CASE STUDY

The presence of the international online giant AMAZON is a threat to the competitive
advantage of the FLIPKART. The financial might of the AMAZON can tilt the position of
the FLIPKART adversely. However, the deep knowledge of the Indian consumer psyche and
the ability to provide solutions to the Indian consumers are the key competence of the
company to come up with innovative online strategies.
The new generation business startup FLIPKART with more than one billion dollar in revenue
per year, is the most popular e-commerce site in India. It has achieved this status through
carving the business in unique ways.

There are both external and internal factors that led to the success of FLIPKART.
• India has a huge younger population who prefers to shop online
• FLIPKART has a first mover advantage in the online business
• The company could gain the trust of the online customers quickly
• The site provides a system for the customers to choose payment terms as ‘cash on delivery’.
This facility allows the customers, who do not have credit / debit card, to buy online.
• The company established a hassle free system to carry out physical inspection before
confirming the purchase. The customers can return the goods in a hassle free manner if they
do not like the product.
• In association with the financial institutions, the company offers a facility to the customers
to pay in monthly installments.
• The site provides a facility for the local merchants to offer their products
The above features of the FLIPKART business are the source of its competitive advantage.

Founded in 2007 by Sachin Bansal and Binny Bansal Flipkart began its life just like
Amazon.com: selling books online at discounted prices. At the time of launch, the e-
commerce industry in India was taking its first steps. Sachin and Binny were actually
working for Amazon, which is where they met before coming up with the idea to start their
own e-commerce company in India. They are also both graduates of India’s most prestigious
university system: the Indian Institute of Technology (IIT). Registered in Singapore,
headquartered in Bangalore, India, Flipkart continues to recruit the best and the brightest
engineers from India’s IITs.)With an initial investment of $8,000, Bansal and Bansal set up
Flipkart in Bangalore from their two-bedroom apartment. Within weeks, the first customer, a
young bookworm from Mahbubnagar, places an order. Amid high drama, Sachin and Binny
pull off the delivery. After 20shipments that year, Flipkart is in business. In 2008, they
opened their first office, offering 24/7 customer service and delivering over 3,400 shipments
before hiring their first employee in 2009. While Indian e-commerce is experiencing
exponential growth, Flipkart sets itself apart by making exclusive changes to its business
model. In a country where people have various tastes and preferences, an ecommerce start-up
will always have enormous challenges. For Flipkart, they identified two distinct problems in
the market, developing three solutions. In a country where fraud is rampant and trust among
vendors and customers is low, Flipkart had to first transform the way Indians shopped. To do
this, they had to adapt to the domestic Indian market. Unlike in Western economies such as
the United States or Europe, retail transactions in India are mostly in cash. Although plastic
money options are available, Indians tend to be cautious of their use due to risk of online
transaction security. Flipkart was one of the first major ecommerce players in India to offer a
cash-on-delivery (COD) service to online customers in 2010. A second and related problem
Flipkart addressed is the custom in India for shoppers to buy goods only after a thorough
physical inspection of the product at a brick-and-mortar store. In other words, people often
prefer to shop in person and buy goods they see and like. To help combat this issue, Flipkart
introduced a hassle-free return and exchange policy and they also introduced an option to
purchase expensive items with its EMI (easy monthly installments) program. By 2011,
Flipkart expanded their shopping categories to include Cameras, Computers, Laptops, Large
Appliances, Health, Personal Care, and Stationery. (Flipkart Stories) Now they offer products
in over 75 categories with books and electronics being the main selling items. After
launching a mobile app in 2012, Flipkart changed its business model to differentiate itself. It
moved away from Amazon’s model of shipping mainly merchandise it owns and that requires
storage in its own warehouses to now be more akin to Alibaba, hosting third-party sellers.
They make money off these merchant’s sales by charging a fee on each transaction. Amazon
joined the Indian e-commerce Industry in 2013, making them latecomers in the industry.
With the expected growth of e-commerce in India, it is predicted that retail will increase to
over $100 billion by 2020. And Amazon is catching up fast, having matched many of
Flipkart’s tactics such as cash on delivery, installment payment plans, and same-day and
next-day deliveries. With its expansion, Amazon shockingly made $1 BILLION DOLLARS
IN SALES AFTER BEING IN INDIA FOR ONLY A YEAR, WHICH TOOK FLIPKART 7
YEARS. IN ADDITION, Flipkart is not only losing its customer it is also losing its
reputation as a quality service provider in India. Although it’s difficult to compare a start-up
to an established corporate entity, this is still a major milestone that requires Flipkart to step
up some of their offerings in order to maintain competitive advantage. Alternatives For this
situation, in order to maintain a competitive edge in the industry, some potential alternatives
