The. Better Business Analysis Institute Presence, the Better Business Analysis podcast with Hindman Walsh. Hi, everybody and welcome back to the Better Business Analysis. Podcast with Benjamin Walsh now We're continuing along. With our BA Unleashed series. And we are. Still in the strategic and enterprise analysis space within the Better Business analysis delivery journey. So last week we talked about the Porter 5 forces, which was a great model for looking.
At our competitive standing within the industry and our strengths and weaknesses. With our buyers and our supplies now, the pistol analysis is. Really, looking at sternly, it's. It's something that you can apply to an. Organization and you can also apply to your life and the country that you're living in, or even the world you're living in. The reason? The pistol. Analysis is really useful. It's all about those kind of
elements and the. Situation and context in which you're living and how that may affect your business. So we use these three strategic planning tools, the spot analysis that we did. Originally the Porter 5 forces and finally. Pistol analysis and these three. Fundamental strategic planning tools are really useful at looking at our strategic standing in regards to the market. And then from that point and we will do this in subsequent. Weeks. We'll then look at how that affects.
The enterprise? The organization using things like, OK, what does that mean for our strategic objectives and our balanced? Scorecard and so forth. OK, so this week we're going to do a. Pistols analysis, Pistol analysis, I should say. For Amazon, the company and so. We should really go through what a pistol analysis is and then we should. Apply that to our company so a pistol analysis or pistol
stands. For the political, the economic, the social, the technological, the legal and environmental factors that may affect. Your organization OK, so Political P, Economic E. Social S technological, technological T legal and environmental so. That's where we get pistols. So it's PESTLE. And so like I said, we're going to be examining these different areas and then it allows. Us to kind of look at these, the external environment? And then we can come up with a
plan. To deal with these these factors that are generally out of our control. So they generally move without, you know, us influencing them and unless. You know, we're doing huge lobbying and so we. Just have to. We just have to deal with them and have a bit of a plan, OK? So we're going to apply a pistols analysis to Amazon and if. You want to do this? Then you can get an A. Four piece of paper. Hold it horizontally. And a half put a line. Down the middle if you like, and then.
Draw 2 lines straight down. So you've got six different areas that should. Look like an MD comic strip and you can. Write the P and the E and the S and the T and the L and the E in every you know in the various boxes. And you can start to think about what you think. These how these factors, what factors would affect Amazon in this current market? So let's let's start with P, the political factors in which Amazon. Are having to see themselves. Operate. OK, So what do you think,
Amazon? Has to deal with in terms of being a multinational company that operates in multiple countries. What comes to mind in terms? Of the political landscape and those who are in the States, you know, Amazon was much more than just Amazon US. Even though it was started there and obviously. Operates heavily there. Amazon has when we talk about pistols analysis or pistol. We talk about the company as a whole, so we are looking at Amazon worldwide.
Here, right. So in terms of Amazon and operate, we know it operates in many. Countries and regions, which means. It is exposed to different political systems and regulations and. Some of those political factors, you know, can can range. From things like taxation, which is a hot topic. Around, you know, billionaires not paying tax, trade policies, labor laws and data protection are just some. So #1 within political factors because of Amazon and this would.
Be true of it. Just operate in the US, but it has to deal with multigovernment regulations and policies. OK. It's it provides e-commerce and which? Are also protected across there are protection rights for consumers. Across the world you know that that are different depending on what country consumer rights. So these these factors can have a very significant effect. Either positively or negatively on Amazon's operations and profitability.
So in the US. Amazon has to collect sales tax in every individual state and where. It is physically present, so if it operates a warehouse somewhere. It has to pay taxes there, which reduces its competitive. Advantages over other retailers, so for example. Maybe Alibaba or Timu and India. Amazon faces restrictions on kind of foreign direct investment and e-commerce, which limits itself to. Kind of provide a marketplace in India.
So it's quite it's quite different depending on what country you're in. I know here in New Zealand, Amazon's been eyeing up. You know whether or not they should open up in New Zealand. And maybe been a little bit weary. About the fact that the tax law might might come to play and it operates in. Australia and ships from there. So there's a lot of factors that
might go into whether or not. It wants to go into a new market and deal with that government and you know it's just it's probably got quite good at dealing with that, but that's that's a situation it has to worry about. It also means that when it. Does when Amazon does move to a country which is effectively Amazon's business model. You might know Amazon from AN e-commerce. Point of view, but really it's it's a warehousing company. And a logistics and supply chain operations.
