Introduction
The report will take an in depth look at the operations of Amazon as it strives to set up activities in France. As such, the report will generally consider the different aspects of Amazon’s business such as its competition and the nature of the market in which the company operates. The features of the overseas market that make it an attractive destination will also be considered in depth. France will be center of focus for the study.
Amazon began in 1994 as a bookseller. Over the years, the company has slowly expanded its business to other sectors (Easter, and Dave, 2017, p.1). Today, Amazon is one of the largest e-commerce companies in the world. For example, the company has expended its reach to cloud computing through its AWS platform (Bermudez et al., 2013, p.230). Furthermore, the company has also invested in television and films through its Amazon studios. Other investments by the company include consumer electronics and its international shipping business (Gershgorn et al., 2017).
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Considering that the company emerged as an online bookstore, what it has managed to achieve is remarkable. Therefore, the purpose of this report is to examine the business activities of Amazon. In essence, the report shall consider the approach undertaken by Amazon as it expands its business worldwide.
Company Introduction: Amazon
Amazon is currently one of the largest online retailers despite its humble origins as a bookstore in Jeff Bezos’ garage. By considering the company’s current reach around the globe, the reach of the company is impressive (Gershgorn et al., 2017). It is clear that the company has enjoyed significant growth in the past twenty-five years of its existence. Today, people from all over the world purchase music, books, music and other products such as movies from Amazon and its partners. Amazon’s reach continues to grow and its operations have spread to multiple countries around the globe. Enright (2016, p.6) illustrates that the company runs thirteen country specific websites and offers its Amazon Prime services to nine of the countries. Furthermore, Enright (2016, p.6) asserts that the company increased its prime membership by 51% in 2015.
Different researchers have considered the business conducted by Amazon in different countries around the globe. Wood (2014, p.1) examines the business conducted by Amazon.com in different countries. The research indicates that Amazon sells a considerably large number of articles such as apparels, automobile and other industrial parts. Other items sold by Amazon include health and beauty products, books, and games.
Amazon competes against multiple companies in the world today. For example, the largest competitor in America is eBay. eBay is still one of the largest competitors of Amazon overseas too. However, McQuillan, (2018) observes that Amazon has to contend with companies such as Cdiscount, Allegro Fnac. The prowess of Amazon has meant that these companies do not operate in a similar way to Amazon.
A SWOT analysis of Amazon would illustrate the company’s weaknesses and areas where there is a need for improvement. Essentially, a SWOT analysis illustrates the internal strategies employed by the company. The strengths of Amazon include a strong brand, its ability to earn a higher revenue from the retail business and the company’s ability to sell an extensive product mix (Greenspan, 2017). Amazon has been able to develop one of the strongest brands on the online retail market and this has helped the company expand in the recent past. The position in the market makes it easier for the company to invest in new products such as through the development of new product that are easily sold to customers (Greenspan, 2017). Amazon has the revenue to maintain its position in the retail business which means that the company will continue to maintain its position in the market.
However, there are a number of factors that could undermine Amazon’s position in the market. The limited penetration in developing market hinders the company’s position as most of the company’s revenue is sourced in developed markets. Similarly, the company has a limited brick-and-mortar presence (Greenspan, 2017). There are a number of avenues that the company can explore to retain its position as a leader in the online retail market. For example, Amazon can undertake into investing more overseas in emerging markets. Other approaches that could help the company is to increase its brick and motor presence around the globe.
Amazon Supply Chain
There are a number of factors that make France a good destination for investment. Dias (2018, p.2) asserts that there has not been a better time to invest in France. At the moment, the rate of reforms in the country make it a desired destination for investment. First, the president Emanuel Macron has a large majority in parliament which makes it easier for the government to enact reform in the country. There are a number of reforms that have been proposed by French government which include its intention to reform the labor market. Second, the government has continued to focus on reducing corporate tax rates. Red tape that often inhibits entrepreneurs from fast tracking investment have been eliminated which would increase efficiency. It is these factors that make France a destination of choice for investment.
There are a number of other factors that make it possible to invest in France. A good investment climate has resulted in a significant number of foreign companies investing in the country. The country has been well marketed around the globe which as a result attracts significant investment. In addition, the investment landscape in the country illustrates a promising landscape that can be exploited to great effect. For instance, the U.S. Department of State (2017) indicates that foreign firms produce up to one third of the country’s manufacturing output. In 2016, there was also a significant influx in foreign direct investment made to France. according to the state department, the country ranked seventh as the most desired location for Foreign Direct Investment opportunities. Furthermore, the number of foreign companies operating in France according to the U.S. Department of State (2017) was 22570.
The amount of investments by both foreign and domestic companies in France make the launch of Amazon Business a viable option for the country. For example, the foreign firms making initial investments in the country can readily benefit from the feature of Amazon Business. In essence, payments and procurement made to the company can be streamlined during this instance to make the country a profitable destination for the company.
