Global business strategy1 Contents Introduction...........................................................................................................................................2 The ways the company responds to changes in the socio-economic and political landscape.................2 Positive and negative effects of Amazon on economic development....................................................2 Global strategies adopted by Amazon to extend the long-term success.................................................3 The role of global value chain analysis in strengthening its competitive advantage..............................4 Benefits from Global Partner Network..................................................................................................6 Ways to formulate business strategies in response to the challenges of internationalization.................7 Role of international organizations in ensuring smooth international trade amidst the devastation of COVID-19.............................................................................................................................................8 Conclusion...........................................................................................................................................10 References...........................................................................................................................................11
Global business strategy2 Introduction It has become a major concern for the managers to decide on a global business strategy as a trade-off between global incorporation and local receptiveness. The global incorporation is all about a degree to which an organization is capable of using the same products and methods in other nations. The local responsiveness is the degree to which an organization should modify their products and approaches to encounter conditions in other nations. These two dimensions result in global business strategies. This strategy can be described as business strategies affianced by the administrations functioning in an international business atmosphere and serving customers worldwide. The short-term goals behind the global strategy are to enhance routine operations of the organization whereas long term goals are to ensure growth and firmness of the organization and supremacy over the world. This report comprises the global business strategy of Amazon. The ways the company responds to changes in the socio-economic and political landscape Amazon has disrupted the way people shop. Amazon is benefitted from the political stability of the nations. It assists the company in making expansion and diversifying business in the developed nations. For instance, Amazon has been able to expand its physical stores in the U.S to complement its e-commerce business. The low unemployment is convoyed by wage growth and it fuels inflation as businesses pass on the costs to the customers. Amazon has interrupted traditional retail and its overhead costs are also suggestively lesser than other retailers. It provides Amazon an edge to weaken rivals on the prices and function on a lesser profit margin (Contractor, et al. 2019). Amazon has conducted lobbying practices to deal with the negative implications of the political factor. The company is increasing its lobbying budget in the US for almost 2 decades now. The progressing incorporation of internet and internet-linked products and services into several aspects of the lives of people has provoked advent of the cyber-crimes in various forms. But the company is struggling with cyber crimes by several measures. These measures differ from nation to nation (Ives, Jarvenpaa and Mason, 1993). Amazon is having security measures that take place at every step taken by the users while using a website or application.
Global business strategy3 Positive and negative effects of Amazon on economic development The positive effects of Amazon on economic development have been realized from the points stated below: Amazon is having positive effects on United States Jobs at the local and national level. The company is having more than offset potential cannibalization of brick and mortar retail employment. Amazon has made evolution and disruption in the retail market. It has made changes in the way people shop online and physical stores because of the increasing e- commerce (Guo, et al. 2019). Amazon has various fulfillment centers that have created various jobs. The company is also a catalyst for robust job growth. For instance, Amazon has added jobs in the transportation, utilities and warehousing sector (Johnson, 2016). Amazon’s maturation offers an enhanced buying experience, customer cost savings unknown level of convenience. It has positively influenced the economic growth of the employees of the company (Dicken, 2007). The negative effects of the company have been observed in the form of: It has been found that Amazon has demolished more jobs than it has formed. There are quite less opportunities for employment, lower wages, and uneven employment because of the dependence on temporary workers. Amazon is recently marked with the ‘stranglehold’ on the U.S. economy. As evidence from the annual report company of Amazon and its corporate website, it has been painted as a dreadful portrait due to its influence on the economy (Forsgren, 2017). Amazon has been able to disrupt traditional retail through lessening overhead costs and passing savings to the customers which have ultimately lessen the profit margins of the competitorcompanies.Thedecreaseintheprofitofcompetitorshasresultedin decreasing employee wages. It has been viewed that current unemployment rates are still low in the last decade (Adaji and Vassileva, 2017). Global strategies adopted by Amazon to extend the long-term success Amazon initiated its business as an online bookseller with the ambitions to rule the universe. With the expansion in its core footprints, the company is growing in the different segments. The company believes in developing its strategies on the things which do not change.