That's really it's trick is that it has mass warehouses. And and a hold stock on behalf of its sellers. And so, you know, it has these big warehouses and so they had a big warehouse, say in an African country to supply. You know, parts of Africa within the within the continent, then if there was political unrest or instability then that could. Affect the operations and supply chain because it would you know, you might need security, you might need different types of
vans. There's all sorts of things that could happen. Workers may not turn up to work. And so forth also in the political. Kind of space political. Factors. There's the international trade agreements and tariffs. That can hinder or facilitate. Cross-border trade and supply. So when there was an agreement. Say a free trade agreement or. NAFTA, which is the North American Free Trade Agreement.
That can affect Amazon and there's the same in in the Pacific area we. Have the CPTPP, which a lot of people would were. Protesting at the time, but it actually helps reduce trade and trade barriers. Between the kind of different countries and when. Tariffs are reduced or customs are reduced. Then they actually helps. That removes barriers for Amazon, and so you can imagine that.
You know, we're not talking about solutions here, but one of the strategic moves for Amazon could be having a lobby group for supporting these free trade agreements across the world. So it's quite an interesting example because Amazon is just. So you know, so big that you know it does have this influence I guess in the other area in terms of. Politics. There was a little bit of boycotts potentially around labor or?
The fact that there are political forces around big multinationals taking over from local stores, so it's also faced some challenges politically just in terms of. You know, it really being an example of capitalism and it's. At its best if you like ** depending on who, who, what you believe in. So that's that's the political kind of factors I think that are affecting Amazon right now. And what about yourself? Have you come up with some political factors? You may be in the US?
You may be in the UK. We may be in Australia, where Amazon operates directly, and you may have some other ideas or you've read some news. Locally that you know is something that Amazon. Might may be focusing on. And so there are all these political factors that affect Amazon okay, moving on from P, we then move to E&E is. Our economic factors. So I mean, we've. I've kind of given you a top tip a little bit because Amazon is so large and operates in so many countries and regions.
You know it's going to be affected by economics more than global. Economics more than just other companies. So thinking about that, do you would you have any idea around? What you think Amazon's What factors that economic would affect Amazon? And there are two that come to mind for me. Two heavy ones. One are economic conditions. So if there are some. Worldwide economic downturns or fluctuations and consumer spending, so like a recession,
for example. Or the war in the Ukraine, you know, has affected consumer confidence or trading. Then that can majorly affect Amazon's sales and profitability. So generally these large companies have mitigating factors and they're making money because they can see all these these kind of economic factors at play. But I do think that. Amazon would be affected like Microsoft.
Other big companies, they would be affected if there was a downturn and consumer spending, especially when they sell a whole lot of good, I guess goods. That aren't necessarily essential. The other factor in the economic space I think would be exchange rates for the same reason. So as a global company, fluctuations and exchange rates can impact on it's. International operations and financial performance.
So if you're operating in, I don't know, Russia, for example, I. Don't think I don't know if Amazon has any operations directly on the ground there, but if Russia with the war in the Ukraine, if the Russian dollar? I think it's the rupee crashed and. Then, you know, back in America where the corporate offices and they. They're counting their profit. You know those dollars they're trading and using? Rupees they may be their profit may be lost and so exchange rates are huge.
It can, I guess, affect Amazon's competitiveness, different markets you know it needs. It's really. Converting everything into a strong U.S. dollar and so that can make Amazon's products more expensive if, for example, the New Zealand dollar dropped. Against the US or the Australian dollar did. Then that could have a problem that could be problematic for Amazon because it's. Really. A U.S. company in trading in U.S. dollars. Okay.
And there are other factors. Within the economic space, you could say in terms of economic growth and development and you know maybe the fact that you know China and Brazil and and and India are getting bigger and bigger and bigger, so they might. See that as a factor in terms of growth, economic growth factor in terms of more more disposable income in those countries and those developing countries and
so therefore. You know, their business models quite sounds because they can just stretch and you know. I guess scale into those countries okay. So we've covered off the political factors and economic factors and we're moving on to I guess factors that I guess society factors or social factors if you like. Sociocultural factors is another way of explaining that. So what kind of social factors do you think that Amazon, you know, is involved in or is? Can influence.