The low level of corruption in the country also makes it a viable destination for investments. According to Transparency International (2018), France is ranked at 21 out of 180 which is relatively high. Therefore, such an environment is likely to foster an environment where business is easy to conduct. U.S. Department of State (2017) also indicates that France ranks high with the ease of doing business.
The property laws in France also offer the country offer individuals the freedom to engage in business freely. Similarly, the judiciary is stable and the rule of law is secure. In addition, France is also a well-established in Europe which should offer Amazon Business a good economy where prosperity is easy to attain.
There are a number of key features of Amazon’s supply chain that distinguish it from others developed by other companies. The components of Amazon’s supply chain include warehousing, delivery, the use of technology and manufacturing. Warehousing is one aspect of the supply chain that Amazon has managed to reinvent (Johnson, 2018). For example, the company is able to deliver any product to a consumer in any part of the globe. The company often locates most of its warehouses close to big cities and metro centers to ensure that the products are delivered on time. Mini-warehouses are also located in smaller metropolitan locations to help ensure that the services are easily accessible to business both in larger metropolitan areas and to customers who operate from smaller locations (Johnson, 2018). Warehouse are optimized to effectively serve the needs of the customer effectively.
The company has a host of different delivery systems available to the consumer. For example, Amazon provides free delivery, two-day deliveries and Prime now for consumers. The use of drones to deliver products to customers was revolutionary too. Similarly, the company has been able to partner with other companies such as UPS which demonstrates its flexibility and the many options available to customers (Johnson, 2018). In addition, Amazon has been able to effectively embrace technology with its use of Robotics to deliver services to customers. Technology helps to enhance the ability of the company to deliver produce on time (Johnson, 2018). Costs are also controlled due to the company’s ability to employ technology effectively.
With Amazon launching Amazon Business in France, these feature of efficient service that are synonymous with the services provide by the company become a feature of what the company will offer to its customers. As a result, the company should be able to compete effectively in France and establish itself in the same way it has done in the United States.
There are a number of features that distinguish the supply chain strategy enforced by Amazon from those employed by other companies. Central to the strategy by the company is its use of Amazon Prime.
The supply chain employed by the company is one facet of the company’s business that has remained the costly aspect of the business. Schmidt (2014, p.10) asserts that while the company was able to increase its sales in the amount of money spent on shipping and other logistical issues has continued to increase. The company has often relied on other forms of transport such as UPS and FedEx to move goods from one location to the next. Schmidt (2014, p.10) notes that Amazon has been successful at running a successful supply chain due to the fact that the company has owned its supply chain. For instance, the ability of the company to control the last minute of delivery has made it possible for the company to build a loyal following. Over the years, the company has been able to control customer experience. For example, Schmidt (2014, p.11) notes that the company would benefit from the use of drones which will make it possible for the company to further control customers which helps the company to develop loyal customers.
There are a number of factors that distinguish Amazon’s supply chain from those used by other companies. Kumar, Eidem and Diana (2012, p.805) illustrate that Amazon is a pure e-tailer. The company employs an EDLP pricing strategy. According to the researchers, the company enjoys the use of this model due to its ability to use the strategy to maintain its inventory successfully. Inventory management is often a large portion of most of the costs incurred by the company. A twenty-six-day cycle of the company’s supply chain is a testament to how well the company has been able to develop a successful supply chain. Furthermore, the company is able to inject more working capital to the development of its supply chain as the sources of revenue are not limited to one source. The company has also managed to curve out a unique customer segment for those it serves. In addition, different approaches are also used to serve these different groups of customers.
The company is heavily reliant on holiday sales to generate more revenue. Kumar, Eidem and Diana (2012, p.806) indicates that the company is often reliant on the fourth quarter as these is when it makes a higher profit. The ability to profit from such seasons comes from the Amazon’s ability to carry large inventory costs which when not manages effectively are likely to damage the company’s bottom line.
Strategy and Market Entry
Amazon recently launched Amazon Business in France. According to Hockett (2018), this comes at a time when the company had extended its operations to India and Japan. Amazon Business was launched in the United States in 2015. The aim of launching Amazon Business was to ensure that organization operating in countries such as France have the ability to meet their procurement needs better. Amazon’s new platform intends to help the company simplify the procurement process (Hockett, 2018). According to Amazon, the platform should be efficient.
Post (2015, p.1) asserts that the launch of Amazon Business was not a surprise. The platform was launched as a marketplace that would provide users with the convenience and selection that has become a feature of the service provided by Amazon. The company launched Amazon Business as a point where customers can find all they wanted to find. When using Amazon Business, an individual can add and remove payment methods, shipping addresses and other properties.
Various theories explain decisions made by companies to expand their business to the international community in an attempt to reach a wider market. Hennart (2001, p.127) indicates that the decision made by a multinational can be motivated by factors from within the organization and those from the outside. For example, capital flow theories can be used to explain decisions made to expend operations overseas. On the other hand, Kuşluvan (1998, p.1) asserts that both macros economic approaches can be sufficient in explaining decisions made by an organization to expand overseas. Essentially, this are actors outside the control of the organization. On the other hand, micro economic factors also explain the decisions made by the company to expand its reach to new markets.