for Flipkart are as follows:
1. Go global – Something that would be beneficial to helping Flipkart keep up with Amazon
would be to go global, offering their service in other countries. Amazon has separate retail
websites for the United States, the United Kingdom and Ireland, France, Canada, Germany,
Italy, Spain, Netherlands, Australia, Brazil, Japan, China, India, and Mexico. Granted, this
will take a lot of time to implement, I personally feel like this may be what Flipkart needs to
maintain a competitive edge in the industry. To differentiate themselves, they could try
expanding into a country’s market that Amazon has yet to expand into, yet also has a similar
need for the services they offer in India. For example, countries like Pakistan, Bangladesh,
Nepal, Sri Lanka, Maldives, Afghanistan, Indonesia, Philippines, Thailand, and Vietnam. All
of these countries have yet to be infiltrated by Amazon but also heavily make use of cash-on-
delivery services like India which is why they would be great to consider for expansion.
Spending time on this alternative may result in a decrease in domestic sales. However,
expanding beyond their domestic borders can increase economic value creation (V – C) and
enhance competitive advantage.
2. Develop a premium member service – Flipkart could create their own personal premium
service, where customers can pay a set price to receive special benefits, like free same and
next-day delivery. Currently, in 10 urban areas Flipkart offers same-day delivery and
guarantees next-day delivery in more than 65 metropolitan areas. With a premium
membership offering, they could make it free for consumers who pay a certain price monthly
or yearly for this service. However, this would mainly just put them right in line with
Amazon, rather than differentiate from them, who operates 13 country-specific sites and
offered Prime in nine of them before adding India. All in All, Flipkart will continue
struggling to keep up with Amazon in even their own market with this alternative because,
while they are just catching up, Amazon will be coming out with something new.
3. Offer fulfillment service – Currently, Amazon offers services that Flipkart cannot yet
match, such as the “fulfilled by Amazon” service (where items offered by a third-party seller
on Amazon’s site are shipped from an Amazon fulfillment center and all Amazon standard
shipping rates and policies apply to these items). Flipkart could work to offer the same
service, however, like the previous alternative, this will only really put them right in line with
Amazon. While the text states they “cannot yet match” this service, I find it wouldn’t be that
difficult considering their total warehouse strength in India is seventeen and they have three
fulfilment centers in Karnataka - one in Whitefield and two in Jigani. Offering this service
would make things much easier on merchants and sellers and help Flipkart gain more sales
and profits. Provided the time and resources, all alternatives are feasible. While options two
and three would be great for Flipkart in the Indian market, both of these alternatives will not
help them to differentiate themselves from Amazon. These options will only help Flipkart
catch up with Amazon while Amazon is busy coming up with its next best strategy for the
Indian market. Comparing the two, option three seems to be the least likely to select due do
the fact that it may currently prove to be too difficult for Flipkart since the text states they
can’t match the service right now, although there really isn’t a stated reasoning. Option two
would be simple to implement since it solely relies on a quick change to the online website.
In looking at the global alternative, I mentioned expanding into countries that have similar
needs for services offered in India. However, this doesn’t mean, Flipkart shouldn’t practice
local responsiveness—the need to tailor product and service offerings to fit local consumer
preferences and host-country requirements by developing different strategies for different
markets. They’ve done well executing this in India and should continue monitoring their
markets per selecting option one. In terms of time and money, this alternative will cost the
most and take the longest to implement. All in all, there are positives and negatives to each of
these alternatives, however, there is one that appears to be the best option. Proposed solution
All alternatives are plausible, however, the best solution in terms of maintaining competitive
advantage would be option one. The route that seems more promising is focusing more on
globalization and development. Despite the amount of time and money this will take
compared to the other alternatives, this is the only option that provides Flipkart with the
highest level of competitive advantage. And, being an e-commerce site will make digital
globalization easier. In fact, digital flows of data and information brings more economic
value than the trade of physical goods and the countries that participate in digital
globalization grow their economy faster. This solution was selected because it seems to
provide the best competitive advantage over Amazon, increasing economic value creation
through expanding internationally beyond domestic borders. In doing so, Flipkart can
maintain competitive advantage by moving into countries that have yet to be touched by
Amazon, as well as locating countries that have similar wants and needs as their domestic
Indian market. Therefore, I think option one, focusing on globalization in the e-commerce
industry is the best solution and will provide the highest benefit for Flipkart.

