Report: Amazon's Strategic Growth, Market Entry, and Challenges

This report provides a comprehensive analysis of Amazon's strategic growth patterns, emphasizing its international expansion and e-commerce dominance. It examines Amazon's business segments across different geographies, highlighting significant revenue figures in key markets like the US, Germany, and the UK. The report delves into Amazon's market entry strategy in China, discussing the acquisition of Joyo and the challenges faced due to factors like competition and business model mismatches. It identifies strategic issues, including maintaining e-commerce growth, handling competition, and balancing profitability. External considerations such as political, cultural, and economic factors are analyzed, with a detailed application of Porter's Five Forces. The report concludes with a proposed implementation plan outlining aims, stakeholder involvement, and timelines for future strategic initiatives, including product diversification and service localization in countries like India and Australia. The report also includes references to support the analysis.

Strategic Plan
Amazon

Amazon growth pattern
■ Amazon is the leading e-commerce company serving each geography
differentially with the help of international shipping feature (Ritala,
Golnam & Wegmann, 2014).
■ The international growth pattern of Amazon can be seen with their
key strategy to get closer to the customer by offering premium and
high quality e-commerce services.
■ In 2018, the company net incomes stand out to 10.073 billion USD
with net sales of 232 billion USD and this makes Amazon one of the
most valuable company in the world.

Business segments by geography
■ Amazon annual sales in the US is 160.15 billion USD, 19.88 billion USD in
Germany, 14.52 billion USD in the UK, 13.83 billion USD in Japan and 24.51
billion USD in the rest of the world.
■ Considering North American region, the e-commerce giant has acquired more
than 141 billion USD as the annual net revenue and internally 65 .87 billion
USD.
■ The AWS (Amazon web services) acquired 25.66$ USD in the last annual year.
■ All this show their market competiveness and strong position in the e-
commerce industry.

Market entry strategy in china
■ The company always tried to grow their business in Asia pacific region. In
2004, the company had entered in China market with acquiring of Joyo, one
of the biggest online book seller in China.
■ Industry based considerations - The company try to established same
business model in China like of US, however, failed to capture the market due
to various other factors like political scenario, competitors like Alibaba and so
the company not found significant opportunities at that time.
■ Resource based considerations – While entering China, Amazon gained
support with acquisition of various Joyo resources such as warehouses,
customer databases, and even employees.

Implications and result
■ The company is doing well all over the world. The company did not based
upon any resources not for even innovation due to the fact that they have to
only sell the product rather than manufacturing or producing.
■ The company tried to expand in China due to huge population and abundant
labour force, however there strategy got failed due to wrong business model
as well as high competition.
■ It can also be said that the time was also not right at that time to enter into
Chinese market and even their acquisition strategy was wrong.
■ The company can effectively planed to enter into Chinese market through
joint venture including location and internalization strategy.

Strategic Issue with amazon
■ The e-commerce market is highly dynamics and competitive where various
external environmental factors directly influence the organisation as well as
industry.
■ The company is facing three key issues that includes –
– Keeping up the e-commerce growth.
– Handling competition in the big market.
– Balancing the profit in relation to the profit.
■ This strategic issues of Amazon is linked to the growing market as well as
rising performance of their various rivals such as Alibaba, Flipkart and eBay.

External Considerations
■ The external aspects in each of the market Amazon is functioning plays an
important role considering politics, culture and economy of the particular
market.
■ For instance, Amazon is also operating in India where the country culture is
very much different in comparison to the US. Moreover, the political situation
in India is stable however, the corruption level is very high.
■ In the similar way, the company facing several issues in Australia due to
trade war between USA and China.
■ In next slide, five forces analysis is being made to understand external
environment consideration more explicitly.

External Considerations – Five Forces
analysis
■ Porter five forces analysis is a tool developed in 1979 and help in analysing
competition of a business (Porter, 2008)

External Considerations – Five Forces
analysis
■ It was found that competitive rivalry in case of Amazon is high as many
number of competitors of competitors such as Alibaba, eBay, and Flipkart are
trying to capture the global market with verities of offerings and customising
their services as per the changing trend of the market.
■ The other force include bargaining power of buyers is also high due to the
fact that customer switching cost is not high. Due to presence of availability
of companies and substitute products in the form of physical stores, the
company may need to change its practices.

External Considerations – Five Forces
analysis
■ The supplier bargaining power is moderate in case of Amazon as the
company sells products of different brands and thus it is not possible to
bargain with Amazon to a great extent.
■ The threat of substitute products for substitution is also high as they do no
have their own products except some like Echo device. This induce consumer
to purchase same product from another company when they put those in
less price.
■ The threat of new entrants is not so alarming as a company needs to invest
huge to give competition to such retail giant like Amazon.

Internal Consideration
■ With changes and needs of time, the company has brought several changes
in its organisation structure such as invested more in technology, developing
its resources, focuses on is core competencies, etc.
■ For implementing new global strategy in the both country i.e. India and
Australia, the company will be needing resources for diversification of its
products and services.
■ The company will also follow the same method of localization of its service
and recruitment in both the countries despite of differences in organisation
culture. It may take time of 3 years approximately.

Implementation Plan
Aim Action Time
Stakeholders involvement Conference to plan and development One year
Alternative products
Serving need for changes and
demonstration of alternative services
in two or three areas
One and half
year
Policy making
Develop and propose policies code
changes for product diversification
Two years
Evaluate plan
Taking feedback from the stakeholders
main customers for evaluation
Third year