USC BUS707 DE/SU 2018: Managing Across Global Cultures - Amazon Report

This report, prepared for a BUS707 course at USC, analyzes Amazon's approach to managing across global cultures. It addresses the benefits and disadvantages of multicultural teams, explores effective staffing strategies, and examines factors influencing the integration of expatriates and local staff. The report further investigates cultural influences on Amazon's strategy implementation, including the application of Vernon's product life cycle theory in foreign markets. Finally, it evaluates global leadership savviness within Amazon and assesses the success of multicultural teams, providing a comprehensive overview of the company's global cultural management practices and challenges. The report draws on case study analysis and relevant academic literature to support its findings and recommendations.

Running head: MANAGING ACROSS GLOBAL CULTURES: AMAZON
Managing across global cultures: Amazon
Name of the student:
Name of the university:
Author note:

1MANAGING ACROSS GLOBAL CULTURES: AMAZON
Table of Contents
Question 1..................................................................................................................................2
1.1 Benefits that Amazon faces while operating multicultural teams across the world........2
1.2 Disadvantages faced by Amazon with multicultural teams across the world..................3
Question 2..................................................................................................................................4
2.1 Multicultural staffing approaches that Amazon should take............................................4
2.2 Factors that affect and hinder the integration of expatriates and local staff....................5
Question 3..................................................................................................................................6
3.1 Cultural influences at Amazon that should affect their strategy implementation............6
3.2 Vernon’s product life cycle theory as used by Amazon in foreign markets....................6
Question 4..................................................................................................................................8
4.1 Global leader savviness and Amazon..............................................................................8
4.2 Evaluation of multicultural team success at Amazon......................................................8
References:...............................................................................................................................10

2MANAGING ACROSS GLOBAL CULTURES: AMAZON
Question 1
1.1 Benefits that Amazon faces while operating multicultural teams across the
world
The term “multiculturalism” refers to the way diverse cultures co-exist in one community
around the world (Youssef-Morgan & Hardy, 2014). For multinational companies like
Amazon, it is imperative to have multicultural teams or a multicultural workforce. For
instance, the case study provided reveals how a lack in cross cultural communication led to
Amazon’s decline in China. One of the major benefits of incorporating cultural diversity in
the workplace and in the business strategy is that a company like Amazon would win the
goodwill of both the target audience and the workforce. It helps in building respect and
integrity amongst the people the company is working or interacting with. In addition, it
positively impacts customer service. If Amazon is to target a global audience, it would not sit
well with the customers if they were to be generalized or fit into a category. It is the
company’s onus to ensure that the individual needs of each customer are met; that can be
made possible only through an efficient multicultural team.
The best way to enhance revenue outcome through a multicultural team is by
understanding the culture the company is catering to (DeLancey, 2013). Taking into account
the case study, Amazon should have made an attempt to understand and study Chinese
culture before trying to apply the same business and marketing strategies which had worked
previously in America or Japan. A thorough market research, along with market segmentation
and target driven marketing would have worked wonders for Amazon in China. Also,
Amazon should be able to develop and nurture authentic relationships which could in turn
provide long term benefits. In addition, Amazon could benefit from shared ownership in the

3MANAGING ACROSS GLOBAL CULTURES: AMAZON
country they are operating in. That would make the community feel included; this would
reduce cross cultural barriers, paving the way for harmonious business relationships.
1.2 Disadvantages faced by Amazon with multicultural teams across the world
It must be remembered that while conducting business in different countries around the
globe, it is the company’s responsibility to ensure that the cultural differences are taken into
account (Fatima Oliveira, 2013). It was Amazon’s failure to do so which led to its
unsuccessful stint in China. Amazon, primarily an American company, wrongly assumed that
imposing the same vision and philosophy that worked remarkably well on American
audiences would have the same effect on Chinese consumers. The most important
disadvantage that a company as large as Amazon faces while operating globally is the
cultural barrier. It is a given that no two country can have the same culture; moreover, each
culture has its own set of idiosyncrasies which must be given due importance. Thus, what
may appeal to an American might not attract the Chinese. Regulatory issues must also be
taken into consideration; a company like Amazon would have to keep in mind the laws and
regulations pertaining to taxes, import, tariff rates and even employment while carrying out
business across nations.
Without a doubt, entering into a foreign market can be a daunting endeavor, but if done
properly, it can be rewarding as well. None of the above mentioned challenges should be a
deal breaker – there are measures that can be taken by Amazon and other companies to
counteract such obstacles. For instance, Amazon could tweak their policies or marketing
strategies to suit the needs of the country they are conducting business in, namely China in
this case (Liu & Hong, 2016). A detailed analysis of the employment laws, tax laws and
corporate regulations would be beneficial for the company. In a foreign market, how the
customer perceives the brand plays a crucial role in determining its success or failure. To

