Global Business and Sustainability: Amazon's HQ in Global Cities

This report delves into the concept of global business and sustainability, focusing on the strategic importance of global cities for multinational enterprises (MNEs). It defines global cities as urban centers with advantages in the global economic system, highlighting their role in attracting trade, commerce, and talent. The report explores the benefits of locating regional headquarters in global cities, including improved connectivity, superior infrastructure, access to skilled labor, diverse customer bases, and better financing options. Using Amazon Inc. as a case study, the report analyzes the factors influencing MNE headquarters choices, such as business environment, industry density, centrality, political stability, and proximity to markets. It also outlines the role and functions of MNE headquarters, encompassing coordination, monitoring, information processing, and strategic decision-making. The report emphasizes how these factors contribute to a company's competitive advantage and its ability to achieve business objectives in the global market.

Running head: GLOBAL BUSINESS AND SUSTAINABILITY
Global Business and Sustainability
Name of the Student
Name of the University
Author’s note

1GLOBAL BUSINESS AND SUSTAINABILITY
Introduction
One of the major objectives of most of the business organisations around the world is to
expand and grow the business. The expansion strategy of a company is based on a number of
factors such as the scale of the business, the target market of the company, the approach of the
business etc. Multinational companies’ strategies to decide upon the right way to expand the
business, with the help of market research the companies develop strategies (Ciabuschi et al.
2012). Selecting a country of operation the mode of entry that is best suited etc are some of the
major decisions that surround the process of expansion in the international borders (Ciabuschi et
al. 2012). For example: Mac Donald’s is an American company that has operations and
distribution all over the world, the strategy that the company has for expansion is franchising.
While choosing the country of expansion is based on market evaluation, the choice for setting up
a regional headquarters is also dependent on a number of factors which will help in achieving the
objectives of the organisation (Ciabuschi et al. 2012). In this assignment some of the elements in
global business like the concept of global cities and why multinational organisations choose
global cities as their regional hub. The assignment will also discuss the benefits that are
associated with the decision of a company to set up the regional headquarters in global cities.
The organisation that has been selected to conduct the study is Amazon Inc. Amazon is an
American Multinational organisation that operates in the E-commerce department as well as
established operations in IT, electronics and entertainment. The company has operations in a
number of countries and has distribution in some more approximately 100.
Global cities
A Global city can be defined to be an urban centre which has the privilege of having
some of the advantages in the global economic system (Krätke 2017). Global cities are identified

2GLOBAL BUSINESS AND SUSTAINABILITY
after globalization popularized and organisations and countries began to understand the
importance of trade and commerce (Sassen 2002). Over the years there has been an increase in
global cities and this rise is associated with the concept of globalization of economies and the
centralization of mass production within these urban centers. During the 1980s research on cities
carried out to collect data for various purposes, this is when the concept of global cities was
identified. The research resulted in some of the common features among the popular and
important cities around the world (Sassen 2002). Cities such as New York, London, Paris, and
Singapore etc are called global cities and these areas attract trade and commerce and also talents
form all over the world. These cities are considered to be the hub for innovation and business as
there is flexibility in the process there is availability of skilled and talented labour, the political,
economic as well as social conditions of the country can be determined form these areas
(Kunisch et al. 2015). Among these global cities there is also further segmentation on the level of
competitive advantage that these areas provide the country as well as the business opportunities
(Krätke 2017). Previously when the research were conducted the cities were ranked according to
the size of the population however, that trend has changed in the recent times and several other
factors like the economic dynamic of the city, the talent availability, the number of
organisational hub in the city, well connected by all the means of transport, centers of
communication and global news and also have developed infrastructures to support innovation
and development etc are also considered while listing a city in the global city index. According
to the A.T. Kearney’s Global Cities Index 2017, London ranks second in the list of the Global
cities and is called Alpha ++. One of the major criticism to the theory of global cities are the
facts that the focus of these cities drives away from the development of other cities in the country

3GLOBAL BUSINESS AND SUSTAINABILITY
and also these cities are better connected to the international market than to their domestic
economy (Krätke 2017).
Benefits of global cities to businesses
Connectivity: All the global cities around the world are well connected through a number of
modes of transport making the process of logistics easier for the company. Transportation is
significant in order to keep up with the basic logistics and supply. The cost of transportation can
be a major part of the cost of running the business and organisations are always looking forward
to ensure that this cost may be recovered with revenues, the major countries of the world are well
connected and the cost of transportation can be reduced (Ciabuschi et al. 2012). Not only that
communication is essential for any business organisation and communication facilities in a
global city is of the best quality that is available in the country and thus the company will benefit
from the same. Therefore, in order to maintain connectivity and ensure effective communication
with other units established in the country of operation the HQ is usually situated in the Global
cities (Baaij et al. 2015).
Better infrastructure options: Let’s consider the case of Amazon, which is an organisation
which is innovation driven and is founded on the basis of information technology. For such a
company to expand in the international market will have to consider the technological
infrastructure which is present in the country (Kunisch et al. 2015). In the global cities the best
services are offered and thus it will be beