After reading the case study Amazon’s KiranaNow: The Indian Online Grocery Market, comment on the industry analysis by analysing the macro-environmental factors affecting Amazon’s KiranaNow using the Porters Five Force framework.
Macro-environmental factors are known as the external factors that can impact the business of an organization. These factors are political, demographic, legal, cultural, technological and economic (Iamratanakul, 2015). To analyze the impact of macro-environmental factors affecting Amazon's KiranaNow, Porter's Five Forces framework can be used.
Porter's five forces framework is an effective business tool to measure the external forces in the industry based on the power of suppliers, power of customers, the threat of substitute, new market players and industry rivalry. The attractiveness of the market and competition in the industry can be evaluated through porter’s five forces model (Mathooko & Ogutu, 2015).
To investigate the impact of macro-environmental factors on the growth and operations of Amazon's KiranaNow, Porter's five forces analysis can be conducted with in-depth analysis.
The threat of new entrants
The threat of new entrants is high for Amazon's KiranaNow due to low investment, the high population of the country, attractive customer base and increasing digital customers. It can be explained with the following factors that can influence the entry of new organizations in the industry.
With a loyal and trustworthy customer market, Amazon can promote its customer base for KiranaNow. Promoting digital distribution and effective quality service can reduce the threat of new entrants. Amazon is a strong brand which can be trusted by customers.
The threat of substitute products
The threat of substitute products is high in Indian economy due to the preference of individuals towards traditional shopping experience. Digital buyers are low in the economy which represents the behavioural hindrance of individuals towards traditional purchasing.
Higher discounts and promotions can help in managing the threat of substitute products. An increasing number of customers in the e-commerce industry can take advantage of lower prices.
Bargaining power of buyers
With the available customers and available substitutes, the bargaining power of buyers is high in the Indian economy. Low switching costs of customers define the availability of products among consumers. Relationship of customers with the stores also impact the organization and its performance.
To differentiate the products, Amazon can allow distinguished discounts on products and services which can easily attract the customers. High quality and low priced products can maintain loyal customers for the organization.
Bargaining power of suppliers
The bargaining power of suppliers can be identified as moderate in the Indian economy. Distinguished delivery options are available in the industry with a strong customer base.
Amazon can easily opt for another supplier with the perfect competitive marketplace. A low commission can promote better profit opportunities for the organization.
Rivalry among existing competitors
Indian economy shows an example of a perfectly competitive marketplace wherein the rivalry among competitors varies from moderate to high. Several small and large competitors are available in the market to target the higher customer base.
Amazon can focus on loyal customers by providing low prices with distinguished offers for the existing customers. It can help in attracting new customers.
What challenges is KiranaNow facing, and what strategies should it use to overcome these challenges?
KiranaNow is facing distinguished challenges in the Indian market based on the customer market of e-commerce. The e-commerce market is growing with a multitude of factors such as greater awareness for online shopping, increasing number of smartphone users, increasing internet penetration and improved support in logistics. However, the key challenges faced by KiranaNow are based on technology, people management, logistics and merchandising. These challenges can be explained as below:
To mitigate the challenges in the Indian economy, Amazon’s KiranaNow can emphasize on distinguished strategies. These strategies are discussed as below:
Iamratanakul, S. (2015). Modelling the Macro-Environmental Factors of International Distribution. Retrieved from: http://www.toknowpress.net/ISBN/978-961-6914-13-0/papers/ML15-125.pdf
Jha, A. J., Jain, V., Chowdhry, V., & Bose, I. (2015). Transforming the traditional Indian retailer. Retrieved from: https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?referer=https://scholar.google.com/&httpsredir=1&article=1027&context=ami
Mathooko, F. M., & Ogutu, M. (2015). Porter’s five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya. International Journal of Educational Management, 29(3), 334-354.
Sharma, U., & Rajput, B. (n.d.). Future of E-commerce in India. Retrieved from: http://journal.commerce.du.ac.in/confdata/5thAICC_paper_45.pdf
Yadav, N., & Sagar, M. (2018). Amazon India’s “Apni Dukaan”: branding strategy. Emerald Emerging Markets Case Studies, 8(3).
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