Amazon's Global Corporate Strategy: An In-depth Business Report

This report provides an in-depth analysis of Amazon's global corporate strategy, examining its evolution in the e-commerce industry. It explores Amazon's adoption of open innovation, particularly in supply chain management and its use of the eliminate, raise, create, and reduce framework. The report also delves into Amazon's concentric diversification strategy, cost leadership, and hierarchical organizational structure. It discusses the company's responses to external factors, including competition from rivals like Walmart and Alibaba, as well as the impact of government regulations. Furthermore, the report analyzes Amazon's approach to global convergence and its use of generic and intensive growth strategies, such as market penetration and product development, highlighting the importance of customer feedback in its success.

Running Head: MASTER OF BUSINESS GLOBAL CORPORATE STRATEGY 0
Master of business Global Corporate Strategy
7/14/2018

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Table of Contents
Introduction................................................................................................................................2
QUESTION ONE.......................................................................................................................2
QUESTION TWO......................................................................................................................5
QUESTION THREE..................................................................................................................7
QUESTION FOUR....................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
The selected industry is to be e-commerce as it has gained immense popularity in the last few
years. It is a continuously expanding industry, which is also closely linked with the digital
era. The MNC chosen in this industry is Amazon, which is an American public owned
company, founded in 1994 by Jeff bozos. It is launched as an online bookstore and later on
their logo got popular (a to z) which symbolize that they have all product available from a to
z category.
In few past years, it becomes one of the largest it e-commerce retailing company in the world
that sells products all over the country. It is well known for its quality and timely delivery and
having great knowledge in making their customers happy.
Amazon vision and mission statements help to evolve the company like a boom. Its mission
statement based on the customer convenience-focused on lowest prices and greater choice of
selection. The objective of Amazon is always customer centric and the company always
amends policies on timely manner compliances to various factors like customer needs and
preferences, government laws, societal factors etc.
QUESTION ONE
With the increased globalization of the economy, the economic growth is boosted by a high
percentage aligning with innovation and competitiveness. Competitiveness forces the
industry and companies to be innovative from both internal and internal end. The close
innovation is a traditional concept where the company generates, develops and
commercializes their own ideas by highly investing in R&DA department and employing
skills and professional employed. The open innovation is a new paradigm, where the
company commercializes their own ideas as well as seeks innovation from other firms. It
means they focus on getting ideas from both the internal and external environment.
Open innovation is a path of competitiveness innovation and one of the Amazon’s most
effective and valuable attributes is that it follow and adopt a business model which is based
on open innovation. The most important innovation Amazon’s use is of making effective
supply chain management and coordination, which help them to beat other e-commerce
options.

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(Montgomery, 2017)
Amazon has simplified its shipping landscape by using the concept of eliminating, raising,
creating and reducing framework. In this, Amazon eliminates the old retail distribution
channel by contracting directly with suppliers aligning with the latest technology in logistics
and thus save cost and more avenues to the customers. They try to raise customer
expectations and then fulfil it by experience and efficiency. In addition, they try to create new
technology which no other industry is offering by establishing cloud computing. Amazon’s
also follows a very different standard or policy which states of reducing short-term profit
through long-term growth which makes Amazon one of the leading company in the world
which come from external innovation and other industries.
The next concept factor endowment is a combination of land, labour, capital, and
entrepreneurship that a country can exploit for a purpose of manufacturing. Generally,
Amazon selects metro areas, which have more than 1 million individuals. Its Seattle
headquarters consist of 33 buildings totalling 8.1 million sq. ft. From 2010 to 2017, Amazon
invested up to $3.7 in buildings and infrastructure and $1.4 billion on utilities and
maintenance. In getting an effective labour force, Amazon contact with various universities
and community colleges. Amazon entrepreneurship cell helps it in ruling the commercial
world. Alexa was the part of this cell only whereas a new program called drone delivery is in
the beta phase.

