Amazon Analysis: Business Growth, Market Entry Strategy, and Strategic Issues

This report discusses the overall business growth of Amazon, its market entry strategy in China, and strategic issues faced by the company. It also explores new global strategies and external considerations in selected countries. The report provides insights into the implementation plan and strategy results of Amazon.

Running head: AMAZON ANALYSIS
AMAZON ANALYSIS
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Author Note:

1AMAZON ANALYSIS
Part 1.
1. The aim of this report is to discuss the overall business growth of the international e-
commerce company Amazon. The company has an international shipping feature to
reach more than 10 countries of the world. To discuss international growth pattern,
Amazon has the key strategy to get closer to the customers so that it can become more
competitive in the field of e-commerce. Amazon has an increasing business
differentiated by geography with new feature sand services exclusive to the particular
geographical areas. The net income of the company in 2018 is 10.073 billion USD
and total assists is 43.549 billion USD, global net revenue of the company is more
than 200 billion USD (see appendix 2) (Richter, 2019). The net sales of amazon in
2018 is 232 billion USD which makes it the most valuable grab in the world. In
discuss business segments by geography amazon’s annual sales in the US is 160.15
billion USD, 19.88 billion USD in Germany, 14.52 billion USD in the UK, 13.83
billion USD in Japan and 24.51 billion USD in the rest of the world (see appendix 3)
(Richter, 2019). In the North American region, the company has acquires more than
141 billion USD as the annual net revenue and internally 65 .87 billion USD. The
AWS acquired 25.66$ USD in the last annual year (see appendix 4) (Richter, 2019).
2. Market entry strategy in China: along with Japan, Germany, UK and USA, the Asia
pacific region, the company has been growing its business sharply. The company is
operating in the 12 important markets including Australia, China and India. Along
with china, in the Indian subcontinent the company is moving to capitalize $ 13
billion in the Indian online retail sector when Amazon had invested in the 2 billion
USD for expanding the operations there.

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Industry-based considerations: the company had entered the market of china by the
process of acquiring Joyo in 2004. It was the biggest online book seller in the country.
This company was rebranded as Amazon China in 2011.however, the company as
successfully grew up in the market of the USA from book selling to e-commerce it
failed to do so in China. In this country, the company attempted to fit the same
business model as it had in the US. In China, the company faced high competition
with Alibaba, the most popular e-commerce company in the country (Hbr.org. 2019).
Therefore, the entry mode as acquisition did not give amazon opportunities to grow
more.
Resource-based considerations: resources are the assets of the organization that call
upon the competencies of the organization. The physical capabilities included
products, patents, warehouses, customer database and the technology infrastructure.
In this case, the company had gained support from the acquired organization in terms
of warehouses, customer database and employees ready from Joyo. On the other hand,
patents and products of the big brand like Amazon was supportive of its growth in
China.
 The specific ability offers value to the customers. For example, the customers
are ready to pay for the one day delivery of the customers.
 The company was not easily possessed by the competitors in the market place.
Hence the rarity of the company’s capability was much higher in the Chinese
market.
 The company’s product and services was quite imitable by the other
competitors in china. This is due to the fact that the company did not have any
unique product to offer but only sold the books published by others and later

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started to sell different household and necessary products collecting from the
production houses.
 The risk of non-substitutability was low for Amazon at the time of entering
the market of China so that competitors could not replace it.
3. Overall justification
The largest e-commerce company of the world Amazon does not seek natural
resources nor for innovation. This is due to the fact that the company one has to sell the
products rather than producing any. Amazon’s only product is Amazon Echo which was
launched in 2014. Hence it was not present in 1998 when Amazon first entered the Chinese
market through Joyo. Therefore, the product innovation was not needed in the market. The
company only needed market seeking, efficiency seeking strategic goals.
The main strategic goal of the firms while entering in the market of China is to
acquire the huge lucrative market. China has the highest population and second largest
economy of the world therefore, the company had to penetrate this market as early as
possible. This market seeking strategic goal of Amazon had created way for it to enter the
market of China despite of having a high density of competition (Laudon & Traver, 2016). In
addition to this, the company had also enter the market of China for seeking efficiency. The
largest population not only provided the scope for customers but also the skilled and efficient
labors. This enabled the company to provide its services within a desired framework of time
and more easily.
This choice of location was effective but the company did not get the location specific
advantage as it could not compete with the Alibaba, the pioneer of e-commerce in the
Chinese market. Another cause of this failure is related to the US style of management and
business model that it applied in Chinese market (Gaus, 2019). Therefore, the company may
change the business model and culture aligned with the expectation of the Chinese market.

