INTERNATIONAL BUSINESS ASSIGNMENT

SECTION – H, SEMESTER – 4

HARSHINI AGARWAL
22BC503
B.Com (Hons.),
SRCC , University of Delhi

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 AMAZON GOES GLOBAL 2020: CASE STUDY
Q. PESTEL and SWOT Analysis of the countries/regions in which Amazon
entered. What were the common aspects in the economies in which Amazon
entered?
SWOT ANALYSIS

STRENGTH WEAKNESS
● Brand Recognition ● Easy to copy business model
● Innovative Technology ● Diverged its focus from its core
● Global Presence business of online book sales
● Flexible and Simplistic system ● Not able to reduce expenses due to
● Distinctiveness, cost leadership, and free shipping and low-profit margin
focus ● Single focus on e-commerce
● Top-of-the-line awareness of buyers ● High dependence on third-party sellers
● Excellent distribution and logistics ● Regulatory and Data Security Risk
skills

OPPORTUNITY
● Acquisitions and Partnerships
● Own payment gateway to reduce
security concerns and increase profit
margin
● Own brand products
● Expand in new emerging markets
● Diversification of Services rather than
just being a third-party seller.
THREAT
● Regulatory Challenges
● Logistical Disruptions
● Rapid changes in technological
environment
● Cybercrime such as hacking and
identity theft.
● Cost leadership strategy which has
major backlash.
● Online and offline frauds.

PESTEL ANALYSIS
United Kingdom, Germany, and France – Western Countries

Parameters

Political
- UK: Political stability, active citizenry in democracy.

- Germany: Strong alliances with France and other EU countries, NATO,

OECD, G8, G20, World Bank, IMF.

- France: Good relations with the UK, influential presence in the Middle
East, some controversial foreign policies, overall political stability.

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Economic
- UK: 6th largest economy, highly developed market-based economy, a
leading financial center in London.

- Germany: Healthy job market, low unemployment rate, excellent working

conditions.

- France: Highly developed and diversified economy, excellence in

cosmetics, luxury products, automotive, aerospace, railway industries.

Social
- UK: Historically influenced by social class, multicultural population,
diverse market offerings.

- Germany: High quality of life, pluralism of lifestyles, cosmopolitan

society.

- France: Modern country, famous for cuisine, fashion, culture, most visited
tourist destination.

Technological
- UK: Hub for financial and technological institutions, frequent
development of new technologies.

- Germany: 5th best technologically advanced country, leader in medicine,

research, infrastructure, military technology.

- France: Technologically advanced, remarkable history in science, IT,

space technology.

Environmental
- UK: Various initiatives for environmental awareness, challenges include
water and air pollution.

- Germany: Challenges include water and air pollution, acid rain, emissions
from industries.

- France: Challenges include air and water pollution, natural disasters,

household waste, noise pollution.

Legal
- UK: Advanced legal system, a strong tradition of civil liberties, leader in
human rights.

- Germany: Open approach to business establishment regardless of

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 nationality.

- France: Independent judiciary, divided court system (civil, commercial,

criminal courts).

India, Japan and China– Asian Countries

Parameters

Political
- India: Largest democracy, relatively stable political environment, dispute
with Pakistan over Kashmir.

- Japan: Constitutional monarchy, post-war pacifist constitution,

considerable role in international community, major aid donor.

- China: Powerful country, permanent member of UN Security Council,

stable political environment, lack of political freedom is a concern.

Economic
- India: One of the largest economies, domestic market offers numerous
opportunities for organizations.

- Japan: 3rd largest economy, 2nd largest in Asia, member of G7, G20,
APEC, ASEAN, mixed economic system.

- China: 2nd largest economy by nominal GDP, largest on a purchasing

power basis.

Social
- India: Multi-ethnic, multi-lingual, multi-religious, gigantic consumer
market, population over 1.4 billion.

- Japan: Social challenges include aging population, sinking birth rate.

- China: Most populous country, population over 1.45 billion, massive

market for consumer products, high literacy rate.

Technological
- India: Key destination for IT outsourcing, advanced IT infrastructure,
highly skilled workforce.

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 - Japan: Technologically advanced, pushing innovation and creativity.

- China: Vision to be global leader in science and technology, emphasis on

entrepreneurship and innovation.

Environmental
- India: Faces environmental challenges such as air and water pollution,
floods, resource depletion, loss of biodiversity.

- Japan: Relatively clean and environmentally responsible, but faces

challenges like waste management.

- China: Rapid economic development has led to severe environmental

impact, including pollution, deforestation, climate change, biodiversity loss.

Legal
- India: Destination for foreign direct investment, various options for
business setup.

- Japan: Mandatory registration for employee insurance, laws regulating

business and employment practices.

- China: Laws regulate labor standards, remuneration, benefits, disputes,

administered through Acts and regulations.