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Global business strategy4 Moreover, the company believes in ‘Frugality’ which means a company like to spend on the things only which are preferred by the customers. The company starts with customers and work backward. Amazon always focused on the long term, not the short term. AWS (Amazon Web Services) is one of the examples of the long-term focus of Amazon (Coe and Yeung, 2015). The leading companies such as Airbnb, Pinterest, Capital One, GE, McDonald’s and Johnson and Johnson. The global strategies adopted by the company for long-term success have been stated below: Prime as the hub of the wheel: Prime was the first edged by Amazon as an incremental enhancement in the value proposition in the way of free shipping. The company claimed of having more than 100 million subscribers of Prime. Prime is leveraged as dominant to the strategy for innovative businesses incoming the market. Fuel for small businesses: The B2b (Business to Business) process is quite troublesome. It has been alleged that Amazon seeks to govern services such as logistics, robotics, and cashless checkout. The company provides more funding to new ventures which can enhance several e-commerce services (Donders, et al. 2018). Artificial intelligence: Artificial intelligence (AI) is leading in the form of Alexa. Alexa provides unmatched access to Amazon’s super in the hole, zero-click. It has transformed shopping by offering customers the capability to replenish many obligatory supplies through verbal commands. Home delivery and supply chain logistics: The strategy of Amazon, ‘airborne fulfilment center’ enables delivery products by drone from a aircraft line device. The company commits to offer products within 48 hours (Chen, 2017). Healthcare: Amazon has made a bold move by taking entry in the pharmacy services. The company can disrupt the pharmacy industry easily with healthcare inflation. Amazon has come up with Cardinal Health and other suppliers to make a wide grasp in the medical services to the healthcare organizations (Ranasinghe, 2019). The role of global value chain analysis in strengthening its competitive advantage The value chain analysis of Amazon analyses the business activities in reviewing the way it can form a competitive advantage for itself. The value chain analysis of Amazon includes primaryandsecondaryactivities.Theprimaryvaluechainisdirectlycomprisedof
Global business strategy5 manufacturing and marketing the product to the targeted customers (Mutum, 2020). The primary value chain activities have assisted in attaining competitive advantage in the form of: Inbound logistics: The inbound logistics enables Amazon to emphasis on every facet of revolution from raw material to the final product. Some of the instances of inbound logistics of Amazon are recovering raw material, storing inputs and within dispensing raw material and apparatuses to initiate production (Pei, Wang, and Ye, 2017). Operations: The operational activities become more significant when raw material reaches and Amazon is capable enough to process the raw material into the final product and present it in the market. The operative activities of Amazona are identified as packing, machining, amassing and testing. The apparatus repair and maintenance also come under the operational category. The operations comprise manufacturing and service operations. For instance, the operations segment includes North America concentrated websites likewww.amazon.com, www.amazon.ca, andwww.amazon.com.mx. The sales under these segments have been upsurge by 33% in 2017 and 2018. Outbound logistics: Outbound logistics comprise the activities that distribute the product to the customers bypassing various mediators. The outbound logistics activities of the Amazon are warehousing, material handling, forecasting, conveying and transporting to the final decision. The fulfillment centers are part of outbound logistics. The company functions 109 fulfilment centers worldwide. Amazon is also making use of the robotic technology in a wide meanstoaccomplishthereceipt,loading,pickingandconsignmentof products.The company also attained a competitive advantage in the form of digital delivery. Such products and services can be taken directly from the Amazon website (Kalia, Arora, and Law, 2017). On the other side, Amazon has attained Whole Foods Chain in 2017. It has assisted the company in generating greater revenues. Marketing and sales: The global marketing expense of Amazon is consistently increasing in the last years has even exceeded USD 13.8 million in 2018. It comprises advertising and other promotional costs. The marketing and sale have been identified as one of the foremost sources of value in the processes. Services: Customer service has been a major source of competitive advantage. The company provides unique customer services. The customers are given the facility to contact Amazon via email, phone or social media (Wang, et al. 2020). The customers are also provided with the opportunity to know about the opportunities through the ‘selling coach program’.
