmental factors that Amazon Go Venturing into Traditional Retail. need to consider are given below.

2.5.2 Environmental factors that influence Amazon Go Venturing into Traditional Retail.

2.5.2.1 recycling and waste management.

The growing environmental pollution coupled with technological advancement has compelled business organizations to adopt innovative recycling and waste management practices. In some countries, recycling has almost become a business norm. Moreover, adopting efficient waste management practices in organizational units that are located in or near urban areas is highly crucial for Amazon Go Venturing into Traditional Retail. Many countries have placed strict norms to protect their urban areas through effective waste management.

2.5.2.2 Renewable technologies

Some countries offer subsidies for encouraging investment in renewable technologies. Amazon Go Venturing into Traditional Retail. can benefit from it and invest in renewable technologies to ensure long-term sustainability. This investment will also increase stakeholder satisfaction and expand the customer base due to enhanced brand image.

2.5.2.3 Weather and climatic conditions

Changes in weather and climatic conditions can influence business efficiency. For instance, extreme weather conditions can increase the cost of operations and compel the Amazon Go Venturing into Traditional Retail. to make the value chain more flexible. Such changes can also influence the consumers' spending patterns, causing the organization to revise its product and marketing strategies.

2.5.2.4 Attitude towards eco-friendly products

There is a growing trend towards the use of green/eco-friendly products. Amazon Go Venturing into Traditional Retail. can take it as an opportunity and adopt green business practices to win the trust of stakeholders. Regulatory bodies’ emphasis on ensuring compliance with environmental norms is altering the product innovation priorities. It requires Amazon Go Venturing into Traditional Retail. to prioritize and focus on marketing the eco-friendly nature of their products over customary value propositions.

2.5.2.5 Environmental regulations to avoid resource depletion

Excessive resource depletion by Amazon Go Venturing into Traditional Retail. can draw the negative response from media, environment protection groups, customers and the general public. Amazon Go Venturing into Traditional Retail. must study the specific environmental regulations of the country under consideration to understand which resources (like water, electricity etc.) are considered rare or which species are endangered whose excessive consumption can cause trouble for the organization.

2.6 Legal factors

2.6.1 importance of legal factors in the pestel framework.

“Legal” is the sixth factor of PESTEL analysis. Amazon Go Venturing into Traditional Retail. cannot enter a new market without studying in detail the legal environment and regulatory structure of the new consumer market. A careful evaluation of legal aspects is required to avoid getting into some serious trouble. Ignorance in this regard can cause undesired circumstances for Amazon Go Venturing into Traditional Retail., such as- hurting competitive advantage as a result of intellectual property rights violation and harmed organizational image due to violation of consumer/employee/environment protection standards. Amazon Go Venturing into Traditional Retail. should consider the following legal factors when exploring a new market.

2.6.2 Legal factors that influence Amazon Go Venturing into Traditional Retail.

2.6.2.1 employee protection laws (discrimination and health and safety).

Amazon Go Venturing into Traditional Retail. must follow the employee/labor health and safety laws as some countries have strict regulations to ensure labor safety. Providing a secure work environment for the workforce is the ethical and moral obligation of Amazon Go Venturing into Traditional Retail. Similarly, anti-discrimination laws (like equal employment opportunity) also need to be carefully studied when developing human resource practices as discriminatory suits against employer harm the organizational image and affect organizations’ ability to attract and retain the talent.

2.6.2.2 Consumer protection laws

The data protection has become an important issue due to consumers’ privacy and security concerns. Amazon Go Venturing into Traditional Retail. need to study data protection regulations to protect the customer data. Moreover, there are laws to set the maximum price, ensure a certain quality standard and protect consumers from fraudulent marketing claims. Amazon Go Venturing into Traditional Retail. must consider these factors to ensure compliance with consumer protection laws.

2.6.2.3 Intellectual property laws

Intellectual property regulations are designed to protect the companies' patents and valuable ideas. Inability to protect intellectual property rights can result in losing competitive advantage, which may weaken the positioning of Amazon Go Venturing into Traditional Retail. against other market players.

3 Concluding statement

To conclude, the PESTEL model is an important business tool that involves a detailed analysis of macro-environmental factors that shape the business environment. Ranging from political factors to environmental factors, each factor comprises various variables that influence the strategic decision making process of business organizations like Amazon Go Venturing into Traditional Retail.

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Implementing Strategy – Amazon Case Study 2019 R

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muskan saxena

Amazon is the first large company that sells goods and services over the internet it was founded by jeff bezos in 1994. Amazon started out as an online book store then it grows quickly to add new items such as DVD’s, video games, electronics, clothing and more to the extent that the company logo symbolizes means that they sell all products from A to Z. Amazon.com try their best to get customer loyalty and trust. They offer state shipping service and they have many retail stores in different countries. It also purchases customer data and information to achieve customer needs and wants. Amazon is one of the first in the world to sell online and has many competitors like: ebay, rakuten and flipkart. Therefore, amazon has own over 40 subsidiaries includes: zappos, shopbop, IMDb, Amazon Prime, appstore, and amazon drive.

Adrienne Massanari

In 2001, Amazon. com released an annual report, as the Securities and Exchange Commission requires from all public companies on a yearly basis, which was overwhelmingly positive about the company's future. In his letter to Amazon. com shareholders, Jeff Bezos reported that he was" as enthusiastic as ever about this business" and was" lucky and grateful" to be a part of the company (Amazon. com, 2001, p. 1). This is not surprising, given that Amazon.

