University Business Report: Amazon's International Management Strategy

This report provides a comprehensive analysis of Amazon's business strategy, focusing on its international management approach. It begins with an overview of the organization, its business strategies, and its internal environment, highlighting strengths, weaknesses, opportunities, and threats. The report delves into Amazon's product diversification strategy, examining its expansion into various product categories and its use of market penetration strategies. It also explores Amazon's business model, particularly the Clicks model and its Just in Time approach. Furthermore, the report examines Amazon's marketing mix, including product, place, promotion, and price strategies. The international expansion strategy of Amazon is also discussed, emphasizing its focus on building a global distribution network and targeting markets in Asia and Europe. The report concludes by addressing the challenges Amazon faces and offering recommendations for overcoming them, ultimately aiming to solidify Amazon's position as a market leader in the online retail industry.

Running head: INTERNATIONAL MANAGEMENT
International Management
Name of the Student
Name of the University
Author Note

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Abstract
The purpose of the following report is to develop the business strategy for Amazon. Amazon has been
the market leaders in the online retail industry. They have been providing customers with diverse
products. The customer satisfaction has been one of their prior focuses. In this report, the different
business strategies for Amazon have been discussed here. The product diversification strategy has been
one of their major successful strategies. The organization has been very much successful in adopting
their strategies for the development. The aspects of their international expansion have been discussed
here as well. The challenges they have been facing are highlighted in this section along with some
important recommendations. These recommendations will help Amazon to get over the challenges.
Thus they can pose themselves as the market leaders in the online retail industry.

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Table of Contents
INTRODUCTION...........................................................................................................................................3
OVERVIEW OF THE ORGANIZATION............................................................................................................3
BUSINESS STRATEGIES FOR AMAZON..........................................................................................................4
Internal environment..............................................................................................................................4
Product diversification strategy...............................................................................................................5
Business model........................................................................................................................................7
Marketing mix for Amazon......................................................................................................................7
INTERNATIONAL EXPANSION STRATEGY FOR AMAZON..............................................................................8
CHALLENGES IN THE BUSINESS OPERATIONS FOR AMAZON.......................................................................9
RECOMMENDATIONS................................................................................................................................10
CONCLUSION.............................................................................................................................................10
REFERENCES..............................................................................................................................................11

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INTRODUCTION
The purpose of the following report is to describe about the business strategy of Amazon. The
business strategy is a very important thing for the business companies so they can compete in the
modern competitive business environment. In this report the analysis of the business strategy for
Amazon will be presented. The success strategies of the company will be presented in this report. The
market value and brand reputation of Amazon os huge indeed. The product and service diversification is
alos a very important factor in determining the business strategies. In this paper, some of the most
important things will be discussed like the product diversification strategy; the competitive factors for
this organization should be used as well. They have been targeting to capitalize on their market on the
basis of their international market expansion. Also one of their most important target is to achieve the
household name status. They want to become the market leaders in their industry. This is why they will
need to grow their market status properly. They might face some challenges in the future for optimizing
their strategies properly. The potential strategies that they might adopt should be discussed here as
well. These strategies will help the organization to thrive more in this environment.
OVERVIEW OF THE ORGANIZATION
The chosen organization for this business report is Amazon. This is a online retail company that
was founded in the year 1994 by Jeff Bezos (Amazon.com 2018). They have been serving the worldwide
area for their services. They are active in most of the countries. This company began its trading in the
year 1995. The headquarters of the organization is located at Seattle, Washington in the United States of
America (Amazon.com 2018). The market capitalization has been one of their most important grounds
as they had crossed Walmart in this. They are considered as the third most valuable public company by
the revenue. This is why they will look to invest in expanding into other countries. They have many
subsidiaries working under them. Currently they are trying to invest on increasing their market capital so

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they can insist in their growth strategies. They have to improve on their strategies so they can gain more
customers by the recommendations of their existing customers. (Amazon.com 2018).
BUSINESS STRATEGIES FOR AMAZON
Amazon has been a company that has stressed on the market expansion for a number of
reasons (Mithas, Tafti and Mitchell 2013). They operate in a certain industry that is highly competitive
for the dependence of the customers on internet and the target market of this company is mainly the
young people. The competition has been one of the most important things for the Amazon to confront
and the internal environment for the organization should be discussed properly (Armstrong et al. 2015).
Internal environment
Strengths
 The brand value of the company is very much strong.
 They focus on three strategies like cost leadership, differentiation and focus strategy (Valipour,
Birjandi and Honarbakhsh, 2012).
 They use the information technology for the betterment of their services.
 The e-commerce distribution channels they use is very much strong and finds them new
customers every time (Johnson 2016).
Weaknesses
 The diversification strategy of Amazon has been very much thin as it seems from the
contemporary aspects.
 They offer free shipping facilities for their customers. This is how they are losing their profit
margins in a big way (Gamble, Thompson and Peteraf 2013).

