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CHALLENGES FAVING AMAZON IN GLOBALIZATION

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Introduction

The Amazon Company primarily focuses on the provision of goods and services to

consumers with the lowest possible price. Likewise, Amazon's goals aim at the formation of a

consumer-centered company through the provision of friendly services, The amazon also

aims at achieving a greater market influence through the connection of the customers to the

wide range of products and services. Amazon primarily deals with the provision of e-

commerce and shopping services, cloud services provision, software services, and devices

production. The major market for amazon includes the United States, North America, Asia,

and India

Firm’s History

Amazon was established in the year 1994 by Jeff Bezos with its headquarters in

Seattle USA where there is an abundance of the technical expertise required for the company.

Initially, the company dealt with the trading of music and videos before it went public. After

the company went public, it embarked on the international market as an online books seller.

The international market covered the areas of the USA, United Kingdom, and Germany

where home appliances, toys, games, and electronics formed a significant component of the

trade. The company later explored options in the web services in the year 2002whr it

provided internet traffic services and data on the popularity of websites. In 2017, amazon

joined the online food marketing and shipping services across the globe.

PEST analysis

Firstly, the fluctuation of prices of natural products poses a threat to amazon trading

activities. The fluctuation in the prices of products ‘’entails the frequent changes in the

market prices of the natural products’’ (Akram, 2009). This implies that the prices of
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products in the market change from time to time. The change in the prices of products is

usually influenced by various factors including monopoly in the producers, natural disasters

and wars, and clashes that affect the supply of the products from the suppliers into the

market. Thus, the interruptions of the supply of the products in the market lead to frequent

changes in prices from time to time that affects businesses negatively. The changes in prices

result from the competition amongst the consumers of the products over the limited supply of

essential resources. The constant fluctuation of prices can be addressed by diversification in

terms of the producers of certain products. Diversification entails having different suppliers

of various products in the market to avoid a monopoly in the supply of the products in the

market. By doing so, ‘’there will be an assurance of a constant supply of the products in the

market and thus stabilize the prices of the various products’’ (Panayotou, 2000). This,

therefore, implies that with a constant supply of the products, trading activities continue

throughout the year in the absence of one of the key producers. Hence, diversification is

essential in the reduction of reliance on a single supplier of certain resources and products.

Likewise, state capitalism poses a challenge to Amazon's trading activities. State

capitalism implies the full control of the business and commercial activities in a country by

the administrative governments. This means that ‘’the government makes all the key

decisions affecting trading activities in a country ranging from the administrative functions to

regulation of the various industries’’ (Krishna, 2021). This, therefore, implies that the

government dictates all the activities related to trade while at the same time dictating the

prices in the market. This, therefore, means that the existence of a centralized power for

decision-making poses a threat to misuse of the power for political and personal gains. This is

so as the power may be used to create a hostile environment that discourages international

trading activities and investment. Thus, the existence of a centralized decision-making power
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discourages globalization since there is no stallholder involvement in the decision-making

process.

Decentralization of decision-making power is essential in addressing state capitalism.

This involves the ‘’devolution of the decision-making powers and privatization of functions

related to business and trade’’ (Panayotou, 2000). Decentralization is essential in ensuring

that the various businesses engage the relevant partners in the growth process of the business.

Additionally, decentralization tends to encourage open communication of ideas and business

strategies essential for the growth of trading activities. Thus, the decentralization of decision-

making power tends to create a conducive environment for trading which attracts local and

international investors in a country.

Consequently, geopolitics tends to affect Amazon negatively. This implies that the

event in a particular county or region affects global trading activities. This is so as the

‘’geopolitical events affect the trading routes in the world which disrupt the movement of

goods from one region to another’’ (Sparke, 2007). This, therefore, means that the activities

in a particular area usually have a direct impact on the trading activities in the world. The

impact arises due to tensions and instability in the different areas that lead to uncertainties in

the future. Hence, geopolitical events usually have an impact on the trading activities in the

world.

Democratization of information is essential in addressing issues related to geopolitical

vents. The democratization of data entails the easy access and distribution of data globally

related to geopolitical events. The distribution of data on a real-time basis ‘’allows the

processing and translation of the data leading to informed decisions related to trading

activities’’ (Panayotou, 2000). This means that data democratization contributes to the
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growth and future development of an organization. Thus, the sharing of data and information

is essential in the making of informed decisions based on the market dynamics.

Conclusion and recommendations

In conclusion, it is undeniable that globalization of trading activities has led to the

growth and development of the world economy. However, there is a need for the adoption of

technology-based trading strategies to ensure the competitiveness of business in the world

market. The technology will ensure the accessibility of the services amongst the consumers at

the convenience of their homes and workplaces. Additionally, there is a need for the

personalization of products and services by the company. This is essential in ensuring the

development of a brand of the company and loyalty amongst the consumers. Hence, the

personalization of services plays a critical role in attracting and maintaining customers over

time.
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References

Akram, Q. F. (2009, June 10). Commodity prices, interest rates and the dollar. Energy

Economics. Retrieved February 24, 2022, from

https://www.sciencedirect.com/science/article/pii/S0140988309000917

Krishna, S. (2021, September 30). What are the challenges of globalization? Connect

Resources. Retrieved February 24, 2022, from https://connectresources.ae/what-are-

the-challenges-of-globalization/

Panayotou, T. (2000, July 1). Globalization and environment. CID Working Paper Series.

Retrieved February 24, 2022, from https://dash.harvard.edu/handle/1/39569837

Sparke, mathew. (2007). From geopolitics to geoeconomics: Transnational State Effects in

the Borderlands. Taylor & Francis. Retrieved February 24, 2022, from

https://www.tandfonline.com/doi/abs/10.1080/14650049808407619