Amazon's International Growth Strategy: A Business Report

This report serves as an external consultant's assessment of Amazon's international growth strategy, highlighting key issues and providing recommendations for improvement. It begins with an overview of Amazon's current operating position, its international competitive strategy, and its functional organizational structure. The report then delves into Amazon's market entry strategies, specifically focusing on Foreign Direct Investment (FDI) for expansion into new regions like Cuba and Iran, and examines its operational control, production, and distribution/supply chain management, emphasizing the use of fulfillment by Amazon services. Furthermore, it addresses the management of human resources across borders, recommending strategies such as decentralized workplaces, effective recruitment, employee benefits, training, and challenging roles. The report identifies key issues, such as market competition and outdated staff knowledge, and offers recommendations for management, concluding with suggestions for enhancing Amazon's global presence through innovation and employee development.

Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student
Name of the University
Author Note

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Table of Contents
1.0 Introduction......................................................................................................................................2
2.0 Discussion........................................................................................................................................2
2.1 Overview of Amazon and its current operating position.............................................................2
2.2 Amazon’s international competitive strategy..............................................................................3
2.3 Existing organizational design structure and control issues........................................................4
2.4 Entry strategies used to enter other regions/countries.................................................................5
2.5 Operational control, production and distribution/supply chain management..............................6
2.6 Management of human resources across borders........................................................................8
2.7 Key issues or opportunities for management...............................................................................9
2.8 Recommendations to management for improvement................................................................10
3.0 Conclusion.....................................................................................................................................11
4.0 Reference List................................................................................................................................13

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1.0 Introduction
Performing the role of the external consultant for assessing the international growth
strategy for Amazon, this report will highlight some issues regarding the business’s international
growth strategy and quality recommendations for the betterment of the organization. This report
comprised the details off overview of the company and current operating position, company’s
international competitive strategy, existing organizational design structure and control issues,
entry strategies used to enter other regions/countries, operational control, production and
distribution/supply chain management, management of Human Resources across borders and
some related key issues or opportunities for management and suitable recommendations to
management for improvement. The company that is selected for the report is Amazon, which is
an American cloud computing and electronic commerce company. In recent times, the e-
commerce business is provided to nation like United States, the United Kingdom, Canada,
Germany, China, India, Ireland, France, Australia, Brazil, Spain, Netherlands, Mexico and Japan.
This report will highlight strategies for Amazon to expand their business in other developing and
developed countries.
2.0 Discussion
2.1 Overview of Amazon and its current operating position
Amazon was founded in the year 1994 and is presently headquartered at United States,
Washington. The main operation of the organization is to provide things that people desire to
purchase from retail shops through online media. Apart from that the main products of Amazon
in recent times are Amazon Appstore, Amazon Echo, Amazon Prime, Amazon Kindle, Amazon

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Video and ComiXology. 5,66,000 employees are working under the organization across the
world to fulfill the organizational objectives. The annual revenues of the concerned organization
for the years 2017 was $177.87 billion and $135.99 billion for 2016 (Statista 2018).
Image: Amazon’s Net sales revenue for 2004- 2017
(Source: Statista 2018)
2.2 Amazon’s international competitive strategy
The e-commerce website offered by Amazon provides low cost objects compared to the
physical stores. People also found products of different brands and can select the products based
on their price preferences, design requirements, time of delivery, lowest price offered for the
variety of products. Thus, for these aspects it can be said that Amazon utilizes the concept of cost
leadership and diversification that provide the company an effective international competitive
strategy. Rothaermel (2015) also stated that Amazon operates their business functions with the
strategy of obtaining razor thin profit margin. The prime reason for the success of Amazon is

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spite of thin profit margin are acquiring combination of economies of scale, constant business
diversification and innovation of business processes. Ross (2015) furthermore depicted that
Amazon emphasized on customer obsession and not on the competitor focus and the company
also focus on long-term thinking and remained commitment to operational excellence. This can
be witnessed through the development of Amazon Drones for faster delivery. In order to attain
the shipping edge, Amazon also developed progressive deals with the established nation like
United States Postal Service and UPS (Rothaermel 2015). Thus, the absence of any physical
store helps Amazon to ship and deliver the products in time.
2.3 Existing organizational design structure and control issues
Leih et al. (2014) portrays that organizational design structure illustrates the management
people, who are liable for operating all the business functions in order to obtain the
organizational objectives. Amazon follows a functional organizational structure and considers
the characteristics of Global function-based groups, global hierarchy and geographic divisions
(Daft 2015). Amazon has a dedicated group for its major business function lead by a senior
manager. The major function based group in Amazon are- Chief Officer Executive (CEO),
business development, Amazon Web Services (AWS), finance, accounting, international
consumer business, consumer business and legal and secretariat. Amazon hence follow a
multidivisional structure represented in the below formulated structure. Vertical lines of
command are followed in Amazon according to which senior managers’ directives facilitate
managerial control to all the entire organization of Amazon.