Recommendations
1. Invest in R&D – Investing in research and development will help Flipkart gain the
knowledge to determine which products and services will do well in the market. For the
chosen solution, R&D will be beneficial in identifying what countries will be best to expand
to, as well as what services are important to the target market. Part of Flipkart’s problem may
lie in their lack of employment for R&D considering there’s 9,084 Research Development
Job Openings in Flipkart. Therefore, before investing in any form of research and
development, they should first hire on enough accredited people that will be able to
determine the best options for the company.
2. Develop a country specific site – As with the last case, in this digital age, more companies
will continue to be “born global”, just like internet-based companies Amazon, Facebook, and
Google. To better customize their websites to suit local preferences and cultures, these
companies tend to establish offices and maintain computer servers in different countries.
(Rothaermel, 2017, 330) Flipkart should do the same when continuing expansion into the
global market to better appeal to consumers by creating a country-specific site wherever they
expand. Since Flipkart is an India based company, it therefore can consider its home site,
www.flipkart.com, its country specific site. Either way, a good tool to generate geo-targeted
website traffic is Google’s Webmaster tool. Through this, you can select a country from the
given list you want to target. Thus, it will give you traffic from a targeted source. This will
help to better appeal to any countries consumers when Flipkart decides to infiltrate another
market.
3. Invest in fiber optic cable networks – Now that we are in the Globalization 3.0 phase, huge
investments in fiber-optic cable networks around the world have effectively reduced
communication distances, enabling companies to operate 24/7, 365 days a year. No matter
where Flipkart decides to do business, this helps keep the company running on a global scale
because as warehouse employees in one country’s location are leaving for the evening,
warehouse employees in another are just beginning their workday.

Founded in 2007 by Sachin Bansal and Binny Bansal (same last name, but unrelated),
Flipkart
began its life just like Amazon.com: selling books online at discounted prices. (Rothaermel,
2017, 494) At the time of launch, the e-commerce industry in India was taking its first steps.
Sachin and Binny were actually working for Amazon, which is where they met before
coming up
with the idea to start their own e-commerce company in India. They are also both graduates
of
India’s most prestigious university system: the Indian Institute of Technology (IIT).
(Rothaermel,
Founded in 2007 by Sachin Bansal and Binny Bansal (same last name, but unrelated),
Flipkart
began its life just like Amazon.com: selling books online at discounted prices. (Rothaermel,
2017, 494) At the time of launch, the e-commerce industry in India was taking its first steps.
Sachin and Binny were actually working for Amazon, which is where they met before
coming up
with the idea to start their own e-commerce company in India. They are also both graduates
of
India’s most prestigious university system: the Indian Institute of Technology (IIT).
(Rothaermel,
Founded in 2007 by Sachin Bansal and Binny Bansal (same last name, but unrelated),
Flipkart
began its life just like Amazon.com: selling books online at discounted prices. (Rothaermel,
2017, 494) At the time of launch, the e-commerce industry in India was taking its first steps.
Sachin and Binny were actually working for Amazon, which is where they met before
coming up
with the idea to start their own e-commerce company in India. They are also both graduates
of
India’s most prestigious university system: the Indian Institute of Technology (IIT).
(Rothaermel,