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 As they have no physical stores and only focus on online retailing, this might be a problem for
them in the international expansion (Kumar, Gaur and Pattnaik 2012).
 Amazon tends to operate in the zero margin business models. The profitability of the company is
decreasing in this way.
Opportunities
 They can introduce the online payment system and this could be an effective step for them to
resolve the issues to the customers (Sudarno 2012).
 They can sell new products and focus on improving the quality of the products.
 They can increase their brand value by raising their product portfolio in a better way.
 They can offer to open several other websites in the emerging markets.
Threats
 The identity theft and hacking of the personal data of the consumers can cause a serious threat
for the customers.
 The pricing strategies of Amazon are very much aggressive. This is why they have faced some
lawsuits from many publishers as well (Benito-Osorio et al. 2012).
Product diversification strategy
One of the most important things for identifying the business strategy of Amazon is the product
diversification strategy. Amazon has gone on to concentrate on the diversification strategy so they can
get more customers at their disposal within a shorter span of time (Benito-Osorio et al. 2012). At the
beginning, Amazon began their business by focusing on the various areas like the selling of the mobile
phones, spare parts for the motor vehicles, electric goods, cosmetics, clothes and many things. They will
be using the market penetration strategies for increasing their market share. They will strengthen the

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customer loyalty of their existing markets and focus on creating new customer markets (Coelho and
(Henseler 2012). They have also adopted one strategy like sending their customers the gifts that would
be helpful for them to promote their new products. This is the way they can raise the motivation among
the employees properly. Then only the customers will feel the urge for shopping from online retail
platform like Amazon (Lazaroiu 2015).
Amazon has been targeting to sell various new products so they can increase their market share
by focusing on their target markets. Now, they are planning to sell various products like
pharmaceuticals, houses, insurance policies for the customers and many more facilities. It has been seen
that the high-fi corporate people do not have the ample time to buy these things by consulting with the
experts. So, they simply prefer the internet mediums properly. Amazon will provide the customers with
the better and convenient products for their use (Barney 2014).
Amazon will also like to introduce new products for the developing new markets in the future.
They do not want to confine themselves within one array of the business products. They want to be
global and focus on selling the diversified products to their customers. The online retail site also offers
their customers with the free repair service for their several products. They have been using the
conglomerate diversification strategy so they can cater to the needs of several customers from all the
levels of the society (Barney 2014). Now they want to focus on new products that are just developing
and this is why they want to get the grab on these products. They want to grow into these sections as
they will not face any market competition here. If they can grab these markets at one go, this will be
highly profitable for them. The aspects of customer satisfaction will be on their target as well. This will
pose a positive effect on the minds of the customers and they will feel motivated to complete their
shopping from Amazon.

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Business model
The business model that the organization currently uses is the Clicks model. According to this
model they have adopted the Just in Time approach for the customers. This approach means the
strategy by which they will provide the special products and services just in time when it is needed. They
go on to buy the products from their suppliers and send it back to their customers. In order to do this,
they must focus a strong supply chain and logistics support for the customers (Christopher 2016). This
proves to be very much beneficial for both the sellers and buyers.
Marketing mix for Amazon
A very significant thing for adopting the perfect marketing strategy is indulging in building a
proper marketing mix. However, it has to be said that Amazon has been able to expand the size of the
market as they have improved their marketing position than their potential substitute online retailers
(Gordon 2012).
Product
Amazon has been expanding their business by selling various types of products like the books,
DVDs, latest and exclusive mobile phones, jewelry, clothes and many other things. This huge range of
products has benefitted them a lot by increasing their customer base. They are aiming to enter many
new products into their inventory for catering to the needs of diverse customers (Gordon 2012)
Place
The brand value of Amazon is so high that it has saved the company from being drowned in this
competitive environment. They are present in most countries. The R&D technology they use has become
a very important part of their supply chain and logistics process. The employees of Amazon are generally

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very friendly and they mitigate all the problems with smiling faces all the time. The customer service for
Amazon is present in most of the countries.
Promotion
As Amazon is a e-commerce site, the most useful way for promoting their business is digital
marketing or social media marketing (Tuten and Solomon 2017). Amazon has also taken up the
strategies like spreading the uniqueness of their products by the television commercials. The advertising
strategy for Amazon is very much web based indeed. They also use the advertising networks online. This
is why the customers see the same products on some other websites as well (Gordon 2012) They are
also keen on getting their name on the high up on the search engines like Google. This will help them to
get the most useful reactions from the users. This is why the name of the company begins with ‘a’. The
word of mouth promotion activity has been used by Amazon for getting more users as well.
Price
They use the competitive strategies in terms of setting the prices properly. They have many
employees all over the world (Gordon 2012) This is why they use the premium pricing method so they
can pay their employees on time. The competitive pricing of the company should benefit the company
from many angles. The company uses the online payment system so this system is very convenient for
them.
INTERNATIONAL EXPANSION STRATEGY FOR AMAZON
Amazon has targeted the international expansion for several reasons. They want to build up a
distribution network so they can get a wide range of customers all over the world. The millions of
customers would help them to gain the best profits. The intensity of global expansion of Amazon is huge
indeed (Penrose 2017). This is why they will need to focus on strengthening their customer base in a