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Board of Directors
Corporate R&D
CEO
Operations
Corporate HQ staffs
CEO EditorialCEO Marketing CEO Business Expansion CEO Development
CEO- Jeff Bezos
Advertising
Communication
Strategic Relationship
Warehouse
Customer Services
Special Orders
Development of products and servicesWebsite design
Editorial content
Book features
Software design
Software development
Image: Organizational structure of Amazon
2.4 Entry strategies used to enter other regions/countries
Amazon is already operating in 185 countries and offers their premium services of
delivering quality products from registered sellers through online medium. Kang and Montoya
(2014) stated that there are different types of market entry strategies like- direct exporting,
licensing, franchising, joint ventures, piggybacking and foreign direct investment. Raff et al.
(2012) depicted that direct exporting refers to selling directly into the market and in this case, the
agents and distributors work closely for obtaining the organizational goals. Ulhøi (2012)
furthermore portrays that licensing on the other hand illustrates where a firm transfers the rights
to be used through other organization. Franchising is a process, where a firm agrees a grant to
another party for utilizing their products and services (Kumaraswamy et al. 2012). While some
organization prefer to get entry in a market through joint ventures where they development

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partnership with another organization to form a third independent company; some prefer
piggybacking where only one products is sold to other company (Laufs and Schwens 2014). The
concept of piggybacking based on foreign markets and included in Host Company’s inventory
for international markets. Lastly, foreign direct investment is a suitable option for an established
organization to make a market entry by investing a huge capital in the host market and
implement their business operation to attain profitability.
Amazon should focus on the Foreign Direct Investment (FDI), for entering into other
region like Cuba an Iran. The main reason for the same is that Amazon operates as their parent
company in other region and nation like Cuba, where after a huge political dilemma nation
intends to enhance their economic growth through business, establishing foreign business by
direct investment is welcomed by the government. Amazon can also prepare their warehouse in
suitable locations for making the delivery system of their products faster.
2.5 Operational control, production and distribution/supply chain management
Amazon utilizing the partnership strategy with effective logistic units named Logistics
Plus. A customer when places their orders, the global vendor prepare the desired products
through international air and ocean freight forwarding. The process is then followed with the
assistance of customs brokerage and trade compliance which is then carried out by domestic
ground transportation (Monczka et al. 2015). Wisner et al. (2014) mentioned that the products
then stored to the Amazon’s warehouse and storage inventory management kitting. In this place,
all the ordered products are stored, picked, packed and shipped including labeling with shipping
documents. Ross (2015) stated that this warehouse also operate the functionality of reverse
logistics. The products from warehouse after labeling sent to the users through three different

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ways. Firstly, through freight delivery, parcel delivery through post office services and direct
fulfillment by Amazon services (Logisticsplus.net 2018).
Image: Amazon’s distribution/supply chain management
(Source: Logisticsplus.net 2018)
Since, in developing countries like Cuba, Amazon can start for delivering their items
through fulfillment by Amazon services along with their inbound sortation centers, outbound
sortation centers, prime hubs and delivery centers. Wang et al. (2015) stated that sortation
centers are such offices and infrastructures that is used for sorting of the parcel according to the
location of the residents of addressee. Amazon on having inbound sortation centers can able to
segregate the order placed by the customers from all other sellers and distributors. The prime
benefits of including the outbound sortation centers is that Aamzon can handle to distribute the
desired objects to different sites based on their address internally. This can be operated through
the existing distribution system that is freight delivery, parcel delivery and fulfilled by Amazon.
The benefit that the organization can attained from prime now hubs is to give premium services