BRIC
ONE US COMPANY WITH ONE INDUSTRY
TWO DIFFERENT STRATEGIES – INDIA & CHINA, BRAZIL & RUSSIA
INDIA
SERVICES HEAVY, BANKING, E-COMMERCE, IT & BPO
The Indian Economy is buzzing and witnessing a growth trajectory which no other global
economy is able to compete with. India provides a very good blend of a thriving domestic
market opportunity, highly skilled manpower & increasingly open regulatory environment.
All these make India a favourite destination for global companies who are looking to expand
their footprint and create a lasting business success.
Domestic Market Opportunity - With a huge population, India is possibly one of the
biggest markets for world businesses. India has been amongst the fastest growing economies
of the world over the last decade. And it is likely to continue on a high growth path for next
decade or two.
Growing Technology Infrastructure - The technology infrastructure is evolving very fast.
Present day India is at the level where China was 5-10 years ago, and all indications suggest
that India will be where China is today in the next few years.
Human Capital - India offers a huge pool of trained manpower. Indians across the world
have proven to be amongst the finest workforces. Global start-ups can make the most of high-
quality workforce with a strong work ethic to set up facilities like manufacturing, R&D,
innovation centres and technology support for global operations.
Open Regulatory Environment - Indian market is far more open than other countries. The
accessibility of the Indian market makes it very attractive for foreign start-ups. The Indian
government is welcoming investments in the country. This is different from the rest of the
world as some of the biggest economies across the world are averse to global companies.
CHINA
MANUFACTURING HEAVY, ELECTRONICS
STABLE GOVERNMENT, STRONG ECONOMY
CHEAP LABOUR
PRESENCE OF US ALREADY BECAUSE US IS CHINA’S MAJOR TRADING
PARTNER AND CHINA IS THE SAME FOR THE US.
CHINA HAS A LEVERAGE OVER US, OWNS A LARGE PORTION OF US DEBT
SHENZHEN, HONG KONG, SHANGHAI COULD BE MAJOR TARGET CITIES
GROWING MIDDLE CLASS
FAST GROWING DOMESTIC MARKET, HUGE POPULATION
BRAZIL
FAST GROWING ECONOMY BUT AT A SLOWER RATE THAN INDIA & CHINA
CLOSE TO US, SO EASIER TO TRANSPORT STUFF
CHEAP LABOUR BUT INSITUTIONS ARE WEAK
ENTRY POINT TO SOUTH AMERICA
CULTURALLY SIMILAR TO EUROPEANS AND HAS ONE LANGUAGE.
URBAN MARKETS ARE NOT THAT STRONG
STABLE GOVERNMENT, PRESENCE OF BRAZILIAN EXPATRIATES IN INDIA
RUSSIA
POST THE FALL OF USSR, WEAK INSITUTIONS AND WEAK ECONOMY.
US & RUSSIA RELATIONS ARE PRETTY WEAK
US HAS EMBARGO ON RUSSIAN SECTORS
DIFFERENT CULTURE, CANNOT GO DIRECTLY
BUT MANY COMPANIES HAVE SANCTIONS AGAINST
UNSTABLE BUSINESS RELATIONS, UNSTABLE INSITUTIONS
CLOSE PROXIMITY TO EUROPE & MIDDLE EASTERN MARKETS
ENTRY POINT TO EUROPE, GOOD FOR MANUFACTURING

CONSULTANT QUESTION- POLICY MAKING

1. Offer Tax Incentives for R&D

The research is clear: Government tax subsidies and grants are the most effective way to
increase innovation as well as productivity. Studies show that reducing the price of R&D by
10% increases investment in innovation by 10% in the long run.

2. Promote Free Trade

Existing evidence suggests that opening trade can spark innovation by increasing
competition, allowing new ideas to spread faster and dividing the cost of innovation over a
bigger market. 

3. Support Skilled Migration

Even if there’s more funding for innovation, you won’t see it unless you have more scientists
to do the research. The most direct way to increase the supply of researchers is to allow more
high-skilled immigrants into the country. 

4. Train Workers in STEM Fields

Another way to increase the supply of researchers in the long term is to invest in training
them domestically. One option is to promote programs that boost the number of people
studying science, technology, engineering, and math (STEM).

5. Provide Direct Grants for R&D

Compared to tax incentives, government grants — often to university researchers — can

target projects that are likely to have the most long-term benefits. Research shows that grants
to academics in turn results in more patents filed by private firms.

1. Maintenance of public utilities.

2. Promote private and foreign investment.
3. Provide trade incentives for promoting foreign trade.
4. Match and control money supply with development requirements.
5. To enable effective utilization of various resources.
6. Encourage developmental attitude among various sectors.
7. Encourage optimal utilization of various natural resources.
8. Ensure equitable income distribution.
9. Make economic resources productive and efficient.

PERSPECTIVE OF COMPANY

CULTURAL FACTORS
 A. Language

Language, more specifically translation, needs to be paid very close attention to when doing
international marketing. There have been some embarrassing mistakes in international
advertising that most likely did not help companies sell their product. 

B. Taste

Entering international markets can be very difficult for some companies because of some
countries’ eating habits. 

C. Regional Values

Many times a country to which you would like to sell a product has extreme regional
differences that must be accounted for when marketing.

