International Business: Amazon's Entry Strategy in Australia Market

This report examines how a Multinational Enterprise (MNE)'s entry into developed markets is perceived within the host country, focusing on Amazon's entry into Australia. It reviews existing literature on MNE entry modes, highlighting the importance of understanding the host country's culture, technology, and market dynamics. The study explores various factors influencing market entry decisions, such as the firm's assets, risk management strategies, and the competitive landscape. It references numerous studies that analyze different aspects of international business, including the choice of entry mode, the impact of institutional environments, and the role of local assets. The discussion emphasizes the development of research on MNE entry modes and the importance of informed decision-making for organizations expanding into new destinations, considering factors like potential market diversity and scope.

Running head: International Business Management
International Business Management
Name of the Student: Amit Verma
Assessment: Assignment 1
Name of the University: Auckland University of Technology
Student ID: 17976607

1
International Business Management
Research Question
How is Multinational Enterprise (MNE) entry into developed markets perceived within the
host country: The case of Amazon's entry into Australia.
Introduction
International business transactions are associated with varied societal value systems
over different national borders. After a business settles for the decision of foreign market
entry, the element of the culture of the host country comes into play. Besides this, other
aspects such as technology are also considered and the influence that the MNE has on the
market performance within the host country. The general outlook of the host country will
always influence the decision that the organization makes regarding its mode of entry. The
presented topic is worth researching since it provides an insight about how MNEs can utilised
their local assets as resources to obtain a competitive advantage in the new international
market. Having in mind that the firm is seeking to expand into a new international market for
the first time, settling for the most appropriate mode of entry is regarded as the most
important factor of consideration in that it is directly linked to the survival and
competitiveness of the business within the new destination. The presented research topic is
important to policy makers since it outlines the most favourable forms of market entry modes
based on the international location.
Summary Table
Reference Purpose of the
Study
Research
Approach
Key Findings
Blomkvist, K., Kappen, P., &
Zander, I. (2010). Quo vadis? The
entry into new technologies in
advanced foreign subsidiaries of the
multinational enterprise. Journal of
International Business
Studies, 41(9), 1525-1549.
doi:10.1057/jibs.2010.22
The purpose of
the study is to
investigate the
longitudinal
patterns utilised
by advanced
foreign
subsidiaries
when entering
into
Repeated
events
analysis.
The study reveals
that more firms are
continually entering
into new
technological
international
markets resulting in
the evolution of
technological
capabilities of the
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technological
market which
is new to the
multinational
organisation.
host countries.
Brouthers, K. (2012). A
retrospective on: Institutional,
cultural and transaction cost
influences on entry mode choice
and performance. Journal of
International Business
Studies, 44(1), 14-22.
doi:10.1057/jibs.2012.23
The major
purpose of the
presented study
is to explore
the entry mode
performance
and the benefits
associated with
the
performance of
various
theoretical
models of
international
entry.
Secondary
research
methodology.
The establishment
of prescriptive tools
for managers is
important since it
enhanced the entry
mode decisions of
firms, resulting in a
better performance
in the new
destination.
Buckley, P., & Casson, M.
(2010). The Multinational
Enterprise Revisited (1st ed.).
London: Palgrave Macmillan.
The authors of
the presented
book seek to
outline the
major aspects
related with the
future of
MNEs.
Secondary
research
methodology
exploring the
works of
authors
published
within the
past 30 years.
The study reveals
that a firm which
seeks to expand
internationally has
an increased
potential of success
in comparison to
those which opt to
venture in local
markets.
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Demirbag, M., McGuinness, M., &
Altay, H. (2010). Perceptions of
Institutional Environment and
Entry Mode. Management
International Review, 50(2), 207-
240. doi:10.1007/s11575-010-
0028-1
The main aim
of the article is
to outline the
data obtained
from Turkish
organisations
which have
expanded into
Central Asian
Republics. The
researchers
achieve the
presented
functionality by
investigating
the perceptions
of the
executives
when it comes
to entry mode
decisions.
Empirical
Research
method.
The findings of the
study show that a
greater ethical-
societal uncertainty
drives most
organisations to opt
for the
establishment of
joint ventures before
entering the
international
markets over wholly
owned subsidiary.
