Qualification - Higher National Diploma in Business
Unit Name - Business and the Business Environment
Unit Number - Unit 1
Unit Level - Level 4
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Assignment Title - Amazon's Eye on Turkey: A critical opportunity for Business
Learning Outcome 1: Explain the different types, size and scope of organisations
Learning Outcome 2: Demonstrate the interrelationship of the various functions within an organisation and how they link to organisational structure
Learning Outcome 3: Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations.
Learning Outcome 4: Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors
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INTRODUCTION
Environment can be termed as that comprises of various factors that influence workplace. Factors can be external or internal that has greater affect on business (Prajogo, 2016). Here, all direct and indirect components that affect operational activity in the business. Vision of the company is to provide best quality product to customer so that more and more consumers get attracted towards it. Mission of the company is to deliver quality services that help in increasing customer attention towards the company. On the other hand, it is important for maintaining effective environment in the business that helps in achieving success for the future.
Amazon.com, Inc. is an American international technology corporation located in Seattle (Amazon, 2019). The main focus of the brand is on e-commerce, digital streaming, cloud computing, and (AI) artificial intelligence. The brand was founded in 1994 by Jeff Bezos in Washington. Amazon has their website in different countries such as India, China, Germany, Australia, etc. The current report based on Amazon Turkey. Amazon launched their website in Turkey in September 2018 as amazon.com.tr. Amazon turkey provides 15 categories of product that includes Books, Consumer Electronics, Sports, and Home Improvement etc (Amazon. 2019). Report include different types of organization and various factors that affect business operation for the future.
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Assignment Brief
• As providing background information in the report, explain and analyse the different types and purpose of organizations (Public, Private, and Voluntary Sectors), further explain the size, scope and their legal structures and how they are linked to business objectives, products and services offered by organization.
Solution:
Various types of organization
There are three different organizations that run its operation that include:
Public organization (Aselsan):- These organizations led down by government and all activities will be performed by them. The purpose of public organization is to provide services to people in the country without aim of earning profit (Aselan, 2019). For example: Aselsan is a Turkish armed force company that provide electronic items to the people of the country. Under, public sectors there are two shareholders for running business and maintaining legal aspects of the firm. Legal structure of Aselsan consists of director, chairman, managing director etc. that run business operations for the future course of action. In this board of director responsible for doing business and increasing profit for the future. It is important for performing various tasks under public sector organization for running its business for the future course of action.
Private organization (Amazon):- This is run by an individual and there is no interference of government in it. The purpose of this sector is to earn maximum profit. In this, there will be at least one shareholder that is there for controlling all operations of the business. For example: Amazon started its new business in turkey in 2018 with the aim of generating more revenue and profit and delivering quality services to customers (Austin, Dávila and Jones, 2017). Legal structure in Amazon comprises of senior management team under various members that are included such as CEO, vice presidents and controller that are responsible for doing business activities in the future. In private organization by comparing it with public sector less number of employees that are working in the company for the future changes that will be occurred in business.
Voluntary organization (Turk Demokrasi Vakfi):- They are running its operation for providing social welfare to the people. The main purpose of it is to provide removing poverty from the country so that it leads in growth and development for the future (Turk Demockrasi Vkfi, 2019). For example: Turk Demokrasi Vakfi is a foundation that run for providing various social services to people that are living in turkey. Legal structure of the company comprises of employees that are working in the firm and help in providing social services to customers in the business. It runs its operation for the purpose of reducing poverty from the country.
P2 Size of different organizations
Different companies have their different size and scope that depend on its structure and functional areas that are running in the business. It will be defined further as under:
Public sector: - The size of this type of organization is large and providing many services to customers in the marketplace. As Aselsan company will be taken into consideration as it is considered to be largest defense Electronics Company in the Turkey that has its operation at larger terms. Therefore, scope of the company is larger as it is quite effective for running its business operation.
Private sector: - In this size of the organization may be small, medium and large that totally depend on structure that will be followed by company. As scope also depends on size as it is large then there will be large scope of business (Erasmus, Strydom and Rudansky-Kloppers, 2016). For example: Amazon turkey started its business at smaller pace so its scope will also be small.
Voluntary sector: - In this there will not be specific size of business as it runs for providing social services to people. In this, more people will be involved in business for providing effective services to customers. Taking an example of Turk Demokrasi Vakfi that is a Turkish foundation that provides its services to people for doing well-being.