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better way. They want to expand their market overseas in the markets of Asia and Europe. They want to
capture the Asian countries like China and India. The huge population of these countries will help
Amazon to succeed as well. Most of the European countries like England, Germany, France and Italy
have been much updated with technology. This is why the Europeans will get the advantages of using
the Amazon prime benefits.
CHALLENGES IN THE BUSINESS OPERATIONS FOR AMAZON
Amazon has been facing many challenges in their business operations. These challenges will act
as the backdrops for getting the profits within their business operations.
 Amazon has set up the performance targets for the sellers in most of the countries. It will be a
great cause of worry if the sellers are not able to meet the performance targets. This will lower
down the profits for Amazon (Pantano 2014)
 The e-commerce market is very convenient as well as costly. Amazon wants some of the
important data like the name of the customers, their address, their identity cards, the details of
their bank accounts and many more. If these data are somehow leaked, this will cause havoc
and the customers will lose the faith on the security settings of the company (Pantano 2014).
 Amazon wants to sell diverse products focusing on different target markets. It might happen
that all of their target markets do not respond to these products. Besides that the qualitu of
their products is also an important question. It has been reported from some regions that the
product quality for Amazon has not been that much up to the mark.
 The lack of proper training for the employees about handling the e-commerce system will
hamper their business operations (Ford 2014).
 As Amazon operates in several countries, they might face the issues related to cross-culture. The
employees belong to different backgrounds and this could cause huge issues.

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RECOMMENDATIONS
Some recommendations could be given in order to solve these issues. These recommendations
can really be helpful for designing the working environment and reshaping the business operations in a
better manner.
1. Amazon should bring some regular offers for their customers. These offers should be new in
concept and should be able to draw the attraction of the customers (Ford 2014).
2. Amazon should arrange for the training of the employees to make them adept at handling the e-
commerce systems. This should enable the employees to work better.
3. The working environment and organizational culture should be very much friendly.
4. Amazon should draw up more competitive strategies so they can be able to cope up with the
challenges posed by their rivals or competitors (Ford 2014).
CONCLUSION
This paper can be concluded by saying that Amazon has been the best online retailer in the
world right now. The business strategies of the organization have been discussed here. The different
business strategies and business models they have adopted have been described here properly. Some of
the important things that have been discussed here are the marketing mix of the company, different
issues like the product diversification strategy, internal environment and other things. The product
diversification strategy has been very much important for them to be the market leaders in the online
retail industry.

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REFERENCES
Amazon.com (2018). Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs &
more. [online] Amazon.com. Available at: https://www.amazon.com/ [Accessed 20 May 2018].
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson
Education.
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
Benito-Osorio, D., Ángel Guerras-Martín, L. and Ángel Zuñiga-Vicente, J., 2012. Four decades of research
on product diversification: A literature review. Management Decision, 50(2), pp.325-344.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Coelho, P.S. and Henseler, J., 2012. Creating customer loyalty through service customization. European
Journal of Marketing, 46(3/4), pp.331-356.
Ford, J.K., 2014. Improving training effectiveness in work organizations. Psychology Press.
Gamble, J.E., Thompson, A.A. and Peteraf, M.A., 2013. Essentials of strategic management: The quest for
competitive advantage. McGraw-Hill/Irwin.
Gordon, R., 2012. Re-thinking and re-tooling the social marketing mix. Australasian Marketing Journal
(AMJ), 20(2), pp.122-126.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Kumar, V., Gaur, A.S. and Pattnaik, C., 2012. Product diversification and international expansion of
business groups. Management International Review, 52(2), pp.175-192.

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Lazaroiu, G., 2015. Employee motivation and job performance. Linguistic and Philosophical
Investigations, 14, p.97.
Mithas, S., Tafti, A. and Mitchell, W., 2013. How a Firm's Competitive Environment and Digital Strategic
Posture Influence Digital Business Strategy. Mis Quarterly, 37(2).
Pantano, E., 2014. Innovation drivers in retail industry. International Journal of Information
Management, 34(3), pp.344-350.
Penrose, E.T., 2017. Foreign Investment and the Growth of the Firm 1. In International Business (pp. 33-
48). Routledge.
Sudarno, B.E.P., 2012. Analysis Tracking Online Payment System. International Journal Of Scientific &
Technology Research (IJSTR) Volume, 1.
Tuten, T.L. and Solomon, M.R., 2017. Social media marketing. Sage.
Valipour, H., Birjandi, H. and Honarbakhsh, S., 2012. The effects of cost leadership strategy and product
differentiation strategy on the performance of firms. Journal of Asian Business Strategy, 2(1), p.14.