Xi’an Jiaotong-Liverpool University

Business in the Asia Pacific Region

Walmart’s Growth and Sustainability in Japan

(Name of the Student)

(Student Number)

(Name of Supervisor)

December 2022

Wordcount: 2,750 words

 Contents
1. Executive Summary.......................................................................................................................3
2. Company Overview and Problem Identification......................................................................4
3. Generation and Evaluation of Alternatives..............................................................................6
3.1. Alternatives to Sustain Market Leadership......................................................................6
3.2. Alternatives to Improve Sustainability Reputation.........................................................7
4. Recommendations.........................................................................................................................8
5. Implementation..............................................................................................................................10
6. Conclusion.....................................................................................................................................12
Reference list.........................................................................................................................................13
1. Executive Summary
The biggest online retailer in Japan is Amazon Japan. A cross comparison of the cultural
attributes of Japan and the U.S.A. showed that there is a significant difference in terms of
individualism, masculinity, uncertainty avoidance and long-term orientation which makes the
operations of Amazon at risk against the fast-growing local competitors in the e-commerce
industry. Amazon Japan must prioritize becoming more sustainable due to the severity of the
competition and the expanding market of Japanese online shoppers. This study examined the
issues of how Amazon can maintain its market dominance and how it may enhance its standing
as a sustainable company. The suggested actions include harnessing Amazon's technology
innovation through the Amazon Flex Customer Relationship Management System and
optimizing its global value chain inside the East Asian area. Additionally, it is advised that
Amazon combine its CSR initiatives through Amazon Connects, which incorporate sustainable
packaging and strengthen the relationship with local labor unions.
2. Company Overview and Problem Identification
Amazon is one of the leading ecommerce companies in the world that belongs to the
internet services and retailing industry and has its headquarters in the United States of America
(U.S.A). Its top product line and services include AWS cloud services, subscription, third party
retail, and retail of electronics and other types of products (Coppola, 2021). Last year, the
company generated $ 469, 822 through the help of its more than 1.6 million employees around
the world (Fortune, 2022). The company operates on four guiding principles: long-term
orientation, commitment to operational excellence, passion for creation, and customer centric
operations (Amazon, 2022). Its vision-mission statement projects Amazon to be the “most
customer-centric, best employer, and safest workplace” in the planet indicating the holistic
business objectives of the company.

Amazon is considered as a multinational enterprise because it has its operations on several

countries around the world. Its site operations exist in 13 countries, but it ships its items to more
than 100 countries around the world. One of the countries in the Asia Pacific Region (A.P.R.)
that serves as key market of Amazon is Japan. Peters (2022) identified Amazon Japan as the
top online store in the country in terms of e-commerce net sales after garnering $ 13,014,000 in
revenues. Its closed competitors are Apple.com and the local players such as Yodobashi.com,
Rakuten.com, Matsukiyo.co, and Cocokarafine.com.

Despite its seemingly successful operations, there are two major issues that need to be
addressed in the operations of Amazon in Japan: How can it compete with the fast-growing
local ecommerce businesses in Japan and how can it improve its reputation as a sustainable
company.

First, the intensity of rivalry among e-commerce stores in Japan is getting stiffer and in spite
of leading performance, this may put pressure on Amazon.com to maintain its number one
position against competitors such as Apple, Rakuten Group, Yodobashi, Matsukiyo and
Cocokarafine. According to Orion Market Research (2020), the comprehensive annual growth
rate of e-commerce industry in Japan is 10.1 % projected from 2019 to 2025. This implies a
growth but also posited that the number and performance of the industry players are also
growing due to higher demand. According to EcommerceDB (2021), local e-commerce stores in
Japan are surging in terms of growth headed by local players such as Yodobashi, Matsukiyo,
and Cocokarafine e-commerce stores. Shimamura.com is also one of the recognizable players
after positing 285 % in terms of revenue growth in the previous year.
 Figure 1. Country Comparison on Cultural Dimensions
Source: https://www.hofstede-insights.com/country-comparison/japan,the-usa/