The common aspects in the economies in which Amazon entered are as follows-
1. Globalisation and Digitalisation: All these countries have been impacted by globalisation
and the rise of digitalisation. Amazon's entry signifies the increasing trend of e-commerce
and the transition to online shopping across these nations.
2. Urbanisation: Major cities in India, China, Japan, UK, Germany, and France are hubs of
economic activity and technological advancement. Amazon tends to target urban areas
initially due to the concentration of population and purchasing power.
3. Regulatory Environment: While regulatory environments vary, all these countries have
regulations governing e-commerce, consumer protection, taxation, and competition. Amazon
has to navigate these regulations and ensure compliance in each market it enters.
4. Technological Infrastructure: Developed countries like the UK, Germany, France, and
Japan boast advanced technological infrastructure supporting e-commerce. Even in emerging
economies like India and China, there has been significant progress in digital infrastructure,
facilitating Amazon's operations.

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5. Competition: Each of these markets is competitive, with local players and international
competitors vying for market share. Amazon faces competition from both local e-commerce
platforms and global giants in each country it enters.
6. Logistics and Supply Chain: Efficient logistics and supply chain management are crucial
for Amazon's success in all these markets. While the infrastructural landscape may vary,
there's a common need for reliable transportation networks and distribution channels.
7. Marketing Strategies: Amazon adapts its marketing strategies to resonate with local
consumers while maintaining a consistent global brand image. This includes localized
advertising, promotions, and partnerships tailored to the preferences and cultural nuances of
each market.

Q. What were the cultural dimensions and commonalities in the

countries/regions in which Amazon entered? Modes of Entry in the areas in
which Amazon entered.

Cultural Commonalities:
1. Consumer Preferences: Despite cultural differences, there is a growing preference for
convenience, variety, and competitive pricing across these countries. This reflects a global
trend towards consumerism and the adoption of Western products and services.
2. Cultural Adaptation: While cultural norms and consumer behaviors differ, there's a global
trend towards consumerism and the adoption of Western products and services. Amazon's
brand image and customer-centric approach resonate with consumers across different
cultures.
3. Work Culture: Despite cultural differences, there are commonalities in work culture trends
such as a focus on innovation, efficiency, and customer satisfaction. Amazon's corporate
culture, characterized by a strong work ethic and customer obsession, aligns with these
trends.
4. Technological Advancement: Countries like the US, UK, Japan, and Germany are known
for their technological advancement and innovation. This technological readiness provides a
conducive environment for e-commerce platforms like Amazon.
5. Environmental Awareness: Increasing environmental awareness and concerns about
sustainability are prevalent across these regions. Companies like Amazon are under pressure
to adopt environmentally friendly practices and reduce their carbon footprint, reflecting
broader societal values regarding environmental conservation.
6. Diversity and Multiculturalism: Many of the countries where Amazon entered, such as
India, the UK, France, and the US, are characterized by diverse populations with multiple

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ethnicities, languages, and religions. This diversity influences consumer preferences, market
dynamics, and business strategies.

MODES OF ENTRY

Country Entry Mode Competitors Market Share

UK Acquisition of Bookpages.co eBay, Tesco plc 30.8% (2018 )

Germany Acquisition of ABC eBay 48.3%

Bucherdienst/Telebuch.de

France Launch of an online store Casino Gulchard - 16.6%

Perrachon

Japan Launch of an online store Rakuten 26.9%

China Acquisition of Joyo Ltd. Alibaba 0.2%

India Acquisition of Junglee.com Walmart 35.7%

Q. What would be Amazon’s next step in its international expansion? Would the
company focus on growing in existing markets or pursuing new market
opportunities? What lessons did it learn from its journey so far? In addition,
how would Amazon deal with the ramifications of unexpected global events
such as the outbreak of the novel coronavirus that caused COVID-19, which
started late in 2019?
Amazon's response to the coronavirus crisis showcases its ability to adapt and thrive amid
adversity. Despite facing significant challenges, including supply chain disruptions and labor
issues, Amazon emerged stronger, benefiting from surging online sales during the pandemic.
The pandemic accelerated the shift towards e-commerce, with Amazon becoming the go-to
retailer for many consumers seeking essential items and household goods. The company's
record sales during the second quarter underscored its essential role in meeting customer
demand during the crisis.
However, Amazon's success didn't come without hurdles. The sudden surge in demand caught
the company off guard, leading to delivery delays and inventory shortages. Amazon struggled

