Running Head: CASE STUDY 1

Expansion of Amazon into Sweden

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Expansion Options

Amazon is one of the world’s leading online retail stores and is arguably one of the most

favorite for most people who prefer to purchase their products online. The online retailer offers a

wide range of commodities that cover almost every aspect of daily life (Kittilä, 2016). Purchases

are made all over with the retailer doing deliveries in almost every corner of the world. Sweden,

on the other hand, is a Scandinavian country with one of the strongest middle-class economies in

the world. It is also the strongest economy within the Nordic region where it lies (Kittilä, 2016).

With a population of about 9 million people, the country is one of the world’s leaders in the

production of machineries such as Scania trucks and the famous Sony Ericsson phones. Some of

the most essential facts about the nation that may promote expansion opportunities for Amazon

include the relentless commitment to innovation for which the country is known, the consensus-

based approach to management that fosters trust-building, and the passion for alternative labor

options such as robotics that favor a reduction of expenditures on wages and employer insurance

(Peng, 2016).

Pros and Cons

The strong economy, particularly the middle-class with a considerable purchasing power

creates a ready market for Amazon’s products. Given that the country is the leading economy

within the region also makes it a favorable place to invest (Kittilä, 2016). The main challenge,
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however, lies with the unpredictable nature of the new market. The best approach, in this case,

would be a horizontal foreign direct investment given that it allows Amazon to pay the same

taxes and not incur extra charges. This is also one of the approaches that most Nordic firms

prefer (Peng, 2016). It is also important to note that the expansion will also require more

members of staff, hence, recruitment (Kittilä, 2016). The powerful middle-class also promises to

be of essence with regard to purchasing certain commodities as electronics and personal

accessories. Such commodities are common with the middle-class. Expansion into Sweden is

likely to give the company an opportunity to extend its reach within the European nations.

Recommendations

Expansion is an essential move for any company. It would be a necessary move for

Amazon to expand into Sweden as a way of extending it market reach. The idea of exploring the

Swedish market holds more gains for the company in terms of economic growth. Sweden has

great potential in terms of delivering a favorable market for Amazon’s products. Given that

Sweden is part of Europe, the company does not have to embrace newer taxation policies. The

company also does not have to incur extra costs in terms of taxation (Efendic et al., 2016).

Entering into the Swedish market allows the company to use the horizontal foreign direct

investment which allows the company to run its operations directly and not outsource as would

be the case in a vertical foreign direct investment. The company is likely to grow at a better rate
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and offer competition to its other outlets within Europe. This sort of competition is likely to

influence marketing decisions also (Efendic et al., 2016).

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References

Efendic, N., Andersson, F. W., & Wennberg, K. (2016). Growth in first-and second-generation

immigrant firms in Sweden. International Small Business Journal, 34(8), 1028-1052.

https://journals.sagepub.com/doi/abs/10.1177/0266242615612533

Kittilä, E. (2016). Analyzing and exploring internationalization opportunities in the kitchen

furniture market in Northern Sweden.

https://www.theseus.fi/bitstream/handle/10024/105007/furniture_sweden.pdf?

sequence=1

Peng, M. W. (2016). Global business. Cengage learning.