Global business strategy6 On the other hand, secondary activities have a great role in managing and enabling the primary value chain activities. The secondary activities are comprised of: Firm infrastructure: The active infrastructure management of Amazon enables to optimize the value of the entire value chain. The infrastructure of the company contains activities like tackling legal matters, planning, quality management, financing and strategic management (Goel, et al. 2020). Human resource management: Active HR management enables the company to minimize modest pressure relied on pledge, inspiration, and skills of the staff. Amazon has attained its cost minimization purposes through analyzing signing and training costs (Li, Frederick, and Gereffi, 2019). Technology development: The value chain analysis of Amazon relies on technical assistance. The technological incorporation in distribution, manufacturing and marketing, and HR (Human Resource) activities require the company to realize the significance of technological advancement. Procurement: The procurement in the value chain is stated to the procedures comprised of acquiring the inputs which can range from equipment, machinery, supplies, raw material and other items required to finish the final product (Rossman, 2016). Benefits from Global Partner Network AWS Partner Network (APN) is a global partner program for technology and accessing businesses thatleverage Amazon web services to develop solutions and facilities for the customers. The Global partner network assists companies to grow and succeed. When the companiesprogressthroughAPN,itassistsinexposingmorebenefitsandprograms personalized exclusively for consulting and technology partners. APN assists companies in making, marketing and selling AWS offerings by offering not only appreciated business, mechanical and marketing assistance (Yadav and Bhatnagar, 2020). There are several APN Partners in the world and more than 90% of the fortune hundred companies are using APN partner solutions and services. There are two types of APN partners such as consulting partners and technology partners. The APN consulting partners are the professional services companies that assist all types of customers and sizes design, construct, architect, drift and sustain capabilities and applications on AWS. It quickens the journey to the cloud. These generally execute technology partner
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Global business strategy7 solutionswithprofessionalservices.APNconsultingpartnerscomprisestrategic consultancies, system integrators, agencies, succeeded service providers and value-added resellers. On the other side, APN technology partners offer hardware and software solutions that are unifiedwith theAWS cloud. The technologypartner productsare generally transportedasapparatusestowider AWScustomersolutions(Reinartz,Wiegandand Imschloss, 2019). The customer solutions can even be transported internationally through consulting partners by AWS marketplace, bundled solutions or straight from the APN technology partners. APNstrengthensthecapabilitiesofAmazontoservecustomersbetter.Amazonis concentratedonconstructinglong-termsustainablebusinessesbyassistingpartnersin constructing, marketing and selling offerings along with developing an effective cloud-based business. Moreover, Amazon partners differently, the company leads with the customers first and plan strategies to enable APN partners to offer high-quality AWS solutions and services to joint customers. It makes quite easy for the partners to find appropriate business and technical resources in constructing an effective and profitable business (Wu and Gereffi, 2018). Through APN, Amazon can attain popularity along with the greater profits. On the other side, partners can attain benefits by leveraging the AWS brand identified for customer centricity, innovation, and stride of innovation. The partners can even deliver more innovation with the consistent developing portfolio of groundbreaking AWS technologies and services. The APN programs even assist companies in highlighting expertise along with the differentiation of the business practice. Ways to formulate business strategies in response to the challenges of internationalization Amazon has been a powerhouse in the US e-commerce market since its inception. After establishing itself in the leading English-speaking e-commerce markets, Amazon has decided to look to the rest of the world, especially in the last years to expand its dominance in the new provinces. Internationalization has been key to the success of Amazon. But along with the success, the company faced significant challenges. Amazon has moved destructively to expand its footprint across the world in the last few years (Walter and Zhang, 2012). The company has even used a simple strategy to enter into the new markets by entering into the nations that are growing rapidly in terms of e-commerce adoption.
Global business strategy8 Amazon has been using launch strategy in various nations around its Kindle business. Initially,thecompanystartsbyconveyingwiththelocalbookpublishers.Oncethe agreement gets finalized, the company starts marketing Kindles and eBooks as a method to get its hold in the market. For instance, Amazon used a launch strategy while entering the Brazilian market in 2012 after making a deal with the native publishers to sell eBooks. It assisted Amazon to create its position in the Brazilian e-commerce industry, endeavored to woo cosmetics producers in the nation and even though to rent a warehouse facility near Sao Paulo earlier (Tallman, Luo and Buckley, 2018). When it comes to internationalization, Amazon’s strategy is majorly grounded onleveraging technological competences for business efficiency. The company follows a cost leadership strategy that assists the company in minimizing expenditure and maximizing profitability. Moreover, this business strategy provides maximum value to the customers by making available goods at the lowest prices in the market. Amazon makes use of optimizing titles, bullet points, and product descriptions individually for each nation. It is well known that search and purchase behavior of the customers vary from nation to nation due to various cultures and living conditions. The company can waste valuable potential if it ignores the preferences and requirements of the customers (Vieira, et al. 2018). Amazon has learned about the differences between the nations, therefore conducts a detailed content significance analysis of the product for each nation. Amazon even formulated a strategy to overcome the internationalisation challenge by striking harmony with the country's target group. It is a crucial point for Amazon country-specific particularities when it comes to the perception of products and product categories. So, the company has undertaken a quite objective approach for content optimization. The company also concentrates on good marketing and persuasively framed arguments (Sprague, 2011). Amazon also works on the creation of the nation-specific keywords. It has become quite significant for the company to deliberate each nation's individuality concerning visibility. The nation-specific modifications can be imitated by the keywords. To make a high-performance keyword set, editors make use of the autocomplete feature of Amazon’s search function. It reveals the most common search items and combinations employed by the customers.
