Analysing Amazon.com: Macro Environment and Competitive Forces

Macro-environment:

Demographic Environment

Population growth

The size of the world population has grown steadily and is projected to continue growing in the immediate future. World population has been totaled at 6 billion and is estimated to grow larger in the near future. Population growth would determine the size and demand of the market in that particular region. For example, high population growth might create a larger market size and thus in turn create more business opportunity; in this case it would benefit Amazon.com.

Population age mix

The age of the population has also some implication on Amazon.com. The population age mix would determine the type of books that would be more likely to be consumed by the public. For example, if that particular region or country has high number of children, Amazon.com would have advantage of selling children books in the respective region. Similar to the scenario given above, adults would prefer adult reading materials while teenagers would prefer reading teenage magazines.

Educational groups

Educational groups would also have effect on Amazon.com in term of literacy rate. For example, a region that has low literacy rate would likely to affect Amazon.com sales in the region. The explanation for this is simply because the population does not know how to read and thus population that falls into the illiterate category does not have the need for books as they could not read. Contrary to this, high literacy rate might imply a high demand of books in that region.

Economic Environment

In general, online business has large business opportunities that amount sales to several billions of dollars each year. This in particular would provide ample business opportunity to Amazon.com.

Economic crisis

Sluggish economy of low GDP rate might have a 'domino-effect' on the sales of books. The economic crisis might cause a decrease demands for books because during the economic crisis, scenarios such as retrenchment, layoffs and downsizing are very common. Thus unemployment would decrease expenses on products such as books which would directly affect the sales of Amazon.com.