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Amazon ability to work in the various type of industries dominate and scaring competitors.
For example, Amazon is working in merchandising; electronics, web-based service, and
Media service provider (Amazon prime video). Buyers are getting expertise over time and
that leads to the change in demand from the customer. Amazon is pulling those demand and
with various innovations and market techniques, it trying to fulfil those demands before time.
This help in building Amazon core capability which is to provide the most convenient place
for the people so that they can buy any range of products at the lowest price in the market.
Amazon’s strategy can be described as concentric diversification. With the help of this
strategy, Amazon is using its technological capabilities at full potential for the success of the
business and follows cost leadership strategy to provide supreme value to the customer at the
lowest price.
Amazon organization structure can be classified as hierarchical and this structure emerges
due to the huge size of the corporate as according to estimation in the US, the online retail
sales in the year 2016 consists of 43% of total sales. In this hierarchy, the senior management
team includes two CEOs, three Senior Vice Presidents, and one Worldwide Controller, who
control various important programs of the company, which is directly reported to the Amazon
CEO Jeff Bezos. In spite of its large size hierarchical structure, there is a high flexibility
between its various departments and functions, which makes it a unique e-commerce
company. In addition, it also leads externally by disruptive innovation and diversification.
The external environment has various rivalries like Wal-Mart, Alibaba, and eBay. Amazon
has both offline and online capabilities but some rivalries are acquires only offline
capabilities like Wal-Mart. The Chinese company Alibaba, which has spent around $9.3
billion in offline stores since 2015, according to Reuters is not having much impact on
Amazon. According to Alibaba international strategy, the focus is on enabling merchants
globally to sell into the Chinese market but Amazon has no such reservations and this is the
point where these two companies strategy differs.
Amazon need to comply with various government laws for entering into the global market
like due to Chinese law, Amazon web services have to compulsory sold some physical
infrastructure property to Sinnet, AWS has a separate hardware venture in partnership with
the Ningxia provincial government in China’s northwest. Amazon also states that the Sinnet
managed Amazon public cloud services in the country.
Considering external innovation and competition, Amazon is diversifying its business into
various fields like, numerous milestones are achieved by Amazon in recent years including
Web services, Alexa, Amazon devices like fire TV stick and Echo devices, Prime Video and
Music, Amazon Go etc. The credit is also gone for many who help Amazon by pushing better
service to customers.

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QUESTION TWO
Global convergence perspective is a process of aligning multiple dimensions such as culture,
policy, and economy across nations so that to achieve strategic goal whereas diversity
management promotes valuing HR resources of a company as individuals and use their
strengths and capabilities for improving the business performance. Both concepts have their
own advantages and disadvantages. In global convergence perspective, the focus is on
achieving the organizational objectives and this help the company to diversify the business,
which leads to superior performance, but here the employees are treated as a thing or tool for
achieving a strategic goal. Also, Global convergence is affected by certain factors like
technology advancement, customer preferences, countries policy etc. International diversity
perspective focuses more on the HR resource where HR strength and capabilities are aligned
with the organizational goals and objectives. They use their full employee potential to
enhance the performance in every department and functions but in this perspective, there is a
high cost of training.
As Amazon is based on digital cloud e-commerce Company, there is less requirement of the
labour force and more requirements of Global economy support and resources and this makes
Amazon go for the approach of Global convergence where they can comply with different
cultures and economies, different market and customers. Digital transformation has both
positive and negative connotations for traditional retailers, manufacturers and wholesalers.
Many large retailers including Amazon are achieving success by selling online. To satisfy the
scaling demand for technology in online retail and wholesale, a company must implement an
Omnichannel, multichannel, marketing tools and cloud e-commerce solutions. This will help
the company in maximizing their corporate profitability and their reachability.
(Source: Dudovskiy, 2014)

