A Comprehensive Analysis of Amazon's Global Business Environment

This report provides an in-depth analysis of Amazon's global business operations. It begins with an introduction to Amazon, highlighting its e-commerce dominance and strong brand image. The analysis delves into the factors driving globalization, including cost, market dynamics, environmental considerations, and competition, and how these factors influence Amazon's strategies. The report examines the benefits and challenges Amazon faces in terms of cost, market expansion, environmental impact, and competition. It further explores strategic complexities such as international trade laws, cost calculation, global pricing strategies, and technological advancements. The report concludes with recommended strategies to sustain and improve Amazon's position in the global market, supported by references to relevant sources. The report provides a comprehensive overview of Amazon's global business environment.

Contents
Introduction to Amazon...............................................................................................................................2
Analysis........................................................................................................................................................3
Recommended strategies for Amazon......................................................................................................22
Conclusion.................................................................................................................................................24
References-................................................................................................................................................25

Introduction to Amazon
Amazon is a much known E- commerce business that has a very strong brand image because of the
customer relations. It has already set a benchmark in becoming market- leading technological
infrastructure. It provides different type of products that satisfy the needs of the customers. Amazon
has entered into e- commerce trading area in 1995 and started by Jeff Bezos. Amazon has expanded
its operations afterwards in different countries like Europe, Asia and US. Products have been
displayed with amazon “advertising publish under the press release, and many producers display the
products on the website to make money. Amazon always keeps the prices low so that it can be
affordable to everyone. There are many competitive websites that give a strong competition to
Amazon but still due to the loyal customers and brand image, it sustain in highly competitive
advantage. According to Amazon, customer satisfaction is on priority and they always take care
about customer’s concern. It is one of the leading online sellers and sells a big variety of
heterogeneous product line. It is having headquarters in Seattle and has customers in approximately
50 states of USA and 160 different countries. It offers products like books, clothing, hardware,
software, home based products and electronics to its customers through its website and application.
It believes in applying innovation to sustain in the market and to attract the customers. Amazon has a
very customer friendly website and applications by which customer’s avail online shopping in an
easy way.

Analysis
Globalization
Globalization has been prevailed everywhere in each and every part of the world. It refers to a
process in which there is an interaction and integration among the people, culture, organizations and
countries. Globalization impacts different part of the business process and is considered a broad
topic. There are different brands like McDonald’s that possess a very strong brand image. Every
single person knows this brand because it operates in almost every country (Walsh,
Bhagavatheeswaran and Roma, 2019).
The Factors of Globalization
There are many factors that are directly related to the concept of Globalization like market,
environment, cost and competition. Globalization keeps on moving whether in positive or a negative
way. All the factors help in driving the globalization.
1. Cost
Cost is a very important factor that helps in motivating different companies all over the world. It also
helps an organization becoming a global brand. It helps companies to operate in more than one
country and expand its operations by selling product and services on a global basis. Every company
wants to expand its operations and become a global brand and reduce the cost of the company as
much as possible. Low cost production means operating production activities in countries where
there are low tariffs and taxes.
Amazon is a very good example that considered cost factor in globalization. There are many sellers
that are very happy to sell their products on Amazon with good margin even after deducting
Amazon’s share. There is a very minimum cost that is levied in selling the products of different
sellers. Amazon has also controlled cost by charging shipping cost on orders of small amount and
therefore when people place bulk order then only shipping cost is free for them (Huang and
Benyoucef, 2013).
2. Market

There are different countries all over the world and people reside in the same possess different
lifestyle so it becomes really difficult to satisfy different type of needs. Companies always try to sell
the products at a particular location as per the customer’s choices and requirements. If an
organization sells high price products in low income areas then no one will be going to purchase it
and there will be so sales as those costly products are not easily affordable by everyone. So,
companies have to choose whether the products are good for a particular location or not. Amazon is
operating in many countries as it is easily reachable to everyone because of its online presence. It
does not own physical stores and only provides online products to the customers. Amazon has tied up
with many sellers and sells their products online in affordable prices. In order to get a hassle free life,
people nowadays prefer online order websites so that they can easily get the product on their choice
at doorsteps. There is no segmentation because it is already present everywhere (Tourne et al., 2016).
3. Environment
Every large organization comes at a price and the whole world has a watch over them. Every
organization has to follow some rules and regulations and they have to make sure that they will not
provide any kind of harm to the environment. If they do so then it directly harms the reputation of the
company. It will result in the loss of customers because of polluting the environment. Every country
has its own regulations related to the environment and companies are not going to break the laws
because of huge fines implacable on that. Amazon also support pollution- free environment and do
every possible effort to make environment pollution free. Amazon has provided many offers to the
customers like exchange of old phones while purchasing new ones. It helps in protecting the
environment.
4. Competition
Even after a company is doing well in the market and is a world famous organization, it doesn’t mean
they can take it easy. There are many strong competitors in the market and have the capability to take
over the position of top players in a particular industry. For sustaining in the competition, every
organization needs to adopt some development techniques to attract the customers like advertising
and conduct research to know the market demand (Deniz and Atışman, 2017).
Amazon is a very big brand and has capability to face strong competition in the market. It has many
competitors like Flipkart and Snap deal. These organizations are of similar nature like Amazon and
provide online services to the customers (Jukić, 2019).