I would say that I think that as consumer behavior and preferences change around the world in terms of. People maybe just saying that they want to support local as a good example, so it could be the fact that. People just thinking you know that just consumer behavior says that we're going to sport local did save that became huge then that could change consumer trends to go to Amazon. Not not politically. They're not necessary protesting
Amazon's existence. But they've just simply might start growing from people who are, you know, they might want to go to shops and local, I guess, in the same way. Amazon needs to think about the trends in terms of the next generation, in terms of Generation Z. Who are more tech savvy? And yeah, and also aging population social factors in terms of. What their behaviors are in terms of the? Type of UX&UI experience that they need, How easy it is or.
How accessible their shopping experiences. Are all factors in which Amazon needs to consider. I think the other one is kind of just are there any? Social attitude towards ecommerce versus shop base. I think that even though you, you and I and those who are listening to this podcast or producing it will know that you know you're pretty tech savvy, probably if you're listening to this, or at least you've got onto Spotify. But that isn't always the case for everyone, so.
I think with the acceptance and adoption of online shopping and the safety of putting your credit card details in for. Example that has helped Amazon reach and grow. To its potential and you know there are still some barriers there. I remember when PayPal came out and. Sorry, not PayPal in America. When PayPal first came to New Zealand, and people were. Still, and this was only 10 years. Ago and people were kind of still skeptical of using PayPal.
This is their local bank because it was kind of a big American company and people. Didn't really know much about it. In the same way New Zealanders don't use eBay, there isn't an eBay in New Zealand. There is Trade Me, which is a New Zealand Broad. Company that owns most market share and eBay has decided not to come into New Zealand explicitly.
Maybe because of that reason? But people won't even buy, you know, generally don't buy from eBay Australia, which is really weird because there are some good. Deals on there. OK. I think in terms. Of the fact that there are also in the socioeconomic, sorry, social, cultural factors, I think there are some somebody. A little bit nuance. Steal that phrase from a friend in terms of its offering in the
way in which. It deals with customers, so in like Japan for example, Amazon offers free shipping and gift. Wrapping like. Pretty much straight away and and India. Amazon offers cash on delivery and easy returns, so they're like the variations. Of what you get maybe in the States and we and I think Australia is very similar to the states as the UK and but they kind of are pushed more to or change their offering basically based on the different countries that they're dealing with.
Have you had any other ideas in terms of? Social factors or social issues? Anything around Amazon? You know, being a good corporate? Anything about that? I guess social activism does fall into this place. Carbon footprint Union. Rights, So there are, there are. Quite a few that you could be focusing on here. So moving on from S, we move on to T. So this is a big area because. Amazon is not just an e-commerce or an warehousing and logistics company. Technological factors?
What kind of technological? Factors do we think could affect Amazon? The two that come to mind for me is just advancements in. Technology, full stop. So Amazon runs, you know, it's a huge company. It has its own cloud technology, that which which is built up for its own purpose and now sells those services for cloud computing. And you know, can independently. Sell those services and it's really, you know, the almost the preference for developers to use Amazon.
Because it. Seems cheaper and it's quite dev focused and they're. Getting into a whole idea around. Smart assistance you know with their. Alexa products, smart speakers, drones, all sorts of bits and pieces that have, they've leveraged this technology and they've started. Productizing what they already had an advantage on or they already had as a platform. For their own business and they.
You know, huge into. Artificial intelligence and machine learning and big data, which helps them, but they can also sell that, so that's. And they keep pushing for that and I think that allows them to. Mean that they are shielded by diversifying their their portfolio so they're not just ecommerce business. So if people, you know, consumers don't buy as many goods or there are some political. In some countries, you know, people can still buy their cloud services.
And it doesn't. They're not really affected. One doesn't really affect the other, so that's important they do. It means that if there is an advancement in technology in terms of cloud technology. In terms of microprocessing, Amazon, you know they want to be first and so they are reliant on those developments and they're probably also investing in those developments. So that's great and also innovation. So Amazon needs to be better than their competition.
So they need to. Stay at the leading edge not only to meet customers expectations but also that for their cloud product. And they need to kind of make sure that they are. Moving along and providing the kind. Of innovation that their their competitors are offering effectively so that you know customer and their cloud. Offering our customers can access their platforms and services anytime, anywhere and. They really just, you know, want to.
Keep developing and keep moving forward to compete in the cloud technology space. It is not for the fine hearted and there's actually not that many players. In the global cloud computing spaces and Amazon is investing. And you know, it expects to get a return, and it only does that by continually innovating, you know, and releasing products on that note. For example, they have and low code no cloud tool called oh, it was called Honey Honeycomb.
