International Business Analysis Essay

In 2018, Amazon’s net sales were USD 232 billion, and the company was one of only two publicly traded firms to reach USD 1 trillion market capitalization. The United States e-commerce giant has come a long way rising from a simple online bookseller store to becoming one of the most valued firms globally. Today, online shopping is conventional in many markets worldwide both in the established and emerging ones. Amazon offers its shoppers a wide range of shopping options ranging from apparel to electronics and even groceries. In effect, the success of the US-based firm can be attributed to the international expansion strategy that has seen it transform the retail industry and become a market leader in many countries. Nonetheless, the success of the retailing company has not been evident in all established markets, for example, a nation such as China has not been receptive to Amazon and powerful competitors have made it difficult for the online retailer to penetrate the market.

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  • Question 1: Reasons why Amazon considered international expansion and is the strategy a key success factor in the online retail industry.

The primary reason Amazon considered international expansion was to diversify their customer base and to allow quality service delivery to their consumers. After entering the e-commerce business in 1994, the online retailer saw huge potentials with the growth of the internet around the same period . Between the periods of 1994 and 2012, the company experienced dramatic growth making it the most prominent retailer worldwide. In effect, the company considered international expansion because there were lucrative markets in Europe, Asia, and South America that were not yet explored . Furthermore, Amazon was necessitated to expand because of the increasing threat of competitors who would acquire their market share in critical economies globally. Arguably, international expansion is essential in the online retailing market because the competition is stiff and there are new entrants to the market every day. Therefore, global placement is critical to ensure that the company maintains its market share.

  • Question 2) Why did Amazon Choose the United Kingdom as its first foreign entry?

The United States and the UK have many similarities regarding consumer patterns, foreign investment regulations, and GDP. Therefore, for Amazon, it was a less risky choice first to explore a similar market that has similar consumer pattern compared to other countries such as Canada and Australia. Besides, the country has a well-developed infrastructure system giving the company faster and efficient service delivery of products and services . Moreover, the United States and the UK share a similar culture, so the company efficiently replicated their domestic strategy to penetrate a foreign market which was more accessible and less risky for the online retailer.

  • Question 3) What Strategies did Amazon use in the United Kingdom?

One of the most common strategies used by multinational companies to penetrate new markets is by partnerships and acquisitions. Amazon entered the United Kingdom in 1998 by acquiring, the largest bookseller in the country (Ruddick, 2013, par.13). This strategy allowed the company to continue working with an established infrastructure system instead of starting from scratch which would have eventually been challenging for the company. For this reason, Amazon started by selling books and later expanded to new categorize while understanding the market needs of the specific market. The strategy made sense because establishing a new brand in a foreign economy may be difficult considering the strange dynamics that the company may face. Hence, the acquisition of offered the online retailer quick access to the customers and is a faster penetration strategy compared to other methods.

  • Question 4) Why did the company choose to enter Japan after the UK and Germany?

While examining the reason why Amazon choose to enter Japan’s market after the UK and Germany, various factors are evident. First, the cultural differences between the United States and Japan are profound; therefore, it was risky to venture into another country that has distinct differences to the mother country. Furthermore, the administrative distance was also a challenge . As a result, Amazon decided to establish their pilot project closer to home so they can monitor operations easily to timely meet customer’s expectations.

  • Question 5) What strengths did Amazon Use in Japan and did they make Sense?

While penetrating the Japan market, Amazon relied on their strength to adapt to new markets by mergers and acquisitions. The merger between merger and whole foods in Japan made sense because it offered new competitive advantage despite both being in different industries (Boss, 2017, par.6). Nevertheless, Amazon was able to provide its Japan consumers a wide range of products including organic products.

  • Question 6) Was there any patterns across Amazon’s international entries?

Notably, the most common strategy Amazon used while penetrating new markets was the ability to acquire and merge with existing businesses to faster enter foreign territories. The strategy is most efficient in open markets as it allows the company to use existing infrastructures while familiarizing themselves in the new countries . Furthermore, the company also studied consumer patterns and offered the best retail prices for products with faster delivery of items, therefore, gaining trust from their clients.

  • Question 7) Recommendations for Amazon’s international expansion

Amazon’s international ventures have been hugely successful. However, in some markets, for example, China the company has failed to penetrate the market. For this reason, the company should focus on becoming partnering with successful competitors such as Alibaba which has had profound success in Asia. Additionally, since the company has a reputable brand, it should focus on efficient product and service delivery rather than new expansion plans. All in all, Amazon must consider closing its less successful international operations and focus on entering emerging markets, for example, the African market which is a promising market for Amazon Inc.

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