The concern on competing with the local e-commerce stores in Japan can be further
analyzed using the country comparison technique in the Hofstede cultural dimensions. Despite
having closer attributes in terms of power distance, masculinity, and indulgence, there is a
significant difference in terms of individualism, masculinity, uncertainty avoidance, and long-
term orientation (Hofstede Insights, 2022). Thus, if the local players continue to gain
momentum in the e-commerce industry in Japan, they can optimize these cultural differences
as their assets to catch up with Amazon.com in terms of sales. Lertxundi and Landeta (2011)
expounded that cultural context is a significant indicator in the operations of high performing
multinational corporations due to the critical consideration of the local market. Yodobashi,
Matsukiyo and Cocokarafine may harness these cultural differences to better serve the local
market and attain some of the market share of Amazon Japan. Thus, it is important to address
“How can Amazon Japan maintain its leadership position and compete against the local
players in the e-commerce industry?”.

The second major issue in the operations of Amazon Japan is the improvement of its image
as a reputable sustainable company. Eccles, Perkins and Serafeim (2012) defined a
sustainable company as an organization that does not only thrive for economic viability, but
also maintains social and environmental feasibility in its operations. Being an international
player in the Asia Pacific Region, this concern is considered to be significant because Asians
 are becoming more conscious in their consumption pattern. According to Massive Media Inc.
(2021), a growth of 10 to 25 % of the total Asian market are patronizing the sustainability
initiatives of companies offering more environmentally, socially, and economically responsible
operations. This is an opportunity that must be anticipated by Amazon Japan. In terms of
operations, Amazon Global is criticized for its anti-competitive practices and difficult working
conditions among the staff located in fulfillment centers (Fortune, 2022). With this reputation,
Amazon Japan can also be shaded negatively not only by the local market but also by the local
employees.

Connected to the sustainability concern of Amazon Japan, the environmental and social
aspect of operations of Amazon Japan is critical to the business. It may have already attained
economic feasibility because of its positive revenues (Peters, 2022). However, Amazon Japan
still needs to make a mark in terms of environmental and social sustainability. A report by
Ishibushi and Matsakis (2021) presented that the union members of Amazon Japan are not
happy in their workplace and the overall plans of the business. Hadero (2022) also presented
that the plastic waste in the overall operations of Amazon increased by 18 %. Kolk and van
Tulder (2010) explained that these aspects of sustainable development are crucial to the
overall sustainability of the business because companies show their responsibility beyond the
profitability agenda of the business. Thus, it is important to address, “How can Amazon
Japan improve its reputation as a sustainable company?”.

3. Generation and Evaluation of Alternatives

The major issues in the operations of Amazon Japan focused on market leadership and
overall sustainability. To address these concerns, multinational enterprise theoretical
frameworks are used.

3.1. Alternatives to Sustain Market Leadership

The first alternative in sustaining market leadership is to optimize regionalism and
consider a production network in Japan. This means that the company can take
advantage of the trade agreement between the home and international country to facilitate
operations (Yeung, 2009). It implies that Amazon Japan can take advantage of the
American Japanese Free Trade Agreement. The U.S Customs and Border Protection
Agreement (2022) entails wider market access to industrial and agricultural goods to the
extent of eliminating 241 tariff lines on the products. This will allow Amazon Japan to build
not only a development network in the country but also a production network which adds
efficiency to its operations. However, this alternative also bears a disadvantage. By
establishing a production network in Japan, the country has to fill in adequate resources to
capitalize on the project. Moreover, expatriate management which requires additional effort
has to be done to ensure a good combination of the foreign and local employees.

The second alternative to this problem is to strengthen the global value chain by
harnessing the technological innovations in the country. This proposition requires for
the optimization of the distribution networks that exist within the international country to
ensure better operations (Yeung, 2009). This means that Amazon Japan can build on the
advantages of its existing fulfillment centers located not only in Japan but in nearby
countries such as Korea and China. Currently, Amazon Japan uses Amazon Flex as its
delivery platform which allows independent and third-party contractors to deliver package to
its customers in the country (HowITravel, 2020). The advantage of this proposition is that it
does not only limit the contractors to Japanese delivery companies, but also to its
international delivery partners within the Asia Pacific Region such as Planet Express which
boost the efficiency of delivery of items coming outside of Japan. However, the
disadvantage of this proposition is that it may induce competition among the existing
Japanese delivery companies.

