Qualification - Higher National Diploma in Business
Unit Name - Business and the Business Environment
Unit Number - Unit 1
Unit Level - Level 4
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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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.
Type of organizations:
E-commerce business referred to the business model in which the customers can buy the products of their own choices via an electronic network; from the internet. There are two types of transaction can be placed through this model which are; business-to-business (B2B), business-to-consumer (B2C). For these transactions there are many parties involved which are; customers, investors, employees, population, economy, government bodies, suppliers, competitors, etc. to observe these factors resources are useful like the human, financial, and physical resources to analyze the above factors and to formulate the global organization. Firms like Amazon, they may pursue, to enhance their market value through the increase in the competitive advantage in the global world (Dave, et al., 2019).
There are three types of organizations in the business world; Public, Private, and Voluntary organizations; these are as follows, along with scope, products, structure, etc.
1.1 Private organizations:
This type of company has a hold of individuals or groups. Their main aim of the operation is to earn the maximum profit. For example, Sainsbury considered one of the private-sectors companies which make their marketing strategy to earn the profit margin. It is considered the 3rd largest chain of the supermarket with all products, like grocery, household items, etc. (Gary, et al., 2019).
1.2 Public organizations:
This organization has a hold of government, and they worked mainly for the sake of the public like instead of their interest, they preferred the interest of the public. National Health Service (NHS) is one of the public organizations with a scope to provide medical assistance to people around the area. They offered well-being and stress -free environment for the public.
1.3 Voluntary Organizations:
These types of organizations involve the charity, business community, voluntary companies. For example, Cancer Research is one of the biggest organizations in England in this type. They have scope to research cancer and its medication so that it can be available to the public for free or for a cheaper rate. They offered free assistance to cancer patients(Dave, et al., 2019) .
• Provide introduction, mission, vision, the products offered by Amazon, its legal structure, scope and size of Amazon or your chosen organization.
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2 Introduction; Amazon:
2.1 Products and services:
Amazon aimed to provide the millions of products, like Grocery, Household items, bags, women wear, men wear, accessories, etc. along with the other thousands of Turkish local businesses products.
2.2 Mission and Vision:
Amazon's mission is to formulate its business operations according to the model of Customer-Centric so that customers can find all their wants in one place and can buy it online from any region of their selected country.
The vision of the company states that they committed to formulate their business structure in Turkey, to expand their selection and delivery options, to provide excellent services to their potential customers(aboutamazon.co.uk, 2019).
2.3 Legal Structure:
The legal structure of Amazon can be classified as Hierarchical, which involves two CEOs, three Senior Vice Executives, and one Controller of Operations worldwide so that operations can control in every country and aspects of the Business can report to CEO Jeff Bezos's(aboutamazon.com, 2020).
2.4 Scope of Amazon:
This company has vast scope because of its variety of products and services, firstly they were only an online book store, but now they have made their technology like the Kindle and AWS to provide better services and products to their customers.
2.5 Size of Amazon:
Amazon is considered one of the largest online retail companies because of its current growth as it has its online store in approximately every country, including Turkey as well. They are serving mainly in logistics so that customers can order through the online portal, and they can deliver those products to their homes or business places(aboutamazon.co.uk, 2019).
• 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.
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3 Functional Organization:
Functions of Business refer to the activities which are performed by an organization, for example, marketing, R&D, sales and production, IT marketing, while the organizational structure defines the areas of Business and how they interact with each other. The interrelationship of structure and functions allows organizations to work effectively and organization which builds this relation is characterized as a functional organization(Bader, et al., 2019).
3.1 Pros and Cons of interrelationships between the organizational functions:
Establishing an interrelationship with the functions and structure of the organization has a lot of pros and cons, which are discussed in the table below;
Advantages Disadvantages
• One of the most obvious benefits is, grouping the employees based on their specialization allows ensuringa better-quality competence level.
• Increased Operational Speed due to teamwork is another related benefit to a company which develop a relationship in company structure and its functions • One major drawback of this process is lack of coordination;each task has to assign to different functional groups which slows down the overall process.
• Territorial disputes are another major drawback when the employees and the management do not cooperate;the situation results in poor progress of the company.
It has been investigated that Amazon Turkey is using advance approaches to ensure the effectiveness of its Business and for the sake of gaining customer attention. One major reason for the success of a company is its strong organizational culture. The following are some benefits which Amazon is enjoying with the help of its organizational structure.
• This is why there is around twelve hierarchy level of the employees in the company.
• The executive staff is working at the 11th and 12th levels while the operational staff is working at levels 1, 2 and 3. Each person in the hierarchy has a specific task which needs to be achieved(aboutamazon.com, 2020).
• The collaboration of the staff and functions at the time of need allows us to build a healthy workplace environment.
• The process of decision making is quite faster in the company because of teamwork they can resolve their issues effectively.
On the other hand, there are minor issues that are faced by the company concerning organizational structure and procedures.
• Lack of process sometimes shows down the procedures of the company
• In the absence of a specialist, it is difficult to carry on the procedures which negatively impact on productivity.
However, it can be said that the advantages of the organizational structure of the Amazon weigh more than the downsides of this structure. Amazon works as the largest firm which is investing in different ideas, incorporating innovation and creativity in marketing management of the company and attitude of avoiding failure is helping the organization to grow more.
• 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.
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4 PESTLE analysis:
4.1 Political Factors:
The company operates together with the political influences in every country in which Turkey included.The political stability in Turkey is helping the company to achieve its organizational objective as they provide fortified e-commerce infrastructure. Effective government strategies and these regulatory bodies are also providing them with a provision to increase the cybersecurity, which is a great opportunity for Amazon to grow (ft.com, 2019).
4.2 Economy:
The growth of the company greatly influenced by the economy of the region, where they operated the same in the case of Turkey. Although at start f the operation, the economy of Turkey gives a tough time to the company and they had to face the economic recession, which proves to be a greater threat to the company to continue their operations in the region. Another threat encountered by the company is the inflation of the currency of the state, Lira. After some time, the economy of Turkey increased, and it raised to 5% because of which the company is now flourishing in the state (nasdaq.com, 2019).
4.3 Social factors:
One of the major strengths of Turkey is its young population, which is moving towards digitalization with every passing day. So, this allows the company to grow their Business because people there have a better understanding of e-commerce. Onthe other hand, the gap between the rich and poor like the wealth disparity is increasing in Turkey because of which Amazon is facing major challenges (Tugberk & Akbalik, 2020).
4.4 Technological:
The government of Turkey is spending a heavy investment in the technological sector of the country. They have the aim to gain a position in the list of top 10 technological advances countries globally by 2023 (americanprogress.org, 2016). These will provide great insight to the Amazon to make improvements in their services and products by using advanced modern technologies. By utilizing the advanced technological means of Turkey, the company can get a competitive position in the business market.
4.5 Legal:
Turkey has a very strong legal structure, and it is an advantage of the companies working in this market is, there is a strong framework for the business entities. That is why Amazon is effectively dealing with the SMEs of the region, and it is a favourable condition for the company, it will not have to go through lengthy procedures before starting working with these companies(dailysabah.com, 2019). The IP rules and regulations of the region are also strict, which ensures that the company will have to ensure that IP rights of every company working with Amazon will be safe in turkey.
4.6 Environmental:
Turkey is a country which is rich in natural beauty, the crystal-clear water, stunning churches, heritage sites attracts a huge number of tourists each year. The company is also adopting sustainable practices, and Turkey is a favourable destination in turkey because they also have a prosperous concept of environmental sustainability. Many companies are working on projects like incorporating biodiversity and reducing carbon emissions. On the other hand, Amazon is also working to drive-out carbon from its business procedures until 2024, so it will be easy for the company to implement sustainable practices(sustainability.aboutamazon.com, 2020).
• 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.
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5 SWOT Analysis:
In order to analyze the competitive advantages due to which the company has gained a competitive position, the scrutiny of the internal and external environmental factors has been conducted, which will be considered and controlled by the junior business analyst.
5.1 Internal Analysis (SW)
5.1.1 Strength
• Strong Brand Image: Amazon has a strong brand image and gets a leading position in the retail business market worldwide.
• Differentiation and Innovation: The company has always tried to make unique innovations in its products and services (aboutamazon.co.uk, 2019). The management is innovating many new products by using advanced technology such as Aura Smart Sleep System, which is rarely sold by any other brand.
• A large Number of Acquisitions: Amazon has successfully increased its revenues by making acquisitions with other companies. Many companies are successfully acquired by Amazon, such as Whole Foods, IMBD, Zappos,Wood, etc. In 2017, it made the most expensive acquisition of Dubai based Souq.com in $250 million successfully (statista.com, 2019).
• Cost Leadership: One of the most significant reasons for having a huge circle of customers is the effective cost strategy of Amazon. The company sells its products at affordable prices with the best quality.
5.1.2 Weaknesses:
• Imitable Business Model: Due to the online availability of products, these canbe easily imitable from the rivals. Hulu, eBay, Barnes & Nobel are giving a tough time to Amazon.
• Low Margins in some Countries: Amazon has not got the desired position in some areas such as India. Moreover, due to the free shipping, the company might have chances of losing margins in remote areas.
• The controversy of Tax Avoidance: In the UK, Japan, and the US, the avoidance of the tax system is becoming the reason for the controversy of Amazon. In 2018, president Trump had criticized the company over taxes on social media channels (cnbc.com, 2018).
• Product failure and Flops: There are different products of Amazon that are not highly liked by the customers; for instance, its Fire Phone and Kindle fire devices got flop.
5.2 External Analysis (OT)
5.2.1 Opportunities
• Penetration to the Developed Countries: By making penetration to the developed countries, the company can increase its revenues, also can make a strong brand image.
• Backward Integration: The company can do backward integration by expanding its quality production of the in-house brand. This will also help them to improve their profit margins.
• Improvement in Technological Measures: By making improvements and innovation in its technological services, the company can reduce its counterfeit sales.
• Expand Physical Stores: The company can engage more customers with the brand and increase its competitive advantages by expanding its physical stores.
5.2.2 Threats
• Government Regulations: The company might face a big problem in shipping due to the strict government regulation of some countries such as Iran, Sudan, Cuba, Styria, and North Korea.
• Cybercrime: The networks of the company can be affected by the increasing cybercrime, which can be negatively used by the irrelevant person.
• Aggressive Competition: The company might face a huge challenge due to the other big retail firms such as eBay and Walmart in the future.
• Negative Business Reports: In July 2018, Vox published news against the Amazon about the poor workplace circumstances of the company such as poor air conditioning and bathroom system, which is negatively affecting the reputation of the company (vox.com, 2018).
5.3 The interrelation of Strengths and Weaknesses with External Marco Factors
Strengths: The company has a strong brand image due to which customers demand more innovation and accuracy in their products and services. It causes to increase the competition for the company in the market. The management can make smart and beneficial decisions for the future by analyzing their strengths.
Weakness: The weakness and controversies might negatively impact on the reputation of Business, which will also be disadvantageous for their internal and external practices as well. In order to overcome this, the management needs to make the decisions through which they can maintain the trust of the customers towards the brand in order to increase competitive advantage and revenues.
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Conclusion:
The penetration of Amazon to Turkey is providing many benefits to the Business in terms of reputation and revenues. The management is adopting many strategies through which they are successfully attracting a huge circle of customers. Due to having the uniqueness and quality of products, the company has gained a competitive position worldwide, but some factors might cause to decrease the reputation of the company such as controversy and huge competition. In order to overcome this, the management must need to make strategies through which they can convert their weak areas into their strengths.