Hennart, J. (2009). Down with
MNE-centric theories! Market
entry and expansion as the bundling
of MNE and local assets. Journal of
International Business
Studies, 40(9), 1432-1454.
doi:10.1057/jibs.2009.42
The presented
analysis
explores the
transactional
features related
with local
assets and the
choice of
international
market entry as
Observation
method.
The study reveals
that the market
where the local
assets of the MNE is
traded is important
in establishing its
relative efficiency
and their choice of
market entry.
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the major
factor, which
prompts equity
between the
firm’s owners.
Johanson, J., & Vahlne, J. (1977).
The Internationalization Process of
the Firm—A Model of Knowledge
Development and Increasing
Foreign Market
Commitments. Journal of
International Business
Studies, 8(1), 23-32.
doi:10.1057/palgrave.jibs.8490676
The authors
seek to
establish how
MNEs can
enhance their
commitments
in the
international
market through
integration,
gradual
acquisition and
the use of
knowledge
about the
potential
market
destination.
Empirical
research
method.
The article
establishes that
having extensive
knowledge and
information about a
potential market
destination enhances
the level of
commitment of the
MNE in the new
market.
Zeng,
Zeng, J., & Glaister, K. (2015).
Competitive Dynamics between
Multinational Enterprises and Local
Internet Platform Companies in the
Virtual Market in China. British
Journal of Management, 27(3),
The study
explores the
relative
performance of
foreign internet
firms, which
operates within
the boundaries
Structured
interviews.
The study
establishes that
internet platform
companies have
unique features,
which they employ
to survive the
competitive nature
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479-496. doi:10.1111/1467-
8551.12136
of China. of the industry in
China. Flexibility
and experimentation
are identified as the
factors, which
contributes to the
competitive
advantage of firms.
Additionally, the
study also points out
that the active
agency of an
organisation through
diversified
institutional players
which is vital for
establishing a
competitive
advantage in the
new international
market.
Zekos, G. (2003). MNEs,
globalisation and digital economy:
legal and economic
aspects. Managerial Law, 45(1/2),
1-296.
doi:10.1108/03090550310770875
The study
conducts an
economic
analysis on the
function of
MNEs
regarding
digital
economy and
globalisation
while exploring
Observation
method.
The findings of the
study provide an
indication that the
world is moving
towards a global
digital economy
whereby different
destination will rely
on others to
establish a
networked society.
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the legal
aspects about
the e-
commerce,
cyberspace,
and MNEs and
their influence
in the digital
economy.
Rathe
Rathert, N. (2016). Strategies of
legitimation: MNEs and the
adoption of CSR in response to
host-country institutions. Journal of
International Business
Studies, 47(7), 858-879.
doi:10.1057/jibs.2016.19
The main aim
of the
presented study
is to examine
the effect that
host countries
institutions
have on how
the corporate
social
responsibility is
adopted by
various
multinational
enterprises.
Observation
method.
The finding of the
presented study
shows that MNEs
strategically adopt
corporate social
responsibility
policies which are
associated to their
existence and
dominance in
various institutional
contexts.
Parboteeah, P., & Cullen, J.
(2017). International business:
Perspectives from developed and
emerging markets (2nd ed.). New
York: Routledge.
The main aim
of the
presented study
is to outline a
balanced
perspective
about
Secondary
research
methodology.
The findings of the
presented study
indicate that various
strategies such as
global competition
will always vary
based on the nature
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businesses
existing within
an international
environment.
Additionally,
the authors also
seek to explore
the
implications
associated with
multiple firms
available in
emerging and
developed
destinations.
of the international
market that a firm
seeks to expand
into. Apparently,
each destination has
a unique business
strategy, which
determines the
success of the firm
in the new
international market.
Papanastassiou, M. (1997). Firm-
Strategies and the Research-
Intensity of US MNEs’ Overseas
Operations: An Analysis of Host-
Country Determinants. Global
Competition and Technology, 153-
179. doi:10.1007/978-1-349-25856-
7_7
The presented
study focuses
on analysing
the factors
determining the
intensity of
research and
development of
US subsidiaries
available in
different host
countries. The
major aim of
the presented
objective is to
investigate the
existing
Empirical
research
method.
The findings of the
study acknowledge
the fact that research
and development
efforts come in
handy in promoting
the process of
internalization.