I think I just read two days ago that they had stopped investing in that product. Because it just wasn't meaning the sales targets that thought and they just, they just turned it off. And said they were going to retire. So that's an example of them being thoughtful and conscious with their development and product management life cycles, Okay, moving on to technology and I know we can go deep there. So I'm moving on. Quickly seeing that's the space that a lot of.
US plan or want to plan, we're going to move over until legal. So we talked about. Regulatory issues that Amazon will have working in different markets and regions. So it's it's a complicated space so I don't know how big. The legal department is at Amazon, but I imagine it's massive. They have to deal with the laws and regulations in any, you know, country.
They have to deal with ecommerce taxation, all the kind of laws you talked about before and you know having a lawyer would it would make sense that they need to focus on that. I think that and so you know and that and that could be also around their IPIP so. The laws to protect their IP and their innovation and technology for example, and they also. So they need to protect their intellectual property.
It has to do that quite well and making sure that other people aren't copying them and if people. Are then they shut them down. And the other thing I guess in that space a big legal factor is making sure that they are not seen as a monopoly. And various kind of states in America could be a problem. So if they're they're providing unfair competition, then you know that. Could be something that that their legal. Team needs to be or prove that they're not doing that.
So that's quite a big legal factor for them, especially when they come into you know other, other. Small towns, maybe? Where they're a small shops and they could be taking taking over that whole market. Because they are in the cloud space, I think data. Privacy and security is huge compliance with data. Protection laws and ensuring that custom data is private is
essential. For Amazon, if there was a data breach on the cloud platform, you know, people would move to Microsoft Azure or to, you know, another cloud provider, Google Cloud. So they they they need to be hot on that and you know, with. Cyber hacking. At the moment, Amazon needs to be hugely careful. With not only its ecommerce, huge customer base but also its. Cloud offering where it's hosting other customer information. I think there is also, you know,
smaller legal problems. I know earlier days there was some legal when I said earlier days, maybe in 5-5 years ago there were several. States in the US who sued Amazon for price fixing like ebox was publishers so. Yeah, this all comes back to being a good global. But every time there's a dispute, you know your legal team needs to go out and deal with that. And of course your payday, but could be quite huge if you want a case with Amazon so that they are a target of legal litigation. OK.
And moving on to our final pistol element or? It is the environmental factor. So what do you think? Some of the environmental factors are that affect Amazon, I would say that. Sustainability and environmental impact I think are huge. I think that because Amazon is huge in terms of its operation and supply chain things like, you know, the amount of CO2 that it generates for shipping. Any kind of transportation company. Needs to worry about that factor in terms of sustainability.
It uses huge. Amounts of of packaging and plastics. So every time it can have an innovation in that space, it can show that it's being more sustainable. There are lots of different kind of small factors within that space. But because Amazon does operate. In so many countries, then, you know its impact can be huge to the world, and it ends up being a player who you know should be involved in climate change conversations. They're probably like other.
Environmental factors in terms of of on behalf of the products that's supplying. So I think that if it were and may. Potentially as a opportunity in that space is that if consumers were really wanting to know how much COT. Was a method from its travel. Maybe you could pay to have that offset. They may exist. Already and or include it in its price or you just make that? Explicit, and it may even. Be in a position was talking to someone who.
Is involved in a company which measures kind of climate impact based on companies. It could even list for the products, its stocks, what you know, grade kind of how good are those individual companies it's listing in terms of its sustainability targets and that might be they might affect consumers decisions. And it's all that I bought from this one company. This company was, you know, a better global, sustainable citizen than this other company for the exactly the same product.
Or something very similar. So that's all I had down in the. Economic The environmental factors, but you may have. More and I'm sure I have missed quite a quite a few in regards to that area. So that was the pistol analysis for Amazon. So these, you know gave you hopefully gave you a general overview and you know, make. You think about Amazon as a global player. And some of the factors that Amazon has to worry about both political factors, economic factors, social factors,
technological factors, legal. Factors and environmental factors. And so that's our. Pistol Analysis for Amazon. I hope you enjoyed. That so we've covered our three main strategic planning techniques when we look at our environment, our competition. And and our strength and our weaknesses and our opportunities and threats for our company. So we're now in a great position to really look at the enterprise analysis, so.
Now taking all those insights, putting, putting them all on the board and some kind of. Big room thinking and then start to pull out some strategy. And so next time we embark on our BA Unleashed episode, we will be going into the enterprise analysis space and we can look at now how strategic objectives. Drop out of these planning techniques. I hope you enjoyed. This week and I'll catch you soon.