SVKM’S NMIMS

School of Business Management

Program: Master of Business Administration (Human Resources)
Year: I, Trimester: II
Academic Year: 2020-21
Course: Corporate Social Responsibility
Marks: 20
Duration: 2 hrs.
Final Examination (2020-2022 Batch)

Instructions: Candidates should read carefully the instructions printed on the question paper.
1. Read the following points carefully:
1. There are four (4) questions in the question paper and the maximum marks is
20.
2. Time allowed for attempting the question paper is Two hours .
3. All Questions are compulsory.
2. The marks assigned to each question is given on the right side of the question paper
against the respective question.

. Read the following Caselet

Amazon challenged in India and Europe over discounting and copycat practices1

Amazon is a cloud computing giant and the largest American e-commerce company. It was
founded in 1994. Originally known for selling books through its website (and later digital
versions via its Kindle e-reader), Amazon has built up a customer service, inventory, and
shipping empire that allows the site to offer everything from clothes to lawn furniture to
janitorial supplies. It also sells digital content like movies, music, and apps. 

Amazon’s relentless expansion around the world has met with serious headwinds in
India and in Europe where the company’s aggressive online sales practices are being
met with court challenges and government investigations. "They are the second
version of the East India Company. They just want to wipe out the competition and
later on dictate their own terms," Praveen Khandelwal, the national secretary general
of the Confederation of All Indian Traders (CAIT), who claim to represent some 60
million Indian merchants, told Deutsche Welle, the German news agency. The trade
group organized protests in over 300 cities across the country when CEO Jezz Bezos’
came to visit India, this past January, at which hundreds of local shop owners shouted
“Jeff Bezos - Go Back!”

The Seattle-based retail behemoth has developed a business playbook that has allowed
it to capture markets around the world from Japan to Germany to the U.S., by offering
the biggest inventory at the cheapest prices combined with easy purchasing and rapid
delivery. Amazon also competes by first demanding steep volume discounts from
manufacturers lured by the website’s global reach and then undercutting them by
selling knock-off products at even lower prices to force the original manufacturers out
of business.
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Published by CorpWatch  By Tyler Fox  Friday, May 1, 2020

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This has been harder in India where Amazon is getting a major push back from the
government which is increasingly open to complaints from local merchants. The
Competition Commission of India (CCI) has taken pro-active measures over the last
few years to prevent online retail platforms, like Amazon India and Flipkart (owned
by Walmart) from competing with third party sellers by banning it from selling
products that they make under their own name (like Amazon Basics and Amazon
Essentials goods), or any other company in which it has at least 25 percent ownership.
Last February, Amazon had to pull 400,000 products off its online store to comply
with the new rules because it had major stakes in two of the biggest sellers – namely
Appario Retail Private Ltd and Cloudtail India. However, after Amazon changed their
ownership stake in Appario and Cloudtail, the products  went back online.

This year K.G. Raghavan, a lawyer representing Delhi Vyapar Mahasangh (DVM), a
trade group representing small and medium businesses,  filed a new challenge against
Appario and Cloudtail, which he alleged were still connected to the retail behemoth
like the “tentacles of an octopus." News reports also  suggested that Appario and
Cloudtail were trying to force manufacturers – notably in the electronics sector - to
give them bigger discounts in order to be included in the Amazon marketplace. In
January CCI agreed to investigate four business practices of both Amazon and
Flipkart: deep discounts, preferred listings, promotion of private labels and exclusive
partnerships with phone brands.

Amazon fired back in February, asking the High Court in Karnataka state to stop the
investigation, because the company claimed it was “perverse, arbitrary, untenable in
law.” Days later, Flipkart filed a similar petition with the same court. The Karnataka
court agreed with Amazon and Flipkart and put a hold on the investigation. DVM
has appealed this decision. "The present case before the CCI is one which involves
matters of grave public interest and economic interest, and no stay should have been
granted," the trade group argued in its filing, noting that small businesses did not have
the resources to fight a lengthy court battle. The traders have the government of
India’s implicit backing. "Unfair competition should not be created for the small
stores,” Piyush Goyal, India’s Commerce Commissioner, told the media. “They don’t
get loans in zero interest rate, they don’t have millions of rupees, they do their
business with small investments," he told the media.

Meanwhile, in Europe, Amazon is also starting to get pushback on one of its most
aggressive, yet least discussed, tactics. Allegedly with the help of the data that it
amasses. Amazon identifies successful products offered by third party sellers on its
site, and then manufacture generic knock-offs (known as private label products) that it
sells at lower prices. "If you -- as Amazon get … data from the smaller merchants that
you host -- which can be of course completely legitimate because you can improve
your service to these smaller merchants -- well, do you then also use this data to do
your own calculations? What is the new big thing, what is it that people want, what
kind of offers do they like to receive, what makes them buy things?"  says Margrethe
Vestager, the European Union’s competition commissioner. For example, in the U.S.
Rain Design found that its long time best-selling laptop stand, at $43, was slipping in
sales in 2016, after Amazon began offering a near identical product that barely
avoided patent infringement, for $20. “We don’t feel good about it,” Harvey Tai, Rain
Design’s general manager, told Bloomberg news. “But there’s nothing we can do
because they didn’t violate the patent.”

2
Similar charges have been made by Allbirds shoes. And a recent   Wall Street
Journal investigation uncovered several other examples of copycat products on
Amazon such as a car-trunk organizer and an office-chair seat cushion, allegedly
copied from Fortem and Upper Echelon Products.

Indian merchants are also starting to complain about copycat products that Amazon
has started selling under private labels such as Arthur Harvey, House & Shields, Myx,
Presto, Solimo, Symbol, and Vedaka. Arpit Gupta, co-founder of a slimming tea
company named myDaily, said he was concerned about sales of Vedaka Green Tea
that competes with his products on the Amazon website. "They can gather that initial
momentum much more than us or any other seller. They have that advantage,
specifically in pricing; they know when exactly to show discounts etc., and not every
seller on the platform has access to deals,” Gupta told the  YourStory website.

Last July, the European Union opened a formal inquiry into the matter to see if
Amazon was engaging in anti-competitive behavior. And in India, the Department for
Promotion of Industry and Internal Trade has asked Amazon to submit details of
private labels together with the percentage of sales that these products  comprise.

Answer the following Questions

1. Based on stakeholder categorization, identify the key stakeholders who are affected
directly and indirectly by Amazon. Explain and justify any one theory that Amazon is
violating by implementing such trade practices. (5 marks)
2. Explain any one voluntary code/ guideline which Amazon can adopt to develop and
promote a socially responsible business. (5 marks)
3. Various NGOs like CAIT and DVM have adopted strategies mentioned in the
caselet to facilitate the promotion of socially responsible behaviour by Amazon.
Explain the strategies and discuss any other strategy that NGOs/NPOs can adopt
to influence responsible behaviour in Amazon. ( 5
marks)
4. Amazon India has to comply with corporate social responsibility norms under
the Companies Act, 2013, and has to spent 2 per cent or more of its profits to
implement programmes.
a. Discuss the CSR rules for executing CSR under Section 135. (3 marks)
b. Discuss the role of the company board in implementing CSR. (2marks)