D. Consumer Habits

Culture and personality combine to shape consumer behavior in every particular region of the
world or country. When you want to market a product to a foreign country you need to first
determine whether it is an individualistic society (free-thinking culture) or a collective society
(the peer group has the most influence on buying decisions).

E. Age/Demographics

Age and other demographics play a key role in international marketing just as they do in
domestic marketing; companies have to pay very close attention to them. Your company is
probably not going to want to market laptops to senior citizens in a third world country where
there is very little internet and where a large percentage of the citizens over 60 are computer
illiterate.

Economic Factors

ECONOMIC FACTORS

A. Per Capita Income

Of course a country’s wealth is a huge factor when determining potential target market
countries and how to market your product to those countries. 

B. Relevant Class Structure

When you are marketing your product or service internationally you must also take into
consideration class structure because it varies widely from country to country. Most countries
have an upper, middle and lower class, but the numbers of people in these classes can be
significantly different from country to country. 
C. Supply and Demand

Of course supply and demand will play a major role in trying to market your products
anywhere in the world. These days a company has to take a deeper look at potential markets
than ever before because just about anything will sell if you market it the right way and in
the right place.

D. Financial Transactions and Banking

Considering how you will get paid for the products and services you market and sell
internationally is important too. In the more prosperous countries it is taken for granted that
you can buy goods internationally and pay for them with such things as credit cards, debit
cards, online payment processors and cash transfer businesses, but that is clearly not the case
everywhere in the world.

POLITICAL & LEGAL FACTORS

A. Laws

There are laws in some countries that will greatly affect your ability to do business in them or
prohibit it altogether.

B. Licensing and Permits

There is a chance that the only way you can do business in a foreign country is to give out an
expensive permit or license of another business in that country to manufacture and sell your
product for you. Governments do these things as a way of making sure a larger percentage of
income from sales stays in the home country.

C. Taxes

Taxes are another way that governments can cash in on foreign businesses operating and
selling products in their country, so their citizens’ spending does not allow much money to
leave the country. Taxes can and do impact your ability to make a profit selling goods and
services in a foreign country and will shape your international marketing strategy because of
that.

D. Fees

When you market your products for sale in a foreign country, you may be subject to pay
certain fees for the right to do that. These fees can be a one-time deal or recurring, and they
can also be quite high in some circumstances if they involve what might be considered luxury
items.
E. Tariffs

Tariffs have long been used to balance trade between countries and to protect national
companies from losing business to foreign competitors. This can be a big factor when it
comes to international trade and marketing your company’s products or services for sale.

F. Currency risks

There are always risks when doing business in the currency of a foreign country that you are
marketing your product or services to. If you have your money tied up in a foreign currency
and economic events fall just right, your company could stand to lose millions. 

G. Other Political Risks and Restrictions:

Investment restrictions: Many countries have strict requirements on who can own

businesses and do other business-related investments in their country. Your marketing
department needs to be aware of these things. 

Operational restrictions: Just how much operational control you will have over your
overseas business remains to be seen, and that is a concern for some. Because of some of the
restrictions that have been discussed and other requirements for doing business in a foreign
country, chances are your business will need an international management team.

Discriminatory restrictions: Discriminatory practices in a foreign country may inhibit or

prohibit marketing your goods and services to that country too.

Quotas: Quotas work a lot like tariffs when it comes to restricting foreign business profits in
another country. Quotas are also designed to encourage domestic business within a country or
state.

H. Stability

These days the stability of a country has to be considered very strongly before you market
your product in a foreign country.

 Wars: Wars can have a very large impact on your business in a foreign country. 

Political Unrest:  Political instability in a foreign country can affect your ability to market a
product or service to a foreign country too. 

INTANGIBLES

A. Environmental

Environmental factors will play a role in international marketing and they can have both a
positive and negative effect on your international marketing strategy.
B. Regional Partnerships

Sometimes companies know it will be difficult to break into a foreign market without the
help of other companies that know the nuances of marketing a product to the people there
well. This is why so many companies choose to partner with other companies that are based
out of the country whose market they are trying to get into. 

C. Product Adaptation

While a “one size fits all” marketing strategy may work in a fairly homogenous country like
the US, this same type of strategy would most likely be a huge failure in countries like those
in the Middle East that are separated by cultural, historical and religious divides. Any prudent
international marketing strategy needs to take things like this into account.