Micro and Macro Ec Theories in Amazon Appraisal

Microeconomic Theories
A microeconomic factor that has affected how Amazon conducts business operations is the
rising of many online retail stores. Amazon is one of the largest online retail stores in the
world and when the numbers of retails stores rises, the competition rises as well. This
affected how the Amazon Company has been able to get revenue and also affected the
volume of sales domestic and international. Another microeconomic factor that has affected
business operations of Amazon is the rise of economically active population all over the
world. (Berg & Knights, 2021)
The increasing number of workers having better paying jobs across the world, especially in
developing economies, resulting in several new opportunities for business development and
expansion in developing countries as well. Furthermore, increasing price elasticity of demand
among consumers across the world affected volumes of sales and revenue of the company in
these markets. (Lee et al., 2020)
Beside the change in the price elasticity of demand, even slight change in the general price
levels of goods and services for high volume product lines can have a significant impact on
the revenue generation of the Company. In conclusion, these are the main and most important
microeconomic factors that have impacted the business operations and overall performance
of Amazon. (Vollero et al.,2023)
Macroeconomic Theories
Some of the large macroeconomic features that are significant to Amazon’s operation include
macroeconomic factors like fiscal and monetary policies, inflation, international trade
dynamics and GDP growth or GDP rate. Being a company having multinational spread,
Amazon is very sensitive towards macroeconomic conditions that are taking place in its key
markets all over the world. (Gupta et al.2023)
The implications of variation in exchange rates can significantly affect the financial
performance of Amazon both in revenue realized through international sales and cost of the
goods they sell. Variation in interest rates and monetary policies directed by central banks, as
well as the spending trends and the patterns of after-tax, disposable income of consumers
have the ability to impact customer spending habits, which in turn affects Amazon’s sales
volumes and income streams. What’s more, Amazon’s business operations are closely tied to
general developments in economic globalization and trade regulations. Trade agreements,
import-export tariffs, and foreign country influences all have an impact in the cost of goods
that Amazon provides, the management of its distribution intro countries, and the selling of
its goods and/or services abroad. (Charles & Uford, 2023)
Amazon examines and records several significant micro and macroeconomic details that
shape organizational activities and performance results in its financial report. They look into
components as competition, and pricing pressures and consumer concern modifications and
provides examples of how they affect Amazon’s decision on a strategic and investment plan
in the Annual Report. (Charles & Uford, 2023)
Macroeconomic factors impact organisation’s decision-making, particularly for those
operating internationally. Important factors include inflation rates, exchange rates, economic
growth, workforce, and unemployment rates. Higher economic growth may increase
Amazon's sales as it raises household disposable income.
By breaking each of the factors down, Amazon allows for a deeper intricate meaning to an
investor or stakeholder, to better understand the macro economic environment that Amazon
performs under and what it could mean toward Amazon’s future end.
Berg, N. & Knights, M., 2021. Amazon: How the world's most relentless retailer will
continue to revolutionize commerce.HTML
Gupta, S.D., Sodani, P., Karmakar, R., Gupta, S. and Singh, S., 2023. Impact of
macroeconomic and institutional factors on the financial performance: a study of platform-
based companies. International Journal of Services and Operations Management, 45(3),
pp.314-331.HTML
Charles, I.I. and Uford, I.C., 2023. Comparative analysis and evaluation of business and
financial performance of Amazon. Com: A three-year period critical review of exceptional
success. European Journal of Business, Economics and Accountancy, 11(2), pp.69-
92.idpublications.org
Lee, K., Malerba, F., & Primi, A., 2020. The fourth industrial revolution, changing global
value chains and industrial upgrading in emerging economies. Journal of Economic Policy
Reform.HTML
Vollero, A., Sardanelli, D. and Siano, A., 2023. Exploring the role of the Amazon
effect on customer expectations: An analysis of user‐generated content in
consumer electronics retailing. Journal of Consumer Behaviour, 22(5), pp.1062-
1073.wiley.com

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Microeconomic Theories

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