Based on the size and scope of the organization services that will be offered to customers by Amazon involve quality product as it deals in various product so by providing effective quality that help in enhancing business operations. Taking into consideration, as Amazon is a private sector so its size and scope is limited as less number of customers involved with it that help in evaluating various perspective for the future. Organizational structure of the company will be provided in making effective services to customers and involving different changes that has to be made after implementation of policies and procedures in the business (Gregory, Ngo and Karavdic, 2017). On the other hand, Aselsan is a public sector organization that size is large and evaluating various aspects for the future. Turk Demokrasi Vakfi is a voluntary organization that enhances effective utilization of resources and building relationship with future business. It is considered to be providing effective change in operational activity that involve in maintaining effective business standards.
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• Provide introduction, mission, vision, the products offered by Amazon, its legal structure, scope and size of Amazon or your chosen organization.
Solution:
M1 Scope and structure of the organization
There are different organization that has their own structure for bringing effective services in the business. There is link between size, scope and structure that help in determining various objectives that lead down in performing various tasks for the future. In public organization there are different task that will be followed so that requires larger scope and organizational structure that will be followed is matrix form of structure. On the other hand, under Amazon divisional structure that will follow for enhancing business operations for the future. Lastly, in voluntary organization hierarchical structure that will perform its operation.
There will be larger scope under Aslesan as it is public sector organization that has its operation in various countries that will be more effective. Under public sector there are many people involved with it as it is part of the government and enhancing future business operations. It is important for assessing various business aspects that will be more effective in providing services to customers (Lee and Klassen, 2016). On the other hand, in private sector there are less number of employees that are involved in business for the future aspect in the future. Amazon is taken into account as dealing private sector that will be more effective and gaining changes that will be running its operation and creating changes that will be efficient in maintaining several effective implementation that help in increasing business operation. Therefore, structure linked with scope of business that will be working as it helps in serving better in the organization.
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• By analysing Amazon, explain the relationship between different organisational functions and further analyse the advantages and disadvantages of interrelationships between organisational functions which impact upon organisational structure.
Solution:
P3 Relationship between different functions of the organization
There are different functions of Amazon such as Finance, Human Resource, Marketing, IT support, Customers services, etc.
Marketing is seen as bridge of relationship with the marketplace with the aim to satisfy need of customers. The marketing department of Amazon aims to do promotional activities for the company that helps the firm to enhance sales (Cusimano and Sterner, 2019). This function helps Amazon to deliver information of customers in order to developing new services and products that will enhance customer's quality life. For performing all the activity regarding marketing and branding, department of marketing requires appropriate funds. On the other hand, finance is related with the proper usage of resources of the company for a bunch of operations and the finance department is responsible for managing budget for the future course of action related to Human resource function, consumer services, promotional activities, etc. However, the relationship between the functions can be seen by the interdependency, where role of finance is to prepare budget about how much money will be invested under doing promotional activities, human resource activities, etc. and marketing, HR, consumer services and IT units are require communicating with the finance unit for required finances (Um, 2017). With proper funding, function of organization will be carry out effectively that help Amazon in enhancing the revenue and sales and also assist in attaining objective.
Human resource is responsible for recruiting talented candidate for the firm so that help in doing effective marketing of the company and carry out their job effectively in order to accomplishing organizational objectives. On the other hand, marketing, finance, sales, IT, consumer service and all the other units are depends on HR unit for recruitment of talented and skilled people. HR department of Amazon recruit right employees for right position in all the units in the organization so that they can perform their best that helps in increasing sale as well as profit (Makarova and Polyanin, 2015). Apart from this marketing department in this employee is responsible for doing promotion that help in enhancing business for the future course of action. Customer service unit also requires a good team of talented workforce who are responsible for taking care of any queries and complaints by consumer regarding any products and services. Effective team of workforce, function of human resource department enable the firm to achieve the objective organization has set.
M2 Merits and demerits of functional units
There are advantage and disadvantage of relationship between functional units as that help in enhancing business for the future purpose. This help in improving communication between employees that are working in the different department (Rastogi and Trivedi, 2016). Through this productivity will increase as ideas exchanged between them this is positive aspect for the business. Apart from this, negative aspect is conflict arises between employees as their thoughts did not match with each other that create problem for the future.
It also helps in improving efficiency among employees to do work effectively and efficiently (Hachicha and et. al., 2016).Disadvantage is that as different employee is having different thoughts and ideas related with business operation. Lack of coordination between employees in completing particular task is also a disadvantage as employee does not coordinate between them that affect operational activity of the company.
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• By providing specific examples and applying PESTLE model in an organisational context of Amazon, analyse and identify the positive and negative impacts the macro environment has upon business operations.