The Benefits & Challenges for Amazon
1. The Cost Benefits & Challenges
Because of Globalization, Amazon has taken benefits out of the costs. It has spread all its reach to
every country all around the world. It has chosen China for expanding its operation because it is a
developing country and labor cost is cheaper as compared to developed countries like UK, US and
France. Although quality of life is not that much great as salaries and wages are very limited and it
helps in reducing the cost of the company (Tracey, 2015). Amazon has acquired its resources from
all around the world because of low cost. Acquiring resources from developed countries costs higher
in compared to less expensive countries like China. Even after these attractive benefits, Amazon is
facing some more challenges. In order to expand all operations globally, there is a need of investing
high capital into the business because of increasing operating cost. Amazon has started providing
prime membership to customers by which customers can get some extra benefits like free and early
delivery. It helps in acquiring a higher market share and retains loyal customers (Boudreaux, 2008).
2. The Market Benefits & Challenges
Amazon has expanded its operations globally and now they are carrying its operations in
international market. It provides benefit to the organization and able to influence customers to
purchase the products that helps in increasing the profits. An important benefit that Amazon is
enjoying is the brand image (Sinclair and Jayawardena, 2010). By expanding refers to make the
brand familiar to people and it make it more prestigious. It also helps in making the brand image
strong and makes it more recognizable. Market refers to the customers and customer means people
(Goldenberg, 2015). There is different type of social challenge that Amazon has to face while
operating business activities like economy, age, religion, culture and life. Amazon sells different type
of products suitable for different type of population so that it can able to satisfy the needs of the
customers as per their affordability.
3. The Environment Benefits & Challenges
Almost every person thinks that Globalization is not good for the environment but it is not a true
statement. There are different benefits that organizations are enjoying because of Globalization. If an

organization acquires resources from different country then automatically it reduces the resources of
that particular country and provides harm to the environment. So it is better to acquire resources from
different parts of the words so that it can maintain a level of balance (Flanigan, 2016). It helps in
maintaining the environment cleaner and people can get oxygen to live. Globalization is a very wide
concept and by operating in different countries means to maintain the environment healthy and clean.
There are some companies that dump their waste in an illegal way in some areas and it affects the
wildlife and people living there. Countries levy heavy fines to those companies involved in illegal
activities. For maintaining safe environment, Amazon has to take care about the environment and has
to spend an extra amount of capital to recycle the old products and try not to harm the environment
(STEGER and WILSON, 2012).
4. The Competition Benefits & Challenges
Amazon was one of the first players in online business and it has created a very strong brand image
in the market. It has a very loyal group of customers that help the organization in providing
competitive advantage. Globalization also helped the organization by making it familiar with people
all around the world. Amazon has expanded its operation globally but still there are some
organizations like Flipkart and Snap deal that gives a strong competition in the market. Amazon
provides very good services to its customers like easy replacements and return to make customer’s
happy. They also make sure to deliver the product before expected time. Sometimes, they face many
challenges because of competition as there is always a need of development and technological
advancement to retain in market (Mohammad Arabzad an, 2012).
Supply chain is also very important aspect for the organization as it contains various risks like
politics, economic factors and natural disasters. It is important to choose a reliable supplier that can
provide services without any interruptions and save the time and money. Supply chain diversification
helps in minimization of risk as the organization have a diverse suppliers and problems do not impact
the same. It is beneficial to ger the suppliers pre – qualify in advance so that it can help in reducing
the time and money lost because of disruption. There must be proper strategic suppliers for managing
the risk.

