Amazon Pestel Analysis

1383 words - 6 pages

PESTEL analysis is the technique where political, economic, socio-cultural, technological, environmental, and legal factors are evaluated to identify external forces that impact market’s growth or decline. Assessment of the external environment helps to recognize key drivers and create a development strategy for the company.
Political Factor
International regulations are slowing Amazon’s expansion. Some countries’ regulations limit possibilities of internet purchases. However, internet providers bring faster and more affordable internet to more consumers which enable more consumers to shop at Amazon. Often, the company under analysis needs help of national governments to launch its authorized countywide websites and receive benefits in regard to taxation. In less internet penetrated open countries, besides direct investments, Amazon requires assistance of local authorities to develop the demand for e-commerce to a significant level. An online global retailer can expand its operations to closed countries through strengthening political relationships and trade pacts. In new countries, Amazon needs either pre-determined national priority supporting the e-market development or strong governmental lobbying of internet-based industry to increase the governmental capacity to earn. In some instances, the corporation needs local political hierarchies to relax cultural or religious ideologies for facilitating conditions friendly to the e-commerce development.
Economic Element
Since the company deals in US dollars, fluctuations of currency can cause issues when selling via the internet. Currently, global economy is improving, and internet sales are expected to grow. When the economy suffers downfalls, online retail sales are one area that either grows or does not suffer as much (Marcus, 2004). Economy standards of particular countries might require specific strategies to make products available to their populations. Some countries, notably China, and India, and emerging markets experience boom of a commercial internet usage.
Socio-Cultural Aspect
Religious and ethical values of some countries restrict internet usage and e-commerce. Therefore, social climate of these countries is not conducive for online sales. However, overall outstanding internet growth rate presents opportunities for increasing the market share. Amazon can use social network marketing to increase people’s awareness of its presence. Culture approval of e-marketing is important to the Amazon’s expansion and development. In less tolerant cultures, e-commerce is challenged or belittled. In addition, the context of cultural supremacy over the power of modern technologies is a result of conservative cultural beliefs of the local population.
Technological Factor
Amazon online retailing offers possibilities of surpassing competitors. Consumers can access internet anywhere in the world through tablets and mobile devices. This makes price comparing easy and allows attracting customers to...

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