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to maintain its two-day delivery promise and experienced difficulties in stocking high-
demand products like hand sanitizer and paper towels.
CEO Jeff Bezos acknowledged the unprecedented challenges posed by the pandemic,
emphasizing the company's commitment to adaptability and durability. Amazon prioritized
investments in safety measures for workers and implemented numerous process updates to
mitigate virus transmission in its warehouses.
Despite facing criticism over its treatment of warehouse workers, Amazon took steps to
enhance safety protocols and ramp up testing for COVID-19 among its employees. However,
the company continues to face scrutiny and probes into its labor practices by authorities in
several states.
Looking ahead, Amazon's pandemic-fueled growth trajectory is expected to persist, with
analysts forecasting record-breaking revenue for the company in the fourth quarter. As the
company prepares for upcoming shopping events like Prime Day and the holiday season, it
remains focused on addressing ongoing challenges and maintaining its position as a dominant
force in e-commerce.
In summary, Amazon's ability to navigate the coronavirus crisis and emerge stronger
underscores its resilience and adaptability as a global leader in retail. Despite facing
formidable challenges, the company's strategic investments and commitment to customer
satisfaction have solidified its position as an essential service provider and a key player in the
evolving landscape of online shopping.

Q. What opportunities and challenges would the COVID-19 pandemic bring to

digital businesses- Amazon in particular? What might be the implications for
Amazon’s future globalization activities? Moving forward, how could Amazon
maintain its global leadership?
The COVID-19 pandemic has presented both opportunities and challenges for digital
businesses like Amazon, and its implications for future globalization activities are significant.
Here's a breakdown of the opportunities, challenges, and strategies for maintaining global
leadership:
Opportunities:
1. Accelerated E-commerce Adoption: The pandemic has accelerated the shift towards e-
commerce, with more consumers turning to online shopping for essential goods and services.
This trend presents a significant opportunity for Amazon to capitalize on increased demand
for its platform and services.
2. Expansion of Digital Services: With more people working and socializing online, there's a
growing demand for digital services such as streaming, cloud computing, and online
collaboration tools. Amazon, with its diverse portfolio of digital offerings including Amazon

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Web Services (AWS) and Prime Video, can leverage this trend to expand its digital footprint
globally.
3. Strengthening Supply Chain Resilience: The disruptions caused by the pandemic
highlighted the importance of building resilient supply chains. Amazon can invest in
strengthening its supply chain infrastructure, leveraging technology and data analytics to
improve inventory management, forecasting, and logistics operations.
Challenges:
1. Operational Challenges: Amazon faced operational challenges during the pandemic,
including supply chain disruptions, delivery delays, and workforce issues. Balancing the need
to meet increased demand while ensuring the safety and well-being of its employees remains
a significant challenge for the company.
2. Regulatory Scrutiny: The pandemic has heightened regulatory scrutiny on tech giants like
Amazon, particularly regarding labor practices, antitrust concerns, and data privacy issues.
Compliance with evolving regulations and navigating regulatory complexities in different
markets could pose challenges for Amazon's global expansion efforts.
3. Competitive Landscape: Amazon faces intense competition from both established players
and emerging rivals in various markets worldwide. Staying ahead of competitors and
continuously innovating to meet evolving customer needs are critical for maintaining market
leadership.
Implications for Future Globalisation Activities:
The COVID-19 pandemic is likely to reshape Amazon's future globalization activities in
several ways:
1. Market Expansion Opportunities: The increased adoption of e-commerce and digital
services globally creates new market expansion opportunities for Amazon. The company may
prioritize entering untapped markets with growing internet penetration and consumer demand
for online shopping.
2. Focus on Supply Chain Resilience: Amazon may place greater emphasis on building
resilient supply chains and investing in local infrastructure to mitigate future disruptions. This
could involve expanding fulfillment and distribution networks, partnering with local
suppliers, and leveraging technology for supply chain optimization.
3. Regulatory Compliance and Risk Management: Amazon will need to navigate regulatory
challenges effectively to expand its global footprint. This may involve proactively engaging
with regulators, implementing robust compliance programs, and adapting business practices
to comply with local laws and regulations.

Strategies for Maintaining Global Leadership:

To maintain its global leadership position, Amazon could consider the following strategies:

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1. Customer-Centric Innovation: Amazon should continue to focus on delivering exceptional
customer experiences through innovation and personalization. This includes enhancing
product offerings, improving delivery options, and leveraging emerging technologies to
anticipate and meet customer needs.
2. Investment in Talent and Technology: Amazon should invest in recruiting top talent and
developing cutting-edge technology capabilities to drive innovation and operational
excellence. This includes investments in areas such as artificial intelligence, machine
learning, and robotics to enhance efficiency and scalability.
3. Sustainability and Corporate Responsibility: Amazon should prioritize sustainability and
corporate responsibility initiatives to build trust with customers, employees, and stakeholders.
This includes commitments to environmental sustainability, ethical business practices, and
social responsibility initiatives that contribute to positive societal impact.
Overall, navigating the opportunities and challenges presented by the COVID-19 pandemic
requires a strategic and agile approach from Amazon. By focusing on customer-centric
innovation, supply chain resilience, regulatory compliance, and sustainable growth, Amazon
can maintain its position as a global leader in the digital marketplace.

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