Apparently, R&D
support the
marketing activities
of firms which seek
to expand in
international market
by offering the right
support required for
successful
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relationship
between the
strategic role
played by the
operations of
the presented
subsidiaries as
well as the
need to rely on
the existing
technological
support.
international
operations.
Dunning, J. (2001). The Eclectic
(OLI) Paradigm of International
Production: Past, Present and
Future. International Journal of
The Economics of Business, 8(2),
173-190.
doi:10.1080/13571510110051441
The main aim
of the
presented
article is to
provide a
description of
the origins of
the eclectic
framework to
the present day
since the
1950s.
Additionally,
the article also
seeks to
promote an
understanding
of the
subsequent
evolution that
Observation
method.
The findings of the
study show that
eclectic paradigm
has managed to
retain its power over
the years, making it
a robust framework,
which examines
specific theories
such as the foreign
direct investment as
well as production
in the international
market.
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the paradigm
went through
since the mid-
1950s.
Dikova, D., & van Witteloostuijn,
A. (2007). Foreign direct
investment mode choice: entry and
establishment modes in transition
economies. Journal of International
Business Studies, 38(6), 1013-1033.
doi:10.1057/palgrave.jibs.8400297
The main aim
of the study is
to link two
literatures on
foreign direct
investment.
The studies are
on the mode of
choice of
international
market entry
and the choice
of entry mode.
Empirical
investigation.
The findings of the
study show that the
rate of the host
country institutional
advancement
regulates the noted
effect of the
international
strategy and the
technological
intensity on
establishing the
right choice when it
comes to
determining the
mode of market
entry.
Schu
Schu, M., Morschett, D., &
Swoboda, B. (2016).
Internationalization Speed of
Online Retailers: A Resource-
Based Perspective on the Influence
Factors. Management International
Review, 56(5), 733-757.
doi:10.1007/s11575-016-0279-6
The presented
study seeks to
establish and
analyse the
various factors
influencing the
speed of the
process of
internalisation
and the effect
Empirical
research
study.
The findings of the
study show that the
potential destination
that a firm opts to
expand into as well
as its diversity and
scope will have a
significant impact
on the next step of
internationalisation
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on the rate at
which firms
expand into an
international
market.
that a firm seeks to
employ.
Discussion
The Development of Literature
The research on the entry mode of MNEs and how it is perceived in the host country
has developed over the years. The presented factor is evident as researchers are continually
expanding their research on the entry mode decisions which is important for organizations
which seeks to expand their operations to new destinations (Blomkvist, Kappen & Zander,
2010). Even though organisations lack clear tools which may guide them in making informed
decisions about the right mode of international market entry, the management can rely on
other factors which ensures that they only make informed decisions about the appropriate
modes which may benefit the firms (Parboteeah & Cullen, 2017). Normative merit related
with a proposed theoretical model is an example of a factor that managers can consider
establishing prescriptive models which guides their informed decisions about the appropriate
model of international market entry (Brouthers, 2012). Research suggests that the potential
destination that a firm opts to expand into as well as its diversity and scope will have a
significant impact on the next step of internationalisation that a firm seeks to employ
(Brouthers, 2012).
Demirbag, McGuinness and Altay (2010), showed that the managers of the firms
seeking to expand internationally can now rely on an integrated risk management framework
which would guide them when it comes to making an informed decision about the
perceptions of the environmental uncertainty when it comes to making decisions about the
most effective mode of international market entry (Brouthers, 2012). The presented factor
stems from the notion that economic dynamics of an organisation is likely to improve when it
expands its operations on an international spectrum to benefit from a globalised world
economy. Joint ventures have been established as one of the most effective forms of
international market entry in comparison to the establishment of wholly owned subsidiary
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(Demirbag et al., 2010). The presented factor suggests that firms are more aware of the best
form of market entry to consider when entering destinations such as the Central Asian
Republics even though there are no tools which are directly associated with the task of
monitoring the benefits related to the use of other tools. The mode of entry that firms choose
will always be perceived by the host country as a factor, which drives the firm’s
competitiveness in the new market.
