This essay covers the whole of Assignment 2 (P4, P5, P6, M3, M4, D2, D3) for Unit 1 - Exploring Business. It goes in depth to ensure all Pass, Merit and Distinction criteria within Learning Aim C and D are met with references linked. There are also documents for Assignment 1 and 3 which can be boug...
Iqbal Ahmed 15174
Centre Number: 10500
Unit 1 – Exploring Business (Assignment 2)
Discuss the internal, external and competitive environment on a given business
Internal Environment
Majority of organisations sees their organisational culture as an important factor. For example, Amazon’s
organisational culture is seen as one of the factors of the success in the online retail business. This is because they
have a culture which really defines them as an organisation, as Amazon is known for having a cooperate culture
which pushes employees to explore ideas and take risks. Also, Amazon have many CSR programs, allowing them to
improve their internal environment within the business. For example, Amazon are educating and helping them
through their “Virtual Contact Centre”, which allows Amazon’s customer service employees to work from home. 1
Another CSR program Amazon has is the “Pay to Quit” program which offers $5000 to employees who decide to quit
because they want to help the employees choose the best career path for them. This clearly demonstrates how the
environment within the business is very friendly and caring, as Amazon makes sure they help their employees in
every way possible. Amazon believe that it is important to care about their employees too because they are an
important stakeholder to the business.
External Environment
External environment are the factors outside of the organisation which affect its operation and determine the
business’ opportunities and threats/risks. The most popular and easiest way to find out the changes within the
external environment is by using the PESTLE model. The letters stand for Political, Economic, Social, Technological,
Legal and Environmental. Political factors include factors such as tax policy, trade tariffs etc which applies to most
large organisations. Economic factors include inflation rates, interest rates, economic growth patterns etc. This can
help businesses to know when they will have an overall increase within their business such as production of
goods/services. Social factors include population analytics, cultural trends etc which helps businesses decide what
products they should sell to what target audience, which can allow them to have an increase in sales and recognition
because they are innovating. Technological factors include market awareness, research and development,
innovation in the industry which can help businesses to assess ways in which the business can expand and adapt to
the innovation in the industry the business is in. Legal factors include consumer laws, labour laws, which are
legislations which organisations will need to consider and obey to avoid legal action. Environmental factors include
climate, weather, global changes which can affect some food organisations because these environmental factors can
cause shortage of crops used for food, 2 meaning it will be harder for the organisation to sell their food and increase
their sales, profits and revenue. PESTLE is a perfect way to find out factors which are affecting a certain organisation,
which allows them to analyse ways to respond to the changed in the macro-environment.
Competitive Environment
As online retail stores are becoming more common, it means Amazon is gaining more competition internationally.
This means that Amazon will need to find new ways to attract the public and gain a competitive advantage over
other organisations. A factor which allows Amazon to have competitive advantage is through their “Amazon Prime”,
which allows free fast shipping, free-same delivery, streaming movies & tv shows etc. This is something Amazon
competitors don’t offer like eBay, allowing Amazon to have an advantage over their competitors. Another factor
which is affecting Amazon is providing in-store services, as they are an online retail store. For example, over 20% of
Walmart shoppers use in-store services, such as pharmacy, financial, optical, and photo processing. This range of
services helps boost revenue and in-store traffic. 3 Walmart is Amazon’s biggest competitor, making it hard for
Amazon to gain an advantage over them. This is why decision-making has changed for Amazon as they are now
trying to become a more customer-centric company. They believe by putting their customers first, it could
potentially allow their customers to become more loyal to the company, allowing them to have an increase in their
percentage of the market share and gain a competitive advantage.
Select a variety of techniques to undertake a situational analysis of a given business
1
https://research-methodology.net/amazon-corporate-social-responsibility-2
2
https://www.renewableenergymagazine.com/emily-folk/how-climate-change-will-affect-businesses-20181109
3
https://blog.marketresearch.com/amazons-competitive-advantage-and-how-retailers-are-fighting-back
Page 1 of 24
, Iqbal Ahmed 15174
Centre Number: 10500
Unit 1 – Exploring Business (Assignment 2)
Assess the effects of the business environment on a given business
Evaluate the extent to which the business environment affects a given business, using a
variety of situational analysis techniques
Amazon is a trusted worldwide company that sells goods and services which first operated in Seattle, Washington. It
is a very large company, holding over 1 million employees and having a range of stores from “526 retail stores, 19
Amazon Books stores and 4-star stores dispensed by Amazon outlets”4. Amazon tends to focus on electronic
commerce, digital streaming but most importantly, the customers as their mission statement is “Our vision is to be
earth's most customer-centric company; to build a place where people can come to find and discover anything they
might want to buy online.”5 Jeff Bezos, owner and founder of Amazon, first started the company in a small garage
where he served as an online bookstore. His parents “invested $250,000 into the start-up of the company.”6
External Environment (PESTLE)
Political
A political factor which affects Amazon is the governmental support of ecommerce. As Amazon is based in the US,
allowing them to expand their business with the help of the government. One way this has already been done is with
the deal Amazon and the US government have made. For example, “Amazon, through its massive Amazon Web
Services (AWS) cloud computing division, has a deal with the government to provide cloud services to the CIA and
other intelligence agencies. Amazon advertises its government deals, highlighting the ability for the government to
save money by using AWS as opposed to other cloud vendors. Trump is reportedly looking at ways to increase
Amazon's shipping costs and possibly even cancel some of Amazon's government contracts” 7 This will impact
Amazon positively because if Amazon abide by the deal, Donald Trump will find ways to increase Amazon’s shipping
costs allow them to gain more profits and revenue. This will allow Amazon’s main competitor, Alibaba, to see
Amazon as a bigger threat. As a result, the government will be contributing to the success of Amazon as they are
helping Amazon to gain more recognition and potentially allow them to become the best technology company.
However, this can also impact them negatively because there will be a rise in competition. This is because as the
government is supporting ecommerce, they are also helping other ecommerce companies including Amazon’s
competitors, JD, eBay and their main competitor Alibaba. Though Amazon have made a deal with the US
government, their competitors could potentially make a better deal with the government, allowing them to have an
advantage over Amazon. This can lead to the public to see Amazon’s competitors as more reliable and professional,
allowing them to have more recognition and sales and potentially leading to Amazon losing their percentage of the
market share.
To conclude, I believe this factor is significantly important because the government has a lot of power over
businesses, meaning it is important for Amazon to have a good relationship and communication with them, which
they do. For example, Amazon made a deal with the US government to provide cloud services to the CIA and other
intelligence agencies. Amazon advertises its government deals, highlighting the ability for the government to save
money by using Amazon Web Services as opposed to other cloud vendors.” 8 This really benefits Amazon because
Trump is reportedly looking at ways to increase Amazon's shipping costs and possibly even cancel some of Amazon's
government contracts, allowing Amazon to have a huge advantage over their competitors because the government
is on their side, supporting them.
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