Solution:
Positive and negative impact of external factors
The macro environmental factors have positive and negative impact on the business operations;
Positive impact
Political factor have positive impact on the company. For example; the government of the country offer low rate taxation and subsidy to the retail businesses that influence the business operation of Amazon positively (Lu, Wang and Xu, 2019). In economic factor, the income level of population in Turkey has positive impact on the company and provides an opportunity to target consumers of all segments. Along with it, Social factor depend on customer's need and preferences. High population of the country provides an opportunity to the business to grow and generate higher revenue and profit (D'Agostino, 2018). Amazon is customer-oriented brand that enable them to produces products and services by considering preference and taste of customer. Under the technological aspect adoption of new technology can increases productivity of Amazon and as Turkey is technological advanced region that will be an opportunity for the brand to implement new technologies within the operations. In legal factor new policy bring change in business operation that improves productivity of business and enable firm to create healthy working environment for people. Lastly, CSR activities have positive impact on the brand image and on the environmental factor of the region.
Negative Impact
Political regulation on e-commerce companies can create a barrier for Amazon in operating into the new country (Haaker and et. al., 2017). High tax rates have negative impact on the company's cost margin. The economy of the world is constantly facing rapid inflation that influences the market share of Amazon in the new marketplace. Change in buying behaviour, taste and preferences put pressure on the company to bring constant changes in the products and services that have impact on profitability of the firm (Bull and et. al., 2016). Not adopting new technology can affects the company. Laws and regulations can limit the operations of the firm. At last, contribution in forest degradation can have negative impact on the environment as well as on the brand image.
M3 PESTLE analysis
This model related with external factors that include:
Political factor: - This factor is considered both opportunity and threat for the company, as government of Turkey have their proper support for e-commerce that is an opportunity for the firm to grow sustainably and expand the operations within the country. On the other hand, there are various political regulations of online shopping businesses that can have impact on the company.
Economical factor: - Turkey is an upper-middle income country that is an advantage for Amazon to target the people and it positively impacts the sales rate. On the other hand, tax rates of the country might affects the profitability and productivity of the company as tax rate of Turkey on net profit is around 22% (Tax Guide, 2019).
Social factor: - The population of the region is around 84 million as of 2019 that is an advantage of the company to grow (Turkey Population, 2020). On the other hand, people within the region are tech-savvy that is also provide an opportunity to the business.
Technological factor: - Turkey has rapidly growing technological market that going from urban areas and reaches out to the rural areas. The people are technological advanced that put pressure on Amazon to meet the expectation level of customers.
Legal factor: - There are a set of laws and regulation that is required by Amazon to consider and follow such as employment law such as The Turkish constitution of 1982, regulation regarding security of consumer's information, anti-trust laws, etc. Although company is following and implementing all the necessary laws and legislation within the workplace.
Environmental factor: - there are various environmental elements that can have impact on the business operation of Amazon such as changing weather can change the preference of customers, air pollution, deforestation, etc. For that purpose, company is following CSR activities that help the company to contribute in environment protection.
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• Conduct an internal external and internal analysis of Amazon Turkey and one of its competitors, applying appropriately SWOT/TOWS analysis, to identify their strengths and weaknesses interrelating with macro factors and justify how it can influence decision making.
Solution:
Internal and external analysis of organization
For analysing this porter's five force will be used as follows:
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Forces
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Features
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Bargaining power of Buyer
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In this it's bargaining power is low to moderate. As Amazon focuses on providing satisfaction to consumer with the quality products and services. Apart from this, the switching cost of consumers is low within the country that automatically makes the power of bargaining low within the specific country (Sharma and Singhal, 2016).
The company is required to enhance effectiveness of their operations and try to understand the needs of consumers that help Amazon to make the customers attached to the brand.
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Bargaining power of supplier
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There is moderate power of supplier. There are many suppliers that are available in the market and company is not dependent on a single supplier or distributors. The main focus of the brand is to allow as much supplier as possible that aims to provide high quality products in an affordable range.
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Threat of new entrant
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There is low threat because economy is going digitalization day to day that and to reach to the high position where Amazon is, is required a huge amount of investment and digitalized strategies that is quite difficult for the new entrants.
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Substitute product
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There are many substitutes that are available in the market so it is high. There are various local stores, grocery stores and supermarkets that provide similar products to the customers. In this situation company is recommend to focus on cost structure so that other companies or stores not able to provide on such range.
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Rivalry entry of new firm
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Strong base of rivalry in the market as there are so many players existing and growing day by day. It is recommend to the firm to develop various strategies and plan to gain competitive advantage.
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VRIO Analysis
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Internal Analysis
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Features
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Valuable
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There are various valuable resources that will be require such as financial, human etc. that help in increasing performance of Amazon in the future. The most valuable resource for the brand is their strong brand image, developing brick-and mortar presence, developing assortment of online presence (Kasemsap, 2015).
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Rare
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Some resources that is rarely available for other local players such as talented human resource, low cost structure, etc and it is essential for Amazon to conduct effective research and development for remain the resources rare for longer term.
