Amazon Evaluating environmental threat.
Amazon is the leader in the online retail market space. Using Michael Porter Five Forces Analysis model is an excellent tool for the external analysis of Amazon to stay competitive. Amazon must regularly evaluate its internal and external factors in the online retail industry environment to remain an e-commerce leader.
Porter Five Forces are:
- Competitive rivalry: Walmart is an aggressive competitor with physical stores and an online presence.
- Bargaining power of customers: Amazon consumers have access to information regarding the retailers and the products they sell.
- Bargaining power of suppliers: Amazon suppliers control their own products. This could impact the company’s online retail operational costs.
- The threat of substitutes or substitution: The customers can easily switch from one online retailer to another by just a simple click of a button.
- The threat of new entrants or new entry: Amazon benefits from its brand / high economies of scale. Newcomers will need to achieve similar performance to compete with Amazon.
Outside of the Porter Five Forces Analysis Amazon has favorable geographic locations. Amazon is currently opening new facilities around the country to make deliveries faster to the customer’s home and office.
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