PESTEL Analysis Example: Amazon.com

a. Describe the Company: Amazon

Amazon.com, Inc. was incorporated in 1994 in Washington, but was reincorporated in 1996 in Delaware. Its corporate offices are located in Seattle, Washington. When it was first launched as an online bookstore, many thought it was doomed to fail. In essence, as Terry-Armstrong (2013) points out, many critics thought Jeff Bezos was going to fail when he stuck his online bookshop with over a million books. However, the e-business has since expanded to sell pet supplies, groceries, home improvement products, music, pharmaceuticals, videos, and electronics. Today, the company has progressed to produce its products, for example the Kindle series, and also has become a major provider of cloud computing services. In addition, it has evolved to become a marketplace for third-party sellers, a supply chain management expert for various business customers, as well as the Amazon Web Services (AWS), which is well known for creating networking infrastructures.

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The company completed its IPO in May 1997, and its common stock on NASDAQ is under the ticker symbol AMZN. The company, according to the Annual Report (2015), is guided by four principles, passion for invention, customer obsession rather than competitor focus, long-term thinking, and commitment to operational excellence. With three segments, North America, Amazon Web Services (AWS), and International, the company serves various customers including consumers, enterprises, sellers, content creators, and developers while also providing a set of services, such as co-branded credit card agreements and advertising services.

The leadership principles adopted by Bezos are inspirational, and include customer obsession, ownership, inventing and simplifying, selecting developing the best in the market, ensuring high standards are upheld, thinking big, disagreeing to commit, delivering results, and earning trust (Amazon, n.d; Birch, n.d). Amazon.com, through the leadership of Jeff Bezos, has had a clear focus and solitary mission since it was established. Its mission and 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. To ensure that the customers are satisfied, the company has grown Prime two-day delivery selection from 1 million to over 30 million, and has introduced Free Same-Day Delivery on hundreds of thousands of products for customers in over 35 cities globally. In 2015, the company created the Seller-Fulfilled Prime, where sellers can meet increased shipping speeds and consistency in service.

b. Describe the Amazon Key Players

The key player in Amazon's management is Jeff Bezos. His leadership style is transactional and transformational. As a task-oriented transactional leader, Bezos is a micromanager who has adopted rigorous standards, and is in most instances, not interested in other people's opinions (Stone, 2013). In addition, he also employs transactional leadership traits, where he is considered as the change agent of Amazon.com, and seeks to innovate and improve the business. In essence, as the CEO, he links the corporation's long-term goals to the people's values, thereby arousing commitment and interest among the subordinates to act on the vision he built, as well as driving team effort beyond ordinary possibilities. In effect, Bezos has managed to replicate these qualities and abilities, which have seen the growth of Amazon, which is as a result of his vision, inspiration, and innovation even when investors and competitors alike did not believe in the success of the company.

In the industry, the additional key players include Walmart, Apple Inc., eBay, and Barnes & Noble, Inc. These are the major competitors. According to Terry-Armstrong (2013), Amazon is locked in a high-profile battle with Apple in the fast-growing market for tablet devices and digital content, such as music, apps, books, and movies. Walmart is also a multinational retailer and runs chains characterized by large discounts, and with its differentiation to e-tailing, it is a big competitor to Amazon.com. Barnes & Noble, Inc. is the largest book retailer in the US, and is known to sell books, magazines, the Barnes & Noble Nook tablet, and also games, and thus, they also operate in Amazon.com's business segment. eBay is another competitor as it has capitalized on e-Business.

c. The Environment in Amazon: PESTEL Analysis

i. Political Factors Affecting Amazon

International policies prevent the smooth growth of Amazon because expansion in some countries is tough due to tough policies and regulations regarding online purchases are interfering with the way Amazon conducts its business. Even so, internet providers are advancing how to bring affordable and faster internet to consumers, and thus, this presents a huge opportunity for Amazon.

ii. Economic Factors Affecting Amazon

Currency fluctuations can cause a variety of issues when selling multimedia over the internet because the company is based in the US and deals with dollars, but with the world recovering from the recession, the sales are forecasted to rise.

iii. Social Factors Affecting Amazon

In some areas in the world, the internet is restricted due to ethical and religious factors. In effect, this prevents sales in those areas. However, internet growth rate is outstanding, which presents Amazon with an opportunity to increase sales and market share. Also, with social networks, such as Facebook and Twitter expanding, Amazon can capitalize on them for marketing and advertising.

iv. Technological Factors Affecting Amazon

As Amazon is an online retailer, it is paramount to find innovative ways to surpass the competitors. For instance, mobile devices are currently with 3G and 4G capabilities, which offers a chance for consumers to compare prices on an international scale, and thus, Amazon can offer competitive prices to increase the sales.