The third alternative to this problem is to maintain its current operations. Currently,
Amazon Japan is the number one e-commerce company in the country with more than USD
13 million in revenues (Peters, 2022). This means that the current business and operational
model of Amazon Japan will be retained. The advantage of pursuing this option is that no
additional resources will be spent because no new activities or projects will be implemented.
However, the main disadvantage is it delimits the growth of the business which may not help
Amazon Japan in achieving its objective of sustaining the leadership position in the e-
commerce industry.

3.2. Alternatives to Improve Sustainability Reputation

The first alternative in improving the sustainability reputation of Amazon Japan is to
consolidate the corporate social responsibility programs aligned with the vision-
mission statement of the company. According to its vision and purpose statements,
Amazon aims to be the "most customer-centric, greatest employer, and safest workplace"
on the globe, reflecting its broad range of corporate goals (Amazon, 2022). Bennett (2022)
explained that the internal and external stakeholders shall be considered in attaining a
holistically sustainable business. This is where the corporate social responsibility programs
 of Amazon Japan will be essential. However, to ensure that Amazon Japan has a holistic
approach for sustainability, both employees, natural areas and the communities involved in
the value chain will be considered beneficiaries of the projects. This presents the advantage
of having a better reputation because of the scope of the CSR programs catered by Amazon
Japan. However, the disadvantage of pursuing this alternative is that it requires a bundled
perspective so that the impact of the initiatives will not be put into waste and a better
reputation will be attained by the company.

The second alternative in improving the sustainability reputation of the Amazon is to

strengthen corporate governance measures to make the sustainability initiatives of
Amazon Japan more transparent. This refers to the consideration of the IFRS measures
so that a more stakeholder-oriented accounting practices will be presented that can help
improve the reputation of the company (Filatotchev and Wright, 2011). This highlights the
argument that Amazon Japan is already implementing individual CSR programs in the
country. However, the issues emerging from the experience of the union members
(Ishibushi & Matsakis, 2021) and the environmental waste stimulated through its packaging
(Hadero, 2022) pressed the need for better awareness in the sustainability initiatives of the
company. The advantage of this alternative is that it directs the improvement of
sustainability reputation by being more transparent through its annual report and corporate
governance statements. However, its primary disadvantage is that it requires recalibration of
the accounting system of the company.

4. Recommendations
4.1. Strengthen the Global Value Chain and Harness Technological Innovations in
Japan
This alternative may address the problem of how Amazon can sustain its leadership
position in Japan because it matches the needs and buying behavior of the Japanese
customers. Based on the results of Hofstede cultural dimension analysis, it showed that
Japanese market have high uncertainty avoidance and long-term orientation (Hofstede
Insights, 2022). This only means that they will not be satisfied with inconvenient processing
of their orders that will make them anxious about their purchase. Through technological
innovation, the long-term orientation of the Japanese market may also be tackled because
the Customer Relationship Management platform of Amazon can be further strengthened to
make the ordering experience more fulfilling. It is also advantageous for Amazon Japan to
pursue this alternative because it can optimize the smartphone global value chain that exists
 in East Asian countries such as Japan. Fujita and Hamaguchi (2015) explained that this can
facilitate efficient exporting of products provided that the company has strong distribution
network in the region. Since Amazon Japan has strong distribution network and delivery
partners in East Asia, this is a better alternative in adding value to the experience of the
customers that will make existing customers be loyal and new customer be attracted to
Amazon Japan platform.

4.2. Consolidation of Corporate Social Responsibility Programs Aligned to the

Vision-Mission Statement
This alternative has the advantage of building on the existing social responsibility
initiatives of Amazon Japan and improve their value by catering the specific needs of the
Japanese employees while also bundling it in a theme up with the global standards. Dunfee
(2006) explained that bundling the CSR programs of the company may help in attaining the
obligation of the company beyond its objective of earning profit. This can contribute to the
attainment of the objective of having a more environmental and socially sustainable
operations because it consolidates a triple bottom line approach in doing the business
(Frederick, 2018).

Figure 2. Triple Bottom Line Framework

Source: https://www.researchgate.net/figure/Triple-bottom-line-performance-framework-see-
online-version-for-colours_fig11_323923095

The triple bottom line framework by Frederick (2018) can help address the company’s
concerns on the biosphere by introducing programs that help in achieving better natural capital
and sociosphere by introducing programs that help address the problems in the human capital
in Japan.

