The Effects Of the Environment on
Amazon as a Business
, Contents
Introduction 3
External Environment 3
Pestle Analysis 4
Swot Analysis 15
Porters Five Forces 21
Examining Business Markets 30
2
, Introduction
Amazon provide goods and services all around the world through their online website where they sell
a variety of different products and services to meet consumer needs and demands. Amazon’s
headquarters is located in Seattle, Washington, United States, and they have 110 distribution centres
in the whole of the USA as well as 185 centres globally.
External Environment
A PESTLE analysis identifies the 6 external factors that contribute to the business through Political,
Economic, Social, Technological, Legal and Environmental factors that may affect a business
externally. The political factors that could affect Amazon can be through relegating competition as
Amazon is monopolizing the market due to 40% of sales in America was via Amazon which means
that the government will limit the expansion of Amazon as this will not be fair for other competitors. A
PESTLE analysis is significant for Amazon as it allows them to look at external factors that may
impact their decisions made within the business. A PESTLE analysis helps businesses to succeed
due to the fact that this can reduce major threats that could effect the business in the long term as for
example politics can effect a business as decisions made within that government could stop certain
plans the business will do in the future.
3
, Political
The current political party in the UK are the Conservatives otherwise know as the Tories who are the
right wing which is run by Boris Johnson. This means that they’re in control of taxes and interest rates
where they can either increase or decrease them and due to the current climate of the world they
have announced a national lockdown within the UK which therefore means that many people will be
put on furlough schemes due to unemployment and businesses having to go into administration as
people do not have the spending power due to COVID-19.
Political factors that affect Amazon would be through the furlough scheme that had been announced
by the government to pay unemployed workers. As stated by (the guardian), Amazon plan to hire
7,000 permanent staff that are on furlough in the UK due to the surge of online shopping because of
COVID-19, they will be planning to employ people that are specialists in a specific field such as
engineers, IT specialists, warehouse workers and health and safety experts. This will have a positive
impact on Amazon as they will be physically ready for the festive period and due to unemployed
workers this will make it easier for Amazon to employ as many workers as they possibly can because
this will give people an incentive to want to work as all non-essential Highstreet shops have been
closed down or their previous business they worked in in went bankrupt. However, the negative
impact of employing many people to these jobs would be that they have an higher chance of
contracting COVID-19 which may affect the company representation as this will be reported on
different news channels.
Furthermore, anther political factor that affects Amazon can be through taxation such as corporation
tax and Value added tax as this means that they will be taxed on their profits as in the UK, currently
19% will have to be deducted due to corporation tax and 20% VAT will be added to each product that
they sell online which may not give an consumer an incentive to buy their products and would rather
wait until there are discounts or coupons before placing an order. According to the (the guardian),
Amazon had been accused of underpaying corporation tax in the UK in 2019 as they tried to fend off
the accusations made by issuing a statement stating that they had paid £220 million of taxes within
the UK across all operations including employers national insurance, taxes and business rates.
In addition to this, government policies might have an effect on the industry that Amazon operates in
such as lockdown due to COVID-19 which had an positive effect on Amazon because they’re based
online so this gives an incentive for consumers within the UK to purchase their groceries and
4
Amazon as a Business
, Contents
Introduction 3
External Environment 3
Pestle Analysis 4
Swot Analysis 15
Porters Five Forces 21
Examining Business Markets 30
2
, Introduction
Amazon provide goods and services all around the world through their online website where they sell
a variety of different products and services to meet consumer needs and demands. Amazon’s
headquarters is located in Seattle, Washington, United States, and they have 110 distribution centres
in the whole of the USA as well as 185 centres globally.
External Environment
A PESTLE analysis identifies the 6 external factors that contribute to the business through Political,
Economic, Social, Technological, Legal and Environmental factors that may affect a business
externally. The political factors that could affect Amazon can be through relegating competition as
Amazon is monopolizing the market due to 40% of sales in America was via Amazon which means
that the government will limit the expansion of Amazon as this will not be fair for other competitors. A
PESTLE analysis is significant for Amazon as it allows them to look at external factors that may
impact their decisions made within the business. A PESTLE analysis helps businesses to succeed
due to the fact that this can reduce major threats that could effect the business in the long term as for
example politics can effect a business as decisions made within that government could stop certain
plans the business will do in the future.
3
, Political
The current political party in the UK are the Conservatives otherwise know as the Tories who are the
right wing which is run by Boris Johnson. This means that they’re in control of taxes and interest rates
where they can either increase or decrease them and due to the current climate of the world they
have announced a national lockdown within the UK which therefore means that many people will be
put on furlough schemes due to unemployment and businesses having to go into administration as
people do not have the spending power due to COVID-19.
Political factors that affect Amazon would be through the furlough scheme that had been announced
by the government to pay unemployed workers. As stated by (the guardian), Amazon plan to hire
7,000 permanent staff that are on furlough in the UK due to the surge of online shopping because of
COVID-19, they will be planning to employ people that are specialists in a specific field such as
engineers, IT specialists, warehouse workers and health and safety experts. This will have a positive
impact on Amazon as they will be physically ready for the festive period and due to unemployed
workers this will make it easier for Amazon to employ as many workers as they possibly can because
this will give people an incentive to want to work as all non-essential Highstreet shops have been
closed down or their previous business they worked in in went bankrupt. However, the negative
impact of employing many people to these jobs would be that they have an higher chance of
contracting COVID-19 which may affect the company representation as this will be reported on
different news channels.
Furthermore, anther political factor that affects Amazon can be through taxation such as corporation
tax and Value added tax as this means that they will be taxed on their profits as in the UK, currently
19% will have to be deducted due to corporation tax and 20% VAT will be added to each product that
they sell online which may not give an consumer an incentive to buy their products and would rather
wait until there are discounts or coupons before placing an order. According to the (the guardian),
Amazon had been accused of underpaying corporation tax in the UK in 2019 as they tried to fend off
the accusations made by issuing a statement stating that they had paid £220 million of taxes within
the UK across all operations including employers national insurance, taxes and business rates.
In addition to this, government policies might have an effect on the industry that Amazon operates in
such as lockdown due to COVID-19 which had an positive effect on Amazon because they’re based
online so this gives an incentive for consumers within the UK to purchase their groceries and
4