4MANAGING ACROSS GLOBAL CULTURES: AMAZON
appeal to a Chinese market, Amazon should have rebranded their products and services in
accordance with the Chinese culture and values.
Question 2
2.1 Multicultural staffing approaches that Amazon should take
While conducting business in a foreign market, one of the most integral aspects of the
business strategy should be the staffing approach. A large corporation like Amazon would
need a robust staffing strategy to ensure that their workforce is performing efficiently
(Brewster et al., 2016). Ideally, in international human resource management, there are three
approaches to staffing that are followed. One, a home country strategy may be adopted; in
this case, staff members from the home country of the company are asked to live and work in
the foreign country, and they are referred to as expatriates. Recruiting expatriates has one
major advantage – since they belong to the home country of the company itself, they are
already aware of policies and regulations regarding the same (Nankervis et al., 2013).
However, it would be an added bonus if these expatriates were to be trained in cross cultural
diversity so as to develop positive professional and social relationships in the foreign country.
Second, a host country strategy may be followed where natives of the country Amazon is
operating in would be recruited and trained as members of the workforce. Thirdly, a third
country strategy may also be utilized where citizens of an entirely different country would be
employed. In the case of Amazon, a company that is very much dependent on its workforce, a
combination of the first two staffing approaches would be most beneficial. For example, if
Amazon had recruited Chinese employees as part of the organization while in China, it would
not only have shattered cultural barriers but also made the transition process smoother.

5MANAGING ACROSS GLOBAL CULTURES: AMAZON
2.2 Factors that affect and hinder the integration of expatriates and local staff
Having discussed the three primary staffing approaches that companies like Amazon
should adopt, it is equally important to examine the factors that affect the integration of local
staff and expatriates in global business management. At present, Amazon has a large number
of expatriates working for them in different countries – this is mainly because these
employees are already acquainted with the policies and strategies of the company and would
not find it hard to settle down in the new working environment. However, there are a few
factors that need to be kept in mind. In the case of expatriates, language can prove to be a
barrier if they are not familiar with the native tongue of the country (Piekkari, Welch &
Welch, 2014). When Amazon set up shop in China, language barriers were one of the reasons
why cross cultural communication failed. Moreover, it must be remembered that the
personalities of people differ from country to country, culture to culture. Inability to blend in
with the natives in the new country or the expatriate’s unwillingness to adapt to the new
circumstances could make his or her integration a laborious process.
As far as the integration of local staff is concerned, the cultural difference can turn out
to be a hindrance (Leung, Lin & Lu, 2014). Large companies like Amazon certainly take
adequate measures in order to recruit and train the host country nationals so as to acclimatize
them with the policies and principles of the organization; however, it must be admitted that
cultural and linguistic barriers often persist. For instance, the local staff might have different
ideas of how to approach an issue from that of the parent company, which could lead to
conflicts within the organization.