5. Implementation
To strengthen the global value chain and harness the technological innovations in Japan,
the following tasks will be implemented:

Inventory of Global
Strengthening of
Value Chain and Regional
CRM to Japanese
Analysis Distribution
Market
Partners

Introduction of
Monitoring and
Local Promotions
Evaluation
to Japanese Market

Figure 3. Proposed Action Plan 1

Value chain analysis will be conducted first by the business development team in
Amazon Japan to ensure that the steps in the global value chain are reviewed for their value to
the customers. This can also help in determining which phases can help in achieving the
objective of sustaining market leadership position among the Japanese market. The inventory of
global and regional distribution partners will be the basis of the inputs to the improved CRM by
ensuring better efficiency of order processing among its customers. The improved CRM catered
to the Japanese market will present specific partners for different products which will add
convenience to the customers and reduce the anxiety of the Japanese market. The integration
shall be done to its existing platform, Amazon Flex, that is indeed flexible to the needs of the
local Japanese customers. Tailor-fit local promotions such as bundled products, free deliveries,
and personalized packaging will also be introduced which are all conforming to the Japanese
culture of purchase. Monitoring and evaluation techniques will also be implemented by the
management team to ensure that objectives are achieved.
 In implementing the CSR consolidation program, the following measures will also be
implemented:

Activity Description Mechanism Time-Frame

Launching of Amazon Connects is Marketing 1st Quarter of 2023
“Amazon the theme of the Department
Connects” consolidated CSR
Programs of Amazon
because it connects
not only to its
customers but also to
its employees,
suppliers,
communities, and the
environment
Implementation of Local Japanese Product Development 2nd Quarter of 2023
Sustainable companies will be Department
Packaging invited to submit a
proposal for Business
sustainable Development
packaging that will be Department
integrated in the
operations of
Amazon Japan
Partnering With Instead of solely Human Resources 2nd Quarter of 2023
Unions for depending on the Department
Employee employee
Development development
programs to the H.R.
Department, this
proposal aims to
consider the inputs of
company unions
more.
Table 1. Proposed Action Plan 1
 Amazon Connects aims to achieve more environmentally and socially sustainable
operations. By implementing sustainable packaging and partnering with local unions, this
objective can be attained which will help improve the reputation of Amazon Japan as a
sustainable business.

6. Conclusion
Amazon Japan is the leading e-commerce company in Japan. However, with the intensity of
the rivalry and the growing market of Japanese online customers, the need to become more
sustainable becomes a pressing issue for Amazon Japan. This report addressed the questions
on how Amazon can sustain its market leadership position and how it can improve its reputation
as a sustainable business. The recommended measures include the optimization of the global
value chain of Amazon within the East Asian region and harness its technological innovation
through the Amazon Flex Customer Relationship Management System. It is also recommended
that Amazon will consolidate its CSR programs through Amazon Connects that implement the
sustainable packaging and improving the partnership with the local unions.
 Reference list

Amazon (2022). Amazon について. [online] About Amazon | Japan. Available at:
https://www.aboutamazon.jp/about-us [Accessed 23 Dec. 2022].

Beinchuman (2022). How Many Countries Does Amazon Operate In? The Surprising Answer.
[online] Being Human. Available at: https://beinghuman.org/how-many-countries-does-amazon-
operate-in/.

Bennett, J. (2002). Multinational Corporations, Social Responsibility and Conflict. Journal of

International Affairs, [online] 55(2), pp.393–410. Available at:
https://www.jstor.org/stable/24358177 [Accessed 12 May 2022].

Coppola, D. (2021). Topic: Amazon. [online] Statista. Available at:

https://www.statista.com/topics/846/amazon/#topicHeader__wrapper.

Dunfee, T.W. (2006). A Critical Perspective of Integrative Social Contracts Theory: Recurring
Criticisms and Next Generation Research Topics. Journal of Business Ethics, [online] 68(3),
pp.303–328. doi:10.1007/s10551-006-9016-6.

Eccles, R., Perkins, K. and Serafeim, G. (2012). How to Become a Sustainable Company.
[online] Available at:
https://www.hbs.edu/ris/Publication%20Files/SMR_Article_EcclesMillerSerafeim_77d4247b-
d715-447d-8e79-74a6ec893f40.pdf.