Strategic Complexities in terms of risk and diversification in a Global Environment
There are many strategic complexities that every organization has to face in this globalized
environment. There are different challenges that are faced by a global organization (Rao, 2013).
International Trade Law -
Organizations has to obey laws set up in a country if they want to do import and export activities.
There are different countries with different laws and every country wants to operate in a liberal trade
policy. Trade also includes the labor and employment. So, almost every country wants to employ
human resources from developing countries rather than developed countries. Amazon always tries to
acquire resources from different parts of the world for controlling the cost (Lynch, 2018).
Cost Calculation & Global Pricing Strategy -
Every company has to take care about the costs involved in doing the operations. When a company
produces the products and they are unable to sale the same then it create a huge loss for the company
so they have to be careful enough while producing the products. They also need to consider currency
exchange rate while creating pricing strategies (Sox, Higgins and Owens, 2013).
Advances in Technology -
There is a high technological advancement in everyday lives. And people are dependent upon the
technology. Technology helps in facing high competition in the market. Although technology has its
pros and cons like any organization can become a victim of cyber- attack from the hackers and they
can expose the company. Technology helps the organization in attracting more customers and fulfills
their needs (Turner and Johnson, 2010).
Cultural Differences-
Every country has a different culture and choices and preferences vary according to the same. Every
company has to sell the products as per the choices of people as per their location, culture and
beliefs. Amazon has to make sure that it will sell the products as per the affordability of the people.
Supply Chain

Supply Chain refers to a process that helps in managing the supply of an organization. It is a process
in which various links are interconnected that ultimately results in customer satisfaction. Supply
chain starts from collecting the resources and then serving the customers (Pathak, 2017).
1. Sourcing
Manufacturing needs combination of different type of resources and that can be gathered from own
country or some other countries. Importing resources from different parts of the world for
manufacturing is known as Sourcing. Amazon does not need resources as it is not involved in
manufacturing process.
2. Manufacturing
After acquisition of resources, the next stage is manufacturing where all the resources come together
to convert into the final product. Amazon is not involved into manufacturing process
(Balasubramanian, 2009).
3. Warehousing
The next stage is warehousing in which products are placed in safe warehouse for protecting them
from any kind of damage. It also helps in distribution and transportation process. Amazon has
different tie-ups from sellers that directly send goods to the customers and Amazon need not to keep
them in any warehouse (Brown and Labonté, 2011).
4. Distribution
There are different distributors that help in distributing the products to the customers. Amazon has a
very strong distribution channel that assures timely delivery without any destruction. Amazon is the
only organization that allows customers to get the orders without charging delivery fees. To avail this
facility, customers need to buy Amazon Prime membership (Atighechian et al., 2016).
5. Return

Amazon has very flexible services for return and replacement of products. In case of electronic
products it ensures to provide services to the customers till the end of warranty period. It does not
provide for any of the products, it’s all about the policies of the seller (Kang and Jindal, 2018).
There are different strategic challenges related to risk and diversification strategies and the supply
chain flow of Amazon. Amazon was earlier involved in book selling but now it deals in each kind of
product It used conglomerate diversification strategy in the industry. It results in the growth of
products as well as markets that were totally new This diversification was full of risk because people
were not very much open for such huge changes. But Amazon has grown gradually and now
everyone know this big brand name. Amazon has its own warehouses from where it manages its
supply chain. It uses many robotics and automated solutions for packing and picking the orders. It
helps in making the supply chain more efficient. As Amazon has not its own physical existence but it
is available on web so it is really difficult to manage the whole supply chain at every location, but
such automated solutions helped the organization a lot.
The influences of globalization
Globalization results in the process of bringing forces of diverse issue of production trade
information technology. Because of globalization, there is an interaction between different nations. It
has also created impact on Industrial relations and efficiency of operations have been increased. Now
there is a pressure on the organizations to take more initiatives regarding social responsibility and
operate as per ethical principles. It also creates a big influence on leadership it helps in creating
strong business knowledge among leaders and managers and now they understand the cultural
differences in a more efficient way. Organizational structure may also vary when it comes to global
business environment as people are not open to the culture and structure of a single country so there
should be a common way that is acceptable to all. Because of organizational structural change, there
are some changes that leaders needs to adapt. They have converted into open – minded to new ideas,
cultures and thoughts. There is an integration of technology because of Globalization and people start
rethinking the way of managing and conducting the business. People belong to different culture work
in an organization that needs more collaboration and understanding between each other. It also
enables people to understand each other’s culture. Leaders started looking at the functions of the
organizations in a new and deeper way so that they can get the most out of it. Functions of