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Imitable
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Online presence and product and services can easily imitable. Thus, it is essential for the company to bring innovation in the products and services and enhance the online presence.
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Organization
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Company organized their resources such as human resource, technology, etc. effectively that help the company in sustainable growth in the marketplace.
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SWOT analysis of Amazon
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Strength
- The brand image is biggest strength of the firm.
- Differentiate and innovative product (Gürel and Tat, 2017).
- The low cost structure is one of the most effective strength of the brand that enable firm to provide products and services at affordable price range from its competitors.
- Efficient delivery networks and leveraging e-commerce and IT (Phadermrod, Crowder and Wills, 2019).
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Weakness
- Avoid in giving taxes in many countries such as; UK, Japans and US that impact business operations and flashed negative publicity for the brand.
- The low cost structure also consider as a weakness for the company as it makes the brand near zero margins.
- The business model can easily imitate that is a considerable weakness of the brand.
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Opportunities
- Amazon is capturing emerging markets that is an opportunity to effectively invest in brick and mortar stores.
- Amazon has opportunity of increasing technologies within the region.
- Operating in Turkey provides an opportunity to the firm to enhance portfolio of its offering.
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Threat
- Intense competition from local players in the marketplace can be threat for the company.
- Increase in cyber crime also present as threat for the brand that can affect the system of network security.
- The entry barrier is low in the online retail space.
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SWOT analysis of Aselsan
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Strength
- Providing diverse range of products is one of the biggest strength of the firm.
- Improved value chain process is also a strength of the company in maintaining consistency
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Weakness
- Low voltage in some areas
- High prices of the products can limit the target consumers.
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Opportunities
- Diverse range of products provides an opportunity to the firm to convert existing products in the new marketplace.
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Threat
- Rivalry in the market is a threat for the company.
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P6 Strength and weakness
The macro factor has significant strength and weakness that is directly associated with company's capabilities. The strength of political factor is effective stability in the country that is beneficial for the company to operate their functions properly (Phadermrod, Crowder and Wills, 2019). On the other hand, its weakness of this factor is not operating properly within the marketplace due to some political pressure. Opportunity is if market condition is stable that will help the enterprise in enhancing its business operations and future growth and development. And lastly, threat is that availability of intense competition within the marketplace that has significant impact on decisions and strategies. Under, economic factor strength will be importing and exporting through free trade policies within the country, weakness decrease in sales, opportunity is increasing foreign trade and threat will be from suppliers that are present in the marketplace. Social factors strength is considered to be word of mouth by consumers (Phadermrod, Crowder and Wills, 2019). Weakness is changing taste and preference of consumer that have to consider and make changes in the products and services constantly. Opportunities enabling feedbacks from potential customers that provide reviews regarding products and services of the company and Threat will be reference group in the market. Under Technological factor, the strength is increasing innovation and development with the technological advancement and weakness due to increase in technology advancement operational cost increases that have directly impact on the profit margin of the industry. Through advancement in technologies, company has opportunities to developing creative, innovative and unique product that support the brand to grab the strong consumer base and threat of this factor will be related to decreasing sale and profitability with ineffective R&D. The macro factor directly linked with the companies capabilities to have control on the external factors. For example; Amazon's brand image is so strong and popular that help them in cope up with the intense competition within the new marketplace (Eijdenberg and et. al., 2017).
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M4 SWOT Analysis
In Amazon decision making may have impact through these external as well as internal factors as due to change in political condition the decision of the company may impact regarding implementation of new policies and procedures (Karagoz and et. al., 2017). For instance, the strength of Amazon is effective brand image across the globe that put pressure on the management to carry out effective actions and make appropriate decisions so that brand image does not affect in negative manner (Hockerts, 2015). Along with it, the low cost structure is considered as a weakness that makes it essential for the firm to take effective decisions to convert the weakness into strength. Amazon has various threats that rise from higher competition, for that purpose company is required to consider this factor in decisions-making process. Along with it, Amazon should develop decisions for enhancing technologies in the operations that will drive the company's success to a next level.
Along with the micro factor macro environmental factors also have significant impact on the organizational objective and decision-making. It is essential for the company to consider and implement all the laws regarding employment while taking any decisions about the working hour or changing policies. High tax rates may affect trade within the country so it is essential for the company to take effective decisions on how cost structure can be changed so this factor does not affect profit margin and help the company to achieve the objective (Çitilci and Akbalik, 2020). Amazon is also responsible to consider the changing needs, tastes and wants of the customers in their decision-making process to deliver sustainable products to satisfy the need of customers.
CONCLUSION
It can be summarized that business environment play a vital role in the organization that help in creating various aspect for the future. There are factors that affect working environment in business and lead in bringing out changes for the future course of action. Decision making process of the company also influence through these external and internal factors that create problem for establishing business in other country.