EcommerceDB (2021). Japan eCommerce Market - Data, Trends, Top Stores. [online]
ecommercedb.com. Available at: https://ecommercedb.com/markets/jp/all.

Filatotchev, I. and Wright, M. (2011). Agency Perspectives on Corporate Governance of

Multinational Enterprises. Journal of Management Studies, 48(2), pp.471–486.
doi:10.1111/j.1467-6486.2010.00921.x.

Fortune (2022). Amazon.com Company Profile | Fortune. Fortune. [online] 2 Feb. Available at:
https://fortune.com/company/amazon-com/.
Frederick, H. (2018). The emergence of biosphere entrepreneurship: Are social and business
entrepreneurship obsolete? International Journal of Entrepreneurship and Small Business,
34(1), p.1. doi:10.1504/ijesb.2018.10011866.

Fujita, M. and Hamaguchi, N. (2015). Supply chain internationalization in East Asia:

Inclusiveness and risks. Papers in Regional Science, 95(1), pp.81–100. doi:10.1111/pirs.12183.

Hadero, H. (2022). Group casts doubt on Amazon’s claims of reducing plastic - Japan Today.
[online] Japantoday.com. Available at: https://japantoday.com/category/business/group-casts-
doubt-on-amazon%27s-claims-of-reducing-plastic [Accessed 24 Dec. 2022].

Hofstede Insights (2022). Country Comparison. [online] Hofstede Insights. Available at:
https://www.hofstede-insights.com/country-comparison/japan,the-usa/.

HowITravel (2020). Amazon Japan | Does Amazon Ship To Japan? Yes, Here’s How. [online]
How I Travel. Available at: https://www.howitravel.co/amazon-japan/ [Accessed 24 Dec. 2022].

Ishibushi, K. and Matsakis, L. (2021). Union leaders in Japan say Amazon is weaponizing
‘performance improvement plans’ to weed them out. [online] Rest of World. Available at:
https://restofworld.org/2021/tokyo-japan-amazon-union/ [Accessed 24 Dec. 2022].

Kennedy, A. (2022). The Sustainability Gap in Southeast Asia | Accenture. [online]

WordPressBlog. Available at: https://www.accenture.com/sg-en/blogs/southeast-asia-blog/the-
sustainability-gap-in-southeast-asia-ambitions-vs-reality.

Kolk, A. and van Tulder, R. (2010). International business, corporate social responsibility and
sustainable development. International Business Review, [online] 19(2), pp.119–125.
doi:10.1016/j.ibusrev.2009.12.003.

Lertxundi, A. and Landeta, J. (2011). The moderating effect of cultural context in the relation
between HPWS and performance: an exploratory study in Spanish multinational companies.
The International Journal of Human Resource Management, 22(18), pp.3949–3967.
doi:10.1080/09585192.2011.610942.

Massive Media Inc. (2021). Consumer Demand for Sustainable Products in Asia: Successes
and challenges. [online] State of Sustainability Initiatives. Available at:
https://www.iisd.org/ssi/webinar/consumer-demand-for-sustainable-products-in-asia-successes-
and-challenges/ [Accessed 23 Dec. 2022].

Orion Market Research (2020). Japan E-Commerce Market Trends, Size, Competitive Analysis.
[online] www.openpr.com. Available at: https://www.openpr.com/news/2175650/japan-e-
commerce-market-trends-size-competitive-analysis [Accessed 23 Dec. 2022].

Peters, L. (2022). Top online stores Japan 2021. [online] Statista. Available at:
https://www.statista.com/forecasts/1218265/japan-top-online-stores-japan-ecommercedb
[Accessed 23 Dec. 2022].

U.S Customs and Border Protection (2022). Japan Free Trade Agreement | U.S. Customs and
Border Protection. [online] www.cbp.gov. Available at: https://www.cbp.gov/trade/free-trade-
agreements/japan.

Yeung, H.W.-C. (2009). Transnational Corporations, Global Production Networks, and Urban
and Regional Development: A Geographer’s Perspective onMultinational Enterprises and the
Global Economy. Growth and Change, 40(2), pp.197–226. doi:10.1111/j.1468-
2257.2009.00473.x.