management must be changed as per the requirement of the organization as well as the people work
in the global business Environment.
The Ethical & Sustainable Factors in Globalization
The Ethical Factors:
 Jobs- There is countries like Japan that has a high suicide rate because of stressful working
hours in the jobs. Japanese always try to work very hard for getting promoted or keeping the
job. So, countries have some policies that limit the number of hours a person work a day in
order to reduce the stress. Amazon is a very ethical organization and it had many suppliers
that overworked and underpaid employees and some of them did suicide. It always keep a
watch on the suppliers for regulating their employees to work maximum 60 hours in a week
and a day off (Sharma and Chowhan, 2015).
 Natural Resources- The world is growing at a higher pace and there are some giant countries
with huge population like India and China. Because of big population, there is a lack of
resources that cannot satisfy the needs. It refer to the less cut down of the forest in order to
safeguard the environment. For example there are countries like Brazil and Indonesia that are
cutting down forests in order to have timber for the population. It results in destruction of
wildlife, habitats as well as oxygen level. Amazon has also started a program that supports
environment. It has many exchange offers for electronics that helps in recycling of old stuff
(SALONER, 2018).
 Transparency- There is a very high competition in the market and every organization wants
to get higher market share. Many companies usually lie to the customers about many things
just to sell their products. So, it is necessary for every organization to be transparent in terms
of the products. Amazon is not directly involved in manufacturing of products but it makes
sure that third party should always reveal every single feature of their products for customers’
benefits. Because of these factors it can make loyal customers stick to the same products
(Inandi, Tunc and Gilic, 2013).

The Sustainable Factors:
 Economy – Big companies never depend on a single market and they need to operate in multiple
markets if in case their local economy gets collapse. It is a very good opportunity to expand the
operations globally rather than to involve in a single market. Amazon is also a huge company and it
has expanded its operations all around the globe and make sure that it earn good revenues.
 Technology – With the help of technological advancement, lives have been improved and
companies as well. Companies try to use latest technologies in order to make operations very
efficient and they use technology in research, marketing and communication. Amazon is into e-
commerce and it’s all about technology. As discussed, there is no physical store and there is only
online reach to purchase products. It helps in creating broad image of Amazon in the market (Lemert,
2016).
 Geopolitics – There are certain restriction on some products that create an issue for the company in
selling the products. So, they have to choose some other option that is called as the second-best
option. There are different countries consist of population that possess different quality of life.
McKinsey’s 7S Model
The McKinsey 7S is the seven interconnected elements that are found in an organization. Hard and
soft elements are the two groups it is divided in that are discussed below:
Hard Elements
These are the elements that are controlled by the management directly and are easily defined and
identified. The elements are strategy, system and structure (Petit, 2012).
Soft Elements
The soft elements are difficult to be defined and identified; as such elements are more governed by
the organization’s culture. These are equally important like hard elements as help in determining the
success of an organization in the industry. Soft elements are skills, staff, and style and shared values.
1. Strategy

A plan made by the organization so as to achieve the long term as well as the short term goals along
with being at the competitive advantage than the others is called strategy. For example, Amazon has
a strategy that focuses on designs as well as the features of the products they manufacture. This gets
them an advantage to continue to produce the same product along with new added features and a
design better than before which lets the customers to buy their products as they know how good the
previous products were and the new one will surely have better design and functionality.
2. Structure
An organization’s structure helps it to organize the divisions of the business along with the reporting
and hierarchy patterns. Most of the structures of the organization are hierarchal and that lets easily
spot who is in charge. CEO was the one who used to handle it all. He gave the rights to the
employees so that they can be a part of the decision making process. No matter more autonomy was
given, the structure of Amazon is still hierarchal (Steger, 2010).
3. System
The daily process of the organization is the system of that company. It helps employees know what
they are expected to do. UAE can be an example on how the system works (Wilkinson and Kannan,
2013).
4. Skills
Skills define the capability of the employees of an organization and how they can handle a situation.
This shows how well the systems can be changed or applying a change to the system. Amazon has
skilled employees and uses “Pull Strategy” that influences the customers because of the brand image
they carry. This infers that the skills of the employees have done so much that it is no longer required
to prove it to the customers of how good their products are.
5. Staff
Each organization has an appropriate person employed for a task who is called staff. The staff needs
to be recruited, motivated, trained and rewarded whenever necessary. The professional staff at
Amazon is professional and at the same time simple for the customers. They have great customer