6MANAGING ACROSS GLOBAL CULTURES: AMAZON
Question 3
3.1 Cultural influences at Amazon that should affect their strategy
implementation
When a multinational company like Amazon expands globally to different nations,
there are numerous factors that could propel its success or cause its failure. For example,
when Amazon ventured into China, it encountered a large number of hurdles which were
unfamiliar. One of the chief reasons for such challenges would be the cultural difference
(Ferrago & Briody, 2013). Culture collisions and other influences like language and pricing
regulations play a key role in the strategy implementation at Amazon. Before a new product
or service is launched into the market, it is essential to gain an insight into the cultural
influences (De Mooji, 2013). If the product or service in question does not appeal to the
target audience in the new country, the company would incur huge losses. Linguistic
differences must also be taken into account; it would be advantageous for the company to
reach out to the target audience in their native language, so as to leave a long lasting positive
impression. While discussing cultural influences, a sound knowledge of regulations and
federal laws would be recommended. Different cultures have different laws as far as taxes,
employment, investment, trademark requirements, import, currency, duties and organization
practices are concerned. A business strategy should be formulated after an in depth analysis
of the market before Amazon decides to enter it.
3.2 Vernon’s product life cycle theory as used by Amazon in foreign markets
The product life cycle theory was introduced by Raymond Vernon in 1996, to analyze
the way American companies were gradually emerging into multinational corporations and
the strategies being implemented for the same (Doha, Das & Pagell, 2013). Vernon
considered the United States to be the most advanced market and devised an internalization

7MANAGING ACROSS GLOBAL CULTURES: AMAZON
model for businesses in advanced countries looking to expand into newer markets. Amazon
could employ this framework while carrying out business globally since it would help
demolish certain cultural barriers. The process entails three phases, namely new product,
maturing product and standardized product.
First, Amazon would introduce a brand new, innovative product into their home
market, targeting high income, upper class consumers who would be more willing to embrace
new products. Also, obtaining funding for such ventures would be easier in developed
countries. During this phase, production would be localized so as to reduce risks and
uncertainties. As the product starts gaining momentum, it would gradually be introduced to
newer industrial markets. In the second stage, the product begins to mature –thus grabbing
the attention of markets in other countries as well, which might not be as advanced as the
United States. FDI or foreign direct investment principles are applied in this phase and
production is gradually expanded to other local markets as well. In this phase, companies
with developing markets and lower income rates would start placing export orders. In the
final stage, the home market of the product becomes saturated and the consumer is no longer
receptive to the same product. The arrival of newer and more advanced technologies lead to
dwindling sales in the home country; accordingly, the company has no other choice but to
maximize all offshore production and attempt to invade foreign markets to generate revenues
(Tavassoli, 2015). Such a strategy could be adopted by companies like Amazon so as to
effectively make a mark in foreign markets instead of alienating potential new customers on
grounds of cultural barriers.

8MANAGING ACROSS GLOBAL CULTURES: AMAZON
Question 4
4.1 Global leader savviness and Amazon
The key to an internationally or globally savvy business is adequate training,
preparation and practice. There is no denying the fact that the ecommerce giant, Amazon, is a
global leader in terms of business practice and strategy management and has mastered the art
of “global leader savviness.” To assume that leadership skills can be transferred from one
marketplace to another would result in poor revenue outcome, disgruntled employees and
decreasing productivity. For a brand as prominent as Amazon, it is of utmost importance to
create globally savvy leaders who can navigate through the challenges and complexities that
international business poses (Caldwell, 2015). In order to ensure that, a thorough analysis of
labor laws and marketing and financial practices of different countries is deemed important
(Dragoni et al., 2014). To take into account the case study, Amazon mistakenly applied the
same practice or strategy they implemented in other countries to China – forgetting that
China, like all countries, has a unique work culture of its own, which must be adhered to.
Also, such global leaders need to have an intimate knowledge of the market they are
operating in – the market reality, the business opportunity in the particular sector, the
competition that the company could face – all these need to be taken into account. In
addition, it is expected that an internationally savvy leader would also be cost conscious, and
ensure optimum utilization of company resources.
4.2 Evaluation of multicultural team success at Amazon
There are a large number of factors that determine the success or failure of
multicultural teams at companies like Amazon. One of the chief reasons would have to be the
ineffective business management strategies that fail to provide a solution to the problem of
cultural differences. For instance, in China, if Amazon had been backed by a sturdy team of