Texila International Journal of Management

Texila International Journal , Chukwuka Ukeni

The success of any business is dependent on the strategy/strategies that are deployed in the operation of such a business. Strategy is a critical determinant of business success. Amazon.com is one of the most successful brands in the world; the company has been in business for over two decades and has recorded an unprecedented business success in human history. In this research work, the key strategy behind the success of Amazon will be extensively investigated. Given the unusual success rate of this organization over the past two decades and their high prospect for greater success, it becomes imperative to investigate the strategy behind this tremendous business success in-order to unveil and/or re-emphasize an established business principle that may not be obvious to many businesses. The purpose of this research is mainly to identify these strategies and extend further emphasis on the viability of such business strategies in order to strengthen existing research on the subject matter. Using the waterfall methodology, the history of the company will be reviewed, the financial reports, company memos, press releases, etc., will be analysed. The evolvement of the business from its inception as an online book retailer to its diversification into numerous other lines of businesses will be reviewed and analysed.

Charles Edward Andrew Lincoln IV

Porter Analysis: A Business Strategy of Amazon.com through a Value Chain and Comparative Advantage Analysis of Amazon's Trademarks and Intangibles Amazon is considered the preeminent online retailer in the world. It operates in varying areas from robotics, movie databases, web services, audio books, food markets, etc. Its expansive reach is a matter of e-commerce highly dependent on the logos and Amazon trademarks, such as the Amazon smiling face, the Amazon logo, etc. The E-commerce industry falls into the category of internet and software services according to S&P's Industry Surveys on "Internet Software & Services. E-commerce can be categorized into two major segments on the internet: business-to-consumer (B2C) and business-to-business (B2B). Amazon.com falls into the B2C category, because Amazon's main target is consumers. Amazon is the largest online retailer in the world. But it operates with a great deal of competitors. Below is a chart of the main competitors Amazon deals with in the economy. Working Paper.

Volume 6, Issue 2 (XXXXI) International Journal of Advance and Innovative Research

DrVvln Sastry

“To be world’s most customer-centric firm, where customers can discover and find anything they want to purchase online and with the lowermost possible prices” is amazon’s mission and vision statement (Amazon, 2015). Amazon is proud to have taken advantage of the World Wide Web or internet boom as one of the main businesses. The firm has created a global strategy that, when considering technology, has made it a key force. Amazon has accomplished a growing range of services and products while maintaining the well-intentioned customer service that they provide their customers with which they deserve a great deal (Amazon, 2015). In latest months, AWS (Amazon Web Services) has been moving towards the business sector, with services such as its Glacier storage service, Redshift data warehousing product and others being released. But the issue arises: what is the business play of Amazon right now? AWS claims that despite the fact that many companies are not prepared to fully jump into the public cloud, acceptance in the enterprise sector has "accelerated quickly." In latest months, the AWS has created a concerted attempt to concentrate on the company. Whether that's enough in the years to come will surely be a large question to watch! The proposed project analyses and describes the main business strategies of Amazon. The project team assesses and evaluates the suitability of approaches that led to the online business achievement of the Amazon. In addition, review will be conducted using industry assessment, strategic description, the assessment of strategy, strategic problems, and strategic suggestions. The generic options for strategy, environment and strategic capacity assessment that will assist describe the strategy of Amazon in detail with regard to the company’s crucial business elements. Amazon's business strategy for the cloud is also evaluated by the research. Objective of the proposed study Amazon’s Strategic Analysis and its enterprise strategy for the cloud, and the study will be conducted with the help of various strategic analysis tools and techniques that have been taught as a part of AMP at Indian Institute of Management, Lucknow and BSE Institute, Mumbai.

Indus Foundation International Journals UGC Approved

IJAR Indexing

Amazon is an American international e-commerce company. It was started by Jeffrey P. Bezos in the year 1994. And it was launched in India in June 2013. Three years back, Amazon had no infrastructure in India, and now it dominates the Indian markets. At the very start it was perception of investors that in India It will not go long like China as in the year 2004 when Amazon entered in China it hasn?t seen much success there with Alibaba, its Chinese competitor, dominating the e-commerce market. After its bad run in China, Bezos is going all in for India. Fact behind formation of Amazon in India was its huge number of headcounts i.e. 1.25 billion four times as big as the U.S.?s and more than doubles Europe?s. Of these, 500 million, around 35 percent, are internet users. As per researches the yearly growth rate of internet users is highest in India around six million users join every month. Researchers expect the online shopping market in India to reach $15 billion by 2016 up from only $35 million in 2014.

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pestel analysis amazon case study

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Amazon PESTEL Analysis

Here is the PESTEL analysis of Amazon

Sociocultural

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Environmental

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Amazon PESTEL Analysis

Political Factors in Amazon PESTEL Analysis

Economic Factors in Amazon PESTEL Analysis

Pestle Analysis of Amazon

How Political Factors Affect Amazon

How Economic Factors Affect Amazon

How Social Factors Affect Amazon

How Technological factors Affect Amazon.com

How Environmental Factors Affect Amazon

How Legal Factors Affect Amazon Inc.

About The Author

Umar Farooq

PESTEL Analysis for Amazon: See the Affected External Factors

Part 1. Introduction to Amazon

Amazon PESTEL Analysis

Political Factor

Economic Factor

Social Factor

Technological Factor

Environmental Factor

Amazon PESTEL Analysis