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The timing of entering the Chinese market was not appropriate. Amazon incumbent in
the market as Alibaba was the pioneer and had a huge market share in the Chinese market
already.
As mentioned above, the company while entered the market of China had the support
of the already exiting set of organizational base ready by Joyo. Hence the industry based
perspective was right in the case of Amazon.
The acquisition strategy was not appropriate in the process of Amazon’s entry to
China. It could have started a joint venture to apply ownership, location, and internalization.

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Part 2.
1. Strategic issues:
Amazon is concerned about three main issues which relates to keeping up the e-
commerce growth, handling competition in the big markets and balancing the investments in
comparison to profits. The company’s strategic issues is relating to the growing market along
with growing performance of the competitors like Alibaba, eBay and Flip kart.
2. New global strategies
Amazon will be focusing on the diversification method in Indian market and Australian
market. The trail-blazing web merchant in the global market has achieved a huge share of
online music, book and video-retailing market. It is leading its rivals in the sections of
delivery speed as well as reliability by offering an exceptional interface. A huge number of
companies have started to move towards the e-marketing business for selling their own
products as well as services in the international markets. This is why they are getting attracted
two more consumers for increasing their market shares step however there are limitations of
this internet business strategies where the companies face difficulties (Thecasecentre.org.
2019). The E-Commerce giant Amazon therefore needs to enhance diversification process so
that it can reach to all level of customers in every country especially Australia and India. This
is global strategy of diversification will allow the company to minimize their risk of loss,
reserve capital and generate returns. Product diversification process will be effective for
Amazon as its capital among different investment will be spread and it will not to be Reliance
upon single investment for all the returns. This will enhance the variety of products and will
be including all the products available for the customers of India and Australia according to
the relevance in the market.
3. External considerations in the selected countries:

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The external situation of the market put huge responsibility on the companies. Similarly
being a global organization from Amazon need to be bothered about the politics, culture and
economy of the market which it is expecting prosperous future. In the case of India, the
culture of the nation can affect the organizational culture as Amazon follows the
organizational culture of the USA which is it’s headquarter. This can never match the
Expectations and technicality of the Indian employees within the organization. It can be a
barrier for the production and service of the company. The political situation of India is
however stable but the corruption level in the higher level of politics is huge (Kumar & Sethi,
2016). However India is being considered as an emerging market where the government is
supporting the global companies to use its natural resources, implies and the huge market.
These can be beneficial for Amazon to operate in India. In the case of Australia the
organizational culture being single, Amazon will not face any issues. The political situation
of Australia is stable and corruption less. Both culture as well as political situation of
Australia has been in support of the growth of Amazon. The main issue Amazon main face in
Australia is the economic crisis resulted from the trade war between China and the USA.
Amazon however has created a good brand image in Australia with no other competitors to
win the market (Amazon.com.au. 2019).
Five forces analysis:
According to porter’s five forces analysis the competitive rivalry in the case of
Amazon is high. As mentioned before, more competitors like Alibaba, Baidu, Flipkart and
eBay are trying to capture the global market and offering the consumers more variety of
products and customizing there services according to the need of the market. The bargaining
power of the buyers is also a strong force in case of Amazon figures the switching cost is not
very high. The suppliers bargaining power is moderate for Amazon because the company
sells the products of different brands therefore the suppliers cannot bargain with Amazon.