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As this approach applied in all the industries with all its product and services and to all the
businesses irrespective of its size and scale, it can be called as an example of “generic
strategies”.
Amazon generic strategy for competitive advantage uses the approach that the company uses
to develop its business surrounded by strong competition in the online retail market. Amazon
established himself as a largest online retailer in the world even against giants like Wal-Mart.
This can happen only because of their intensive growth strategies, which lead Amazon to
expansion and diversification. According to Amazon annual report 2017, many small and
medium-sized businesses worldwide now approach to Amazon for selling their products
through Amazon to grab the new customer’s base around the globe. These SMBs comprises
various sellers across every state in the U.S., and from different countries around the globe.
In the year 2017, with the help of Kindle Direct Publishing technology, various independent
authors exceeded $100,000 in royalties. In 2011, these SMBs also invested over $150 billion
worldwide in their technology infrastructure, transportation network and fulfilment
capabilities. Due to all this, around 1.7 million direct and indirect jobs were created
throughout the globe.
The cost leadership is followed by Amazon as its generic strategy for the competitive
advantage. The main objective of this generic strategy was in minimizing the operational
costs. For example, to improve operation efficiency, the advanced computing and networking
technologies are being used which also leads in minimization of various costs. As Amazon is
an e-commerce company it benefitted by the practice of automation, which is generally used
for processing, scheduling, logistics and various other processes. In addition, there is a huge
investment done in the department of R&D so that the performance can be optimized for its
IT resources. In addition, Amazon achieves economies of scale as it is supported by massive
warehousing facilities which directly or indirectly help in increasing the processing capability
and that become a cost advantage for the company. As Amazon differ itself in services- so it
can also be assumed that Amazon follows something of a hybrid type of strategy.
For intensive growth strategy, Amazon uses market expansion, which helps it to add new
countries over the globe and creates new opportunities. This strategy also works as a
competitive advantage related to the market development. Market penetration is a secondary
intensive growth strategy where the goal is to make more profits from the markets. Amazon
grows with adding more numbers of consumers. For example, if the consumer diverts his/her
interest in the online retail, the profits of the organization will increase. Market penetration is
behind the initial rapid growth of Amazon in the United States.
For the purpose of business growth, Amazon focuses on product development as a supporting
intensive strategy. By introducing Alexa, prime video, drone delivery option (beta) and
offering a new product it grows like a boom over time. The company now also deals with
Amazon Basics products and Amazon Web Services (AWS). The company has cost
leadership generic strategy supports this intensive strategy by aligning the process with lower
cost approach to promote new and innovative products.

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Amazon highly focuses on customer feedback, and delighted customers spread such feedback
on various places such as forums. This type of service also helps the company to make long-
term and loyal customers so that they are attracted to buy more from Amazon.
For have to be a big giant, an organization may not have to depend on one strategy, plan or
perspective but they have to comply with different strategies which help them to penetrate the
market. Amazon, which is an international e-commerce retailer majorly, focuses on cost-
leadership but also make plans while considering other factors (like service) which makes it
hybrid.
QUESTION THREE
Corporate social responsibility (CSR) is a corporate responsibility to the environment, society
and stakeholders. Corporate governance is the boundary and framework where a company
has to work under various processes, practices as it consists of the interest of various
stakeholders, shareholders, management, customers, government and societal and
community. Corporate profitability is a tool, which gives a global overview of how a
company works, its relation between various department and functions, so that effective
strategic planning can be done which help the managers at every level. It also helps the
management in knowing how a business earns a profit and what are the various strategic
decision affect the daily operations of the organization.
CSR, which stands for Corporate Social Responsibility, is a broad concept that helps the
society in sustainable development, the delivery economic benefit to the organization
(shareholders), providing social and environmental benefits and thus it has wider practices
and definitions.
These all concepts are inter-related which help the organization in achieving its goals and
build a strong brand identity. For growing corporate profitability, Amazon pushes various
new products with effective plan and strategies. From a CSR perspective, it is beyond
corporate profit and has become the mainstream part of the company for the community
benefit and as the corporate business become more aligned with a non-profit organization.
Every business uses various resources like water, land, roads, and power, etc. and it is the
responsibility of every business organization to uses a part of the profit for the welfare for the
organization. Also, it is an obligation of the business towards the government, which
persuades the organization to take a lead in reducing the pollution created by their factories.
Amazon which is leading in e-commerce industry has also focused on the development of
their CSR activity by supporting local communities, empowering workers, reducing energy
consumptions, providing education and by doing various charity and donations to NGO. Few
initiatives, which are taken by the organization, are –