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to their prime users. Amazon’s Prime Now Hub delivers their prime users one-hour and two-
hour deliveries within a 15-mile radius. Amazon can also utilize software system that is built on
scanners and barcodes so that less mistakes in delivery is obtained.
2.6 Management of human resources across borders
Amazon has over 500,000 workers working in their organization across the world.
However, Deresky (2017) stated that not all people are competent to follow the organization’s
parent office’s rules and regulations. Thus, Amazon should adopt the host nation’s culture to
formulate proper human resource strategies so that their operational functionalities can be
obtained successfully. Some of the important aspects that should have to be considered while
managing the human resources across borders are:
De-centralizing the workplace environment- Binder (2016) stated that a company can show
greater benefits if there is no communication gap among the working personnel and people in the
managerial positions. Thus, Amazon needs to follow a less hierarchical de-centralized working
culture so that people can easily communicate with the managers and share their concern with
the seniors.
Recruitment- Amazon has to recruit the managers and staffs effectively so that can accomplish
the desire job roles and responsibility for attaining organizational goals. The managers of the
organization should be recruited from the home country’s culture so that they can assure that the
host country’s organization maintain the culture followed in the headquarter. However, the
recruitment of the employees can be made from the host country so that they can utilize their
local culture and knowledge for fulfilling their job roles.
Designing effective employee benefits policies- Amazon being am established organization
expected to offer an effective workplace environment to all their employees. Amazon needs to

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formulate the benefits according to the benefits required by the employees based on their culture
and financial benefits so that employees can intends to remain associated with the organization.
Employee training session- Reiche et al. (2016) highlight that some employees lack
communization due to language barrier with the managing people. In such cases, even through
the employee is efficient enough to perform the destined roles and responsibilities with
proficiency; the communication gap does not allow the manager to indentify the strength and
weakness off that particular employee. Thus, Amazon need to conducts regular employee
training sessions both for learning new technological implementation and on communication so
that effective interpersonal relationship can be built up among the employees and managers or
leaders.
Offering challenging roles to efficient employees- Leader should encourage employee for their
effort and give constructive feedback if lack any proficiency (Vance and Paik 2014). Amazon
should also implement effective performance management system to identify the strength of each
employee and offer those challenging roles and responsibility that can allow the employee to
enhance their performance in Amazon’s host nation’s office and also allow the concerned
organization to prosper with innovation.
2.7 Key issues or opportunities for management
In terms of making the business global the risk that is faced by Amazon is keeping up
with the market which includes the political aspect of the host nation. Cowling and Mailer
(2013) stated that on expansion of the business, the risk for rise in competitors also become high.
Thus, other online retail organizations, which are established from many years, can also take
initiative to formulate online services. The opportunity in this case that can be attained by the

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Amazon is to innovate new ideas and technology through which they can create their monopoly
in the host nation.
The knowledge base of the staffs may be outdated if not trained properly. Jackson et al.
(2014) stated that organization that deals with the technology driven operations, have to update
their technology regularly so that all the employees can gain the understanding of the operational
functionalities that the organization is performing utilizing the modern technology (Deresky
2017). Thus, Amazon can face the challenge to develop the knowledge base of the employees.
Amazon can also face problem in their internal operations. One such issue is to earn
more users to use their prime membership. Though Amazon has the largest customer base but it
struggles to increase their prime users. Amazon also do not disclose the total number of prime
users but the they always reveal the percentage rise or declined in the total number of such users
(Financial Times 2018).
Failure in adoption of the changes is another big issue that Amazon has to face while
implementing regular changes in the technology and new business functions. Binder (2016)
highlight that the main reason for the occurrence of this dissatisfaction is that employee have to
follow the rules irrespective of the fact whether or not they are capable enough to performed hat
changed system.
2.8 Recommendations to management for improvement
Auditing competitor’s details
Amazon can overcome the risk of competitors by regular monitoring the competitor’s
details and audit their upcoming strategies. Amazon can also make partnership with the
governing bodies of the host nation so that they can be aware of the political aspect that can be
occurred.

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Provision of Training
The training related to the modern technology can help Amazon to overcome the problem
of outdate knowledge base of the employees. However, the company needs to consider the fact
that as technology is changing so fast, allocating time in regular training might result in low
productivity and higher staff dissatisfaction. Thus, Amazon can opt for on-job training and paid
training sessions so that employee can get satisfaction for learning about new technologies.
Innovating the business operations
Amazon can enhance their prime memberships of they offer certain discount and benefits
like cash coupons for the next purchase once registered to the prime accounts. Moreover,
Amazon should also have to bring unique features in their operations that can attract the users
being the subscribers for the Prime Account. Strategies like online gaming shows, visualization
of 3D view of the projects and virtual trial of the products can be incorporated in the Amazon
Prime subscription for attracting more customers.
Developing two-way communication
The best suitable way to cope up with the change management is developing active two
way communication with the employees where the leaders communicate each planned changes
with the working personnel with proper justification and benefits that the company as well as the
employee will get once implemented in the organizational operations. Amazon can also develop
an organizational online social chat field where all the employees can share their suggestions and
concern regarding products, technology, training sessions and other things in an informal way.
3.0 Conclusion
The company that is selected for the report is Amazon and in the overview of Amazon
and it is found that Amazon was established in the years 1994 and their main products are