9MANAGING ACROSS GLOBAL CULTURES: AMAZON
managers who respected the native culture and was willing to accommodate it, the company
would have established itself as a forerunner in the Chinese ecommerce industry. There are
three ways of promoting and enhancing multiculturalism in the workplace. One, the company
would have to make an honest effort to create a team that abides by the cultural and
traditional values of the particular community. Second, equal opportunities must be created
for both expatriates and for the local community members. Thirdly, an all encompassing
training module should be devised to integrate cultural diversity in the workplace (Chuang,
2013). To evaluate the success of such a multicultural team, Amazon should analyze the way
the team operates – if there are conflicts and how such conflicts are resolved, the performance
levels of multicultural teams as compared to others, business growth and innovation in terms
of strategy and practice, return on equity, reduced ethnocentrism and inclusion policies.
Success of such teams can be understood from a healthy organizational culture which
involves cultural values; it would not only improve the reputation of the company as a whole
but also inculcate a sense of creativity and innovation amidst the workforce. Similarly, this
results in positive brand positioning in a foreign market and appeals to the target market who
would be willing to experiment with new products (Brannen & Lee, 2014). Investing in such
a multicultural team would have helped Amazon establish itself in the Chinese market;
understanding how the Chinese differ from the West would have prevented the massive
financial loss that Amazon suffered in the country.

10MANAGING ACROSS GLOBAL CULTURES: AMAZON
References:
Brannen, M. Y., & Lee, F. (2014). Bridging cultural divides: Traversing organizational and
psychological perspectives on multiculturalism. The Oxford Handbook of
Multicultural Identity, 417-437.
Brewster, C., Houldsworth, E., Sparrow, P., & Vernon, G. (2016). International human
resource management. Kogan Page Publishers.
Caldwell, J. (2015). Leading globally, thinking interculturally: Developing global
characteristics. The Journal of Business Diversity, 15(1), 55.
Chuang, S. F. (2013). Essential skills for leadership effectiveness in diverse workplace
development.
De Mooij, M. (2013). Global marketing and advertising: Understanding cultural paradoxes.
Sage Publications.
DeLancey, R. M. (2013). Employees Perceptions of Multiculturalism and Diversity in
Multinational Corporations. African Journal of Business Management, 7(35), 3559-
3574.
Doha, A., Das, A., & Pagell, M. (2013). The influence of product life cycle on the efficacy of
purchasing practices. International Journal of Operations & Production
Management, 33(4), 470-498.
Dragoni, L., Oh, I. S., Tesluk, P. E., Moore, O. A., VanKatwyk, P., & Hazucha, J. (2014).
Developing leaders’ strategic thinking through global work experience: The
moderating role of cultural distance. Journal of Applied Psychology, 99(5), 867.

11MANAGING ACROSS GLOBAL CULTURES: AMAZON
Fatima Oliveira, M. D. (2013). Multicultural environments and their challenges to crisis
communication. The Journal of Business Communication (1973), 50(3), 253-277.
Ferraro, G. P., & Briody, E. K. (2013). The cultural dimension of global business. Upper
Saddle River: Pearson.
Leung, K., Lin, X., & Lu, L. (2014). Compensation disparity between locals and expatriates
in China: A multilevel analysis of the influence of norms. Management International
Review, 54(1), 107-128.
Liu, C., & Hong, J. (2016). Strategies and service innovations of haitao business in the
Chinese market: A comparative case study of Amazon. cn vs Gmarket. co. kr. Asia
Pacific Journal of Innovation and Entrepreneurship, 10(1), 101-121.
Nankervis, A. R., Baird, M., Coffey, J., & Shields, J. (2013). Human resource management:
strategy and practice.
Piekkari, R., Welch, D., & Welch, L. S. (2014). Language in international business: The
multilingual reality of global business expansion. Edward Elgar Publishing.
Tavassoli, S. (2015). Innovation determinants over industry life cycle. Technological
Forecasting and Social Change, 91, 18-32.
Youssef-Morgan, C. M., & Hardy, J. (2014). A positive approach to multiculturalism and
diversity management in the workplace. In Perspectives on the intersection of
multiculturalism and positive psychology (pp. 219-233). Springer, Dordrecht.