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 Incubating fulfillments centres to give surplus food to Feeding Americans.
 Employing around 10,000 troupers and military spouses.
 Hosting a program called ‘Girls Who Code’ occasionally to assist the girls who are having
positive approach towards coding.
 Amazon’s customer service employees can do their work from home only with the help of
Amazon Virtual Contact Centre.
 Amazon Career Choice program pre-pays 95% of tuition for staffs who want to take any
other course and whether the study is beneficial for the company or not.
 From environment perspective, Amazon completed its goal of applying 40% renewable
energy by the end of 2016 and the company will also use solar energy systems on its various
fulfilment facility rooftops across the US, which can generate a power of 41 megawatts
(MW).
 Amazon branch is known as Amazon Smile assists their consumers to fund various
charitable establishments when they purchase any kinds of stuff from atamazon.com.
 Amazon provides and grants funds to various aspiring writers and thus helps the certain
non-profit literary organization and this all is done by a separate branch of the company
named Amazon Literary partnership.
 Nearly, 2000 gift packages were sent to the family of active US military men and women
who are far from their families and 500 gift packages for their children’s in the year 2015.
According to RepTrak ranking, in 2015, a reputation of good citizenship is also earned by
Amazon due to its number of initiatives:
 Packaging is done in Amazon while considering various environmental factors.
 Amazon Web Services research grants for climate change
 A program was developed named as Kaizen program that helped in by changing the
mind of employees so that they can take various initiatives for the safety of
environment, which can bring more goodwill to the company.
 The building design of the Amazon corporate headquarters is sustainably maintained
and they have a plan of recycling nearby building heat to warm the office space.
These CSR activities help the organization in the strengthening of their corporate
profitability and brand equity. According to the Reputation Institute, those companies,
which have excellent CSR RepTrak scores, are recommended by the consumers and only
6% customer would recommend those companies have poor scores.
Various organizations doing a great job by accepting the importance of CSR and aligning
the goodwill with corporate social responsibility and it is also important they these
organizations have to communicate their performance to the public as this will help and
encourage the customers to see your corporate reputation on a positive side. This concept
can be achieved if an organization -
 Global initiatives are important but an organization should also focus on local
initiatives, which will help in increasing the relevance of your efforts for customers.
 Make strategies and take initiatives for long-term i.e. years, not for months.
 Promote word of mouth and sharing of several important activities on social media.
Amazon is regularly active on various social media sites like Facebook, Google +,

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and many more that help it to spread any important information regarding new offers
and launching of new product. This will also help it in saving a huge amount of costs.
 Allow consumers to join with the company’s discussion of plans with the help of
forums where customers or consumers can share their ideas, suggestions, views etc.
This will help the organization to understand more about the market and thus
necessary implementations can be done according to the suggestions.
QUESTION FOUR
As the multinational company works in several countries, it is important to understand the
demand and environment (PESTEL) of the respective countries, which help the organization
to design their corporate plan and strategy.
Most countries use external innovation as a part of the strategy for framing their policies and
plans. This is a new paradigm, which seeks and acquires knowledge and ideas from the
external environment including competitors, customers and stakeholders.
There are both pro and cons of open or external innovation, which influence the
business decisions from different dimensions. External innovation provides self-competition,
which helps the organization to create innovation in itself. It will help in building trust and an
open relationship. The major disadvantage of open innovation is that not sufficient resources
or money for the Research development and time is a constraint. In addition, global
convergence helps the organization to mix-up their resources, values and cultures for
expanding and diversification of the business but it is also affected by the rapid change in
technology and consumer tastes and preferences. Also, the organization has to face certain
challenges at certain stages of implementation.
Various organizations also adopt internal diversity organization and treated their employees
as an individual and value them by using their unique strengths and capabilities to increases
the management performance. The major advantage of this perspective is that the employees
are more loyal to such organizations and prefer organizational goal to the individual goal and
thus productivity and creativity are increases. The major cons of this perspective are that the
organization has to bear the high cost of training and sometimes competition in the workplace
increases when employees do not accept other cultures and try to compete with each other
rather than working in a collaborative team.
For sustaining the corporate profitability, the senior management helps in showing the clear
vision to the employees and leads to create a change with the leadership quality called
leadership for change. This will help the management to create a customer-centric strategy
based on innovation.

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Conclusion
In conclusion, Amazon as a leading chain of e-commerce industry had passed all the tests
required in a winning strategy. The alignment of their strategies with the open innovation tool
helps them to understand their market more precisely and support them in widening their
market base. Using their technological innovation and strategic alliances, they made cost-
effective, convenient and simple for their customers to purchase any products or service
online.
While choosing the correct approach i.e. global convergence, their goal for expansion and
diversification also comes. The support of digital transformation also helps the company to
get a competitive position in the marker.
The corporate profitability of the company gets strengthen with their CSR activities and as an
MNC, Amazon successfully makes a positive stand for the various numbers of CSR
accomplishments during their lifecycle.
At last, the adoption of all the approaches in a timely and effective manner make Amazon the
“darling of Wall Street”.