The development of internet and internet technology has enhanced the rate at which
organisations are entering new markets. However, the presented framework has prompted
organisations to establish a new platform, which it is continually relying on entering new
markets such as in the case of Amazon’s entry into the Australian market. The e-commerce
strategy of market entry has worked in favour of the presented organisation by enhancing the
process at which the organization ventures in the presented destination. Within the Australian
market, it is true that the mode of market entry that the firm settles for will always determine
the ability of the organization to administer its intended services. Globalisation provides an
indication that firms have a great opportunity, which drives them to perform their business
within a foreign market (Buckley & Casson, 2010). Various studies show that eclectic
paradigm has managed to retain its power over the years, making it a robust framework,
which examines specific theories such as the foreign direct investment as well as production
in the international market (Buckley & Casson, 2010).
Even though theories of international market entry can be applied within the concept
of international service firms, there is need for the presented factor to be carried out with
great caution. The presented fact stems from the notion that the service features that the firms
offer in the international market are distinctive in nature (Hennart, 2009). Additionally, under
the presented globalisation trend, the development of the internet and the internet technology
has enhanced the operations efficiency of firms while intensifying competition such as in
Amazon’s case where the internet has enabled its entry into the Australian market (Schu,
Morschett & Swoboda, 2016). The presented factor indicates that the e-commerce strategy
adopted by the firm has enhanced its ability to expand its business scope as well as the
tension of the competition while forcing the firm to go beyond its traditional businesses
(Demirbag et al, 2010).
The entry mode strategies employed by businesses to enter the international market
destinations are highly important in increasing the service operability of the business in
various ways (Papanastassiou, 1997). For instance, Amazon has established a desirable way
of overcoming the existing environmental barriers, which are likely to affect the firm’s ability
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to expand internationally (Zekos, 2003). Through the internet, Amazon has still managed to
obtain a positive perception in Australia, based on its e-commerce features. The presented
characteristics has allowed the business to engage in a process of communicating and
interacting with the consumers even in a dispersed market at varied stages of buying
(Johanson & Vahlne, 1977). The competitiveness of the organisation in the presented
potential destination is enhanced since the mode of international market entry has
significantly contributed towards bringing the experiences of the consumers together despite
their location. Additionally, the entry mode has also enhanced the ability of the firm to
exchange service and production details while communicating with customers in different
environments despite their different buying stages.
The ecommerce strategy is also regarded as an effective strategy of market entry,
which allows service firms to extend their operability to different foreign organisations (Zeng
& Glaister, 2015). Based on the service characteristics that an organisation is directly
involved with the e-commerce strategy of entry is regarded as the most desirable one for
consideration for most firms. The e-commerce mode of international market entry embraced
by Amazon to enter the international market has played a significant role in bring the
experiences of the customer together (Dunning, 2001). Apparently, the strategy enables the
customers to understand the type of products offered by the company to the Australian
market. Additionally, the strategy also aims in promoting the quality of its products to the
consumers as well as effectively coordinates its marketing functions. The presented aspect
stems from the notion that the firm has the capability of marketing its brand over the online
platform thanks to the mode of entry that the organization settled for to enter the international
market.
Through the exploration of the e-commerce as a strategy, which can be effectively
adopted by international firms, the chosen strategy for international market entry determines
the success of the organisation in the industry. The selection of the right mode of
international market entry is important for an organisation since it provides a description of
the success rate of the firm in the international environment based on the advantages, which
the business can explore in the presented case. The use of e-commerce strategy of
international market entry is considered as an effective mode of entry for service firms such
as Amazon because of various factors. For instance, the presented strategy is considered as
effective since it enables the firm to enjoy the distinctive features, which comes along with
the chosen mode of entry such as the concept of timeliness and the ability to engage in a
virtual form of communication.
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The mode of entry is an important factor of consideration for any organization, which
seeks to expand on an international spectrum. However, the mode of choice of international
market entry should be considered in that they directly influence the rate at which the host
country will perceive the firm especially when it comes to the ability of the organisation to
remain competitive in the industry (Rathert, 2016). Looking in the case of Amazon in
Amazon’s entry into the Australian market, it is clear that the choice of entry is directly
related with the general performance of the organisation in the new market.
The service characteristics of an organization will always provide an indication
whether the chosen e-commerce strategy will serve the mission and purpose of the
organization on the international market. Apparently, the culture of the host country is an
important consideration in this case since the strategy will imply if the firm will easily adopt
to the noticeable differences for it to be successful and effective in the industry (Dikova &
van Witteloostuijn, 2007). Apparently, the way services of an organisation are marketed will
always provide a reflection of the nature of the values of the society.