Global business strategy9 Roleofinternationalorganizationsinensuringsmoothinternationaltradeamidstthe devastation of COVID-19 COVID-19 pandemic has disrupted trade around the world. International organizations have taken immediate measures to facilitate trade in medical supplies, equipment, and agriculture products. The availability and accessibility of the vital medical supplies and pharmaceuticals at reasonable prices have been supported by international organizations on an equitable basis whereitismorerequiredevenbyinspiringadditionalproduction.Theinternational organizationsareevenguardingagainstprofiteeringandunfairpriceincreases.The emergency measures have been designed to tackle COVID-19 and unnecessary barriers to tradehavenotbeencreatedforinternationalorganizations.Buttheinternational organizations are required to follow the export restriction made by the specific nation for export restriction on medical supplies and equipment as a precaution to the pandemic (Sahin, et al. 2020). The international organizations are consistent to form coordinated approaches and share decent practices to facilitate flows of essential goods and services. The goods made available by international organizations are just medical and essential supplies only. Although, other goods have been restricted by WTO (World Trade Organisation) during a pandemic. The restriction put during movement is temporarily useful to limit the international spread of the highly infected disease. In such circumstances, nations should perform risk and cost-benefit analysisbeforetheexecutionoftherestrictionstoassesswhetherbenefitsoffset disadvantages. The COVID-19 can be effectively addressed through timely and appropriate information. International organizations have committed to enabling the consistent flow of essential medical supplies, equipment, and agricultural products. It has been made possible by working together to offer a free, fair, transparent, non-discriminatory and stable trade and investment environment.The internationalorganizationsare holding the principleof international harmony along with deliberating the growing needs of other nations for emergency supplies and humanitarian support (Sohrabi, et al. 2020). International organizations are making sure that smooth and consistent operations of the logistics networks are serving as the backbone of the international supply chains. The ways for logistics networks have been discovered in the form of air, land freight and sea to remain open along with facilitating the vital movement of personnel and professionals across borders without deflating the efforts to avert the spread of the virus. On the other side, it is continuing to monitor and evaluate the influence of the
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Global business strategy10 pandemic on both local and international trade. Moreover, the organizations are functioning to form harmonized approaches and share decent practices to facilitate flows of essential goods and services. But the global economy is required to get ready to face the pandemic among predictions of deep recession (Van Staden, 2020). When it comes to Amazon, the company has added 100,000 jobs for meeting buyer demand and to support existing employees in pleasing orders for the vital products. Amazon has augmented pay for hourly staffs by $2/hour in the U.S,C$2/hour in Canada, and €2/hour in several European nations. Moreover, the hourly base pay has been doubled for every overtime hour worked. The employees of the company suffering from coronavirus are even provided with extra time-off and full pay. Amazon has also enhanced the capability for grocery delivery from Amazon Fresh and Whole Foods Market as fast as possible. Conclusion The global business strategy of Amazon has enhanced routine operations along with ensuring the growth and constancy of the organization and ascendency over the globe. Amazon has been disrupted the way people shop. The company is responding effectively to the changes in the socio-economic and political landscape. The negative implications of the political factors have been dealt with by Amazon through lobbying practices. When it comes to the effects of Amazon on economic development then there are more positive effects than negative effects. Amazon is having positive effects on U.S Jobs at the local and national level. The company is having more than offset potential cannibalization of brick and mortar retail employment. Moreover, small retailers can increase their business and turn into an empire over Amazon. The global strategies adopted by Amazon have been effective for long-term success. Amazon has revolutionized retail. The company starts with the customer and work backward. The global value chain has been quite effective in attaining a competitive advantage. The inbound logistics and operations assisted Amazon in attaining a competitive advantage. Amazon got benefitted from Global Partner Network by leveraging Amazon web services to develop solutions and services for the customers. Amazon even formulated business strategies as a responsetothechallengesofinternationalizationsuchasleveragingtechnological capabilities for business efficiency.
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