Both macro and microeconomic reasons influence decisions made by any business to expand its reach. Therefore, these reasons inform the strategy adopted by the company. Amazon has been able to realize its success by investing significantly in different sectors of the economy. For example, the company has employed intensive growth strategies that have helped it to attain the position it currently enjoys. The business has been able to expand its reach to the international community by providing customers with e-commerce services. Essentially, this is illustrated by the decision to invest in France through the launch of Amazon Businesses.
Amazon has been able to attain its current position in the market by adopting a number of strategies. The company has adopted both generic and intensive strategies to improve its position in the market. Cost leadership is used by Amazon to maintain a competitive advantage over other companies. Amazon is able to maintain its position as a cost leader by employing approaches that ensures the company minimizes it operational cost. For example, process automation has been implemented effectively by the company to ensure that the amount of money it spends remains lower. Automation makes processes such as processing, and scheduling of purchases is easier and easily attainable.
The continuous improvement of the company’s e-commerce platform makes it easier for the company to maintain the cost leadership strategy adopted by the company. Investment in research and development are a feature of the company’s model. Research and development make it easier for the company to improve its position by optimizing how the information technology resources available to the company are utilized. A low cost of operation means that the company is able to sell products at lower costs.
The company has also invested significantly in other facets of business. Amazon also uses intensive growth strategies to obtain profit. The company engages in market development which is the company’s primary approach to growth. In the recent past, the number of countries where Amazon provides it services have slowly increased. Market penetration has also been utilized by the company to achieve its goals. In essence, the company is eager to improve the revenues it gathers from the markets it currently operates.
Amazon’s decision to expand its business to France is incline with its application of market development as a generic strategy. Sellers on Amazon’s new platform launched in France will enjoy the opportunities that are presented by making it possible for them to meet buyers locally or from the overseas.
Ethics
There are a number of issues that sellers and buyers have to contend with when using the Amazon market place. Counterfeit products are often sold by different individuals through the company’s platform (Bain, 2019). In a recent address to its shareholders, the company has admitted that it might actually have a counterfeit problem.
Amazon has a well-defined approach to dealing with counterfeits. However, the company believes that it is the responsibility of the seller and supplier to check the authenticity of the products they sell (Amazon Seller Central, 2019). The company has strict rules that prohibit any individuals from selling bootlegs or pirated copies of products. In addition, a seller is not allowed to sell products that were replicated illegally (Amazon Seller Central, 2019). In essence, the company is committed towards selling authentic products to customers.
Individuals suspected of selling inauthentic products or those that infringe on the rights of other individuals are subject to severe punishment. Fake products stored in fulfilment centers are destroyed by Amazon at the expense of the seller (Amazon Seller Central, 2019). Seller do not receive payment for their products until the buyer ascertains that the products sold to them through the company are authentic (Amazon Seller Central, 2019). Accounts that are discovered to have sold inauthentic products or used to commit fraud have their payments withheld.
There have been a number of approaches that the company has employed to deal with the challenge of counterfeit product being sold through its platform. For example, the company has continuously engaged manufacturers, content owners, vendors and sellers to develop better ways to ascertain the authenticity of products sold by customers (Amazon Seller Central, 2019). For example, the company has been able to conduct reviews of products and engaged in actively baring these products from its marketplace. The company supports the prosecution of the individuals who sell inauthentic products on its market place. sellers are also exposed to other penalties such as fines and other civil liabilities in case one is caught. Often the civil liabilities are incurred in terms of fines paid to right holders and for the damage incurred.
Conclusion
Amazon is currently one of the largest online retailers despite its humble origins as a bookstore in Jeff Bezos’ garage. The company’s reach around the globe is impressive considering tis humble roots. Expansion has been as a result of investments in different locations around the globe which have boasted the company’s profile.
The decision by Amazon to launch Amazon Business in France came at a time when the company had been pursuing the expansion of the company. For instance, the company had extended its operations to India and Japan before embarking on France. Amazon Business would ensure that organizations operating in countries such as France have the ability to meet their procurement needs better.
There are a number of factors that make France an ideal location for investment. For example, at the moment, the rate of reforms in the country make it a desired destination for investment. There are a number of reforms that have been proposed by French government which include its intention to reform the labor market. Similarly, the French government has continued to focus on reducing corporate tax rates. In addition, red tape that often inhibits entrepreneurs from fast tracking investment have been eliminated which would increase efficiency.
Amazon customers have to contend with a few issues. Counterfeit products are often sold by different individuals through the company’s platform. In a recent address to its shareholders, the company has admitted that it might actually have a counterfeit problem. The company has a well-defined approach to dealing with counterfeits. However, the company believes that it is the responsibility of the seller and supplier to check the authenticity of the products they sell.
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