Research Gaps
Lack of appropriate tools with a capability of measuring the effectiveness of the
different modes of market entry is one of the research gaps evident under the presented topic.
Even though organisations have established similar techniques which guides them in making
informed decisions about international market entry modes, it is evident that a gap still exists
on the appropriate tools which can be considered by firms to gauge the direct economic
impact of various modes of international market entry. Additionally, it is also clear that the
existing research has failed to explore the existing relationship between service intangibility,
cultural aspects, and the e-commerce entry strategy.
Proposed Future Research
There is need to explore and identify the most effective tools which can be used in
gauging the effective modes of market entry. In addition, there is need to explore the existing
relationship between service intangibility, e-commerce entry strategy and cultural aspects
from the perspective of the service recipients and providers. Having knowledge of the
presented factors would play a vital role in eliminating the problems noted in research as well
as the existing gaps to ensure that the members of the firms seeking to expand internationally
can make informed decisions on the presented issue for a successful performance.
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References
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Blomkvist, K., Kappen, P., & Zander, I. (2010). Quo vadis? The entry into new technologies
in advanced foreign subsidiaries of the multinational enterprise. Journal of
International Business Studies, 41(9), 1525-1549. doi:10.1057/jibs.2010.22
Brouthers, K. (2012). A retrospective on: Institutional, cultural and transaction cost
influences on entry mode choice and performance. Journal of International Business
Studies, 44(1), 14-22. doi:10.1057/jibs.2012.23
Buckley, P., & Casson, M. (2010). The Multinational Enterprise Revisited (1st ed.). London:
Palgrave Macmillan.
Demirbag, M., McGuinness, M., & Altay, H. (2010). Perceptions of Institutional
Environment and Entry Mode. Management International Review, 50(2), 207-240.
doi:10.1007/s11575-010-0028-1
Dikova, D., & van Witteloostuijn, A. (2007). Foreign direct investment mode choice: entry
and establishment modes in transition economies. Journal of International Business
Studies, 38(6), 1013-1033. doi:10.1057/palgrave.jibs.8400297
Dunning, J. (2001). The Eclectic (OLI) Paradigm of International Production: Past, Present
and Future. International Journal of The Economics of Business, 8(2), 173-190.
doi:10.1080/13571510110051441
Hennart, J. (2009). Down with MNE-centric theories! Market entry and expansion as the
bundling of MNE and local assets. Journal of International Business Studies, 40(9),
1432-1454. doi:10.1057/jibs.2009.42
Johanson, J., & Vahlne, J. (1977). The Internationalization Process of the Firm—A Model of
Knowledge Development and Increasing Foreign Market Commitments. Journal of
International Business Studies, 8(1), 23-32. doi:10.1057/palgrave.jibs.8490676
Papanastassiou, M. (1997). Firm-Strategies and the Research-Intensity of US MNEs’
Overseas Operations: An Analysis of Host-Country Determinants. Global
Competition and Technology, 153-179. doi:10.1007/978-1-349-25856-7_7
Parboteeah, P., & Cullen, J. (2017). International business: Perspectives from developed and
emerging markets (2nd ed.). New York: Routledge.
Rathert, N. (2016). Strategies of legitimation: MNEs and the adoption of CSR in response to
host-country institutions. Journal of International Business Studies, 47(7), 858-879.
doi:10.1057/jibs.2016.19
Schu, M., Morschett, D., & Swoboda, B. (2016). Internationalization Speed of Online
Retailers: A Resource-Based Perspective on the Influence Factors. Management
International Review, 56(5), 733-757. doi:10.1007/s11575-016-0279-6
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Zekos, G. (2003). MNEs, globalisation and digital economy: legal and economic
aspects. Managerial Law, 45(1/2), 1-296. doi:10.1108/03090550310770875
Zeng, J., & Glaister, K. (2015). Competitive Dynamics between Multinational Enterprises
and Local Internet Platform Companies in the Virtual Market in China. British
Journal of Management, 27(3), 479-496. doi:10.1111/1467-8551.12136
Amit Verma 17976607