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Along with this the threat of substitute products for substitution is hi because Amazon does
not have own product except Echo (Amazon.in. 2019). Therefore the customers can buy the
same products from another company when the gate those in less price. The threat of new
entrants in this industry is not so alarming because it needs a huge investment to give
competition to the online retail company like Amazon.
4. Internal considerations:
As Amazon has presence in most of the developed and developing countries in the world
which has given it the scope for creating brand image in every market (Akter et al., 2016).
With changes of time and need of the customers, the company has brought changes in its
structure, invested more in technology and developed it resources. In order to implement the
new Global strategy in both India as well as Australia the company needs full support of
technology. This is due to the fact that Amazon largely depends upon the online business
quotes where the customers get the chance to select there needed items and get delivered by
Amazon there for technology in both production as well as servicing is needed to be
upgraded. It is obvious that Amazon will be needing resources for diversification of its
products and services in the two countries (Forbes.com. 2019). It will be using the local
employees and utilize their skills properly. Despite the fact that India and Australia have two
different organizational culture but the company needs to follow the method of localization of
its services and recruitment. This will take time for 3 years so that all the needed changes can
be implemented properly in both the selected countries.
5. Implementation plan:
Aim Action Time
Stakeholders involvement Conference to plan and development One year
Alternative products Serving need for changes and
demonstration of alternative services in
One and half year

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two or three areas
Policy making Develop and propose policies code
changes for product diversification
Two years
Evaluate plan Taking feedback from the stakeholders
main customers for evaluation
Third year
6. Strategy results of amazon will be found in the appendices from appendix 7 to 10 that
includes investment required to undertake your strategies, the expected financial
payoffs in terms of growth or earnings, NPV, the discounted cash flow impact and
five years financial projections (Amazon.com, Inc. - IR. 2019).

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References:
Akter, S., Wamba, S. F., Gunasekaran, A., Dubey, R., & Childe, S. J. (2016). How to
improve firm performance using big data analytics capability and business strategy
alignment?. International Journal of Production Economics, 182, 113-131.
Amazon, E. C. (2015). Amazon web services. Available in: http://aws. amazon.
com/es/ec2/(November 2012).
Amazon.com, Inc. - IR. (2019). Annual reports, proxies and shareholder letters |
Amazon.com, Inc. - IR. Retrieved from https://ir.aboutamazon.com/annual-reports
Amazon.com.au. (2019). Amazon.com.au: Shop online for Electronics, Apparel, Toys,
Books, DVDs & more. Retrieved from https://www.amazon.com.au/
Amazon.in. (2019). Online Shopping site in India: Shop Online for Mobiles, Books, Watches,
Shoes and More - Amazon.in. Retrieved from https://www.amazon.in/
Forbes.com. (2019). Why India Is Crucial To Amazon's Massive International Expansion
Plans. Retrieved from
https://www.forbes.com/sites/greatspeculations/2017/11/28/why-india-is-crucial-to-
amazons-massive-international-expansion-plans/#7ec3150d464d
Gaus, A. (2019). Amazon's 5 Biggest Challenges in 2019. Retrieved from
https://www.thestreet.com/technology/amazon-key-challenges-for-2019-14825146
Hbr.org. (2019). Why Western Digital Firms Have Failed in China. Retrieved from
https://hbr.org/2018/08/why-western-digital-firms-have-failed-in-china
Kumar, R., & Sethi, A. (2016). Doing business in India. Springer.
Laudon, K. C., & Traver, C. G. (2016). E-commerce: business, technology, society.
Richter, F. (2019). Infographic: Amazon's Surprisingly Diverse Revenue Base. Retrieved
from https://www.statista.com/chart/15917/amazon-revenue-by-segment/

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Thecasecentre.org. (2019). Amazon's Market Entry Strategies in Australia. Retrieved from
https://www.thecasecentre.org/main/products/view?id=147199
Appendices:
Appndix 1.
Appendix 2.

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Appendix 3.
Appendix 4.

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Appendix: 6

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Appendix 7.

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Appendix 8.

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Appendix 9.

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Appendix 10.