v. Environmental Factors Affecting Amazon

Since Amazon offers cloud computing and cloud storage services, it can eliminate the need for external hardware storage, such as hard drives among other computer components. In effect, this can contribute to less pollution, as it will lead to less transportation and less packaging for these hardware components.

vi. Legal Factors Affecting Amazon

Selling overseas requires that Amazon abides by international laws as a company. States and even countries have different laws on certain products, such as alcohol and chemicals. In addition, selling multimedia online requires that Amazon acquires certain rights to the media.

d. Describe the Amazon situation/challenge/experience

Even though Amazon has a strong corporate culture, there are various challenges that can be derived from the leadership of the company. Bezos requires unreasonably high expectations and standards from the employees, which pressures the employees, which can cause distress. For instance, as Rosin (2015) points out, most employees cry at their desks as the pressure to deliver surpasses any other metric. Also, Mr. Bezos uses an overly forthright leadership by offering the workers an instruction manual called The Articles of Faith, which forces employees to prove their worth by outperforming their colleagues and even sabotaging their careers. In effect, this breeds unhealthy competition among the employees. Mr. Bezos pointed out in 1997 that at Amazon, employees can only work for long, smart, or hard, and they cannot choose two of these. Besides, the transparency culture demands that they become high achievers. As such, while winners excel in their jobs, losers get fired or quit in annual eliminations (Rosin, 2015). The management is also insensitive as workers with personal cries and even cancer, are unfairly judged and in some instances pushed out without sufficient time to recover. The management also favors criticism over harmony by adopting a disagree and commit rule according to rule number 13 in The Articles of Faith (Rosin, 2015). In addition, there are no benefits as a source of motivation. The company even requires the employees to pay part of their signing bonus when they quit before a year's time. Further, the management disregards employees' need for work-life balance. In addition, workers do not get enough praise after performing well and it follows an unfair system in ranking them by discussing the performance of lower-level managers before their higher-level peers.

II. Analysis using textbooks

a. Primal Leadership: Amazon

According to Goleman (2013), leaders have an emotional task, which should be primal, in that, it is an original, and the most important act of leadership. As such, it is the duty of leaders to play a primordial emotional role. Further, as Goleman (2013) points out, leaders in any human group have been the ones to seek assurance and clarity by others, especially in instances of threat or uncertainty. For this reason, they act as the group's emotional guide. In addition, followers also look for an emotional connection with leaders, and thus, leaders should have empathy. Also, leaders can give praise or withhold it, criticize and in some occasions destructively offer support or turn a blind eye to other people's needs. As such, a leader can opt to give people a sense of clarity and direction, which encourages flexibility, and sets them free to utilize their best sense of how to get the job done. According to Goleman (2013), these aspects determine a leader's primal emotional impact.

Considering Bezos' style of leadership, he is not a primal leader. In essence, Bezos does not encourage flexibility as he has confined the employees to perform within a specified spectrum, under the The Articles of Faith, which encourages employees to outdo each other proving their worth in the company. Those who lag behind, instead of supporting them, fire them. In addition, due to lack of emotional support, others quit their jobs, even within a year after they are employed. Bezos style of leadership does not offer any empathy because employees are unfairly judged and in some instances pushed out without sufficient time to recover. It is emotionally draining especially when employees are unfairly judged due to the unfair systems that Bezos has incorporated in Amazon. Even for the sick, such as those who have had a miscarriage or suffering from cancer, the management is insensitive to them. Many of the employees even cry at their desks due to the immense pressure of the leadership style. Lastly, with a culture of lack of appreciation and no motivation, Bezos' leadership style is not primordial at all. As such, this is detrimental not only to the workers life, but also negatively affects their performance and productivity in the workplace.

b. Amazon Leadership Challenge

According to Kouzes and Posner (2012), there are five practices and roles that leaders should implement in their organizations. It is upon leaders to take on the challenge and implement these practices. The practices are modeling the way, inspiring a shared vision, challenging the process, enabling others to act, and encouraging the heart. However, the authors go ahead and point out that encouraging the heart is the most uncommonly practiced leadership role in most organizations. In essence, it entails putting in place measures to appreciate people's efforts, and thus, it includes sincere celebrations with the main aim of recognizing the workers successes. Modeling the way entails encouraging the employees to behave with their values and voices while inspiring a shared vision focuses on developing a positive vision and goals that everyone in the organization cares about, and thus, can work collectively with a clear comprehension. Challenging the process entails adopting innovative ways to make a change. Lastly, enabling others to act, should involve adopting a trust-based culture, as well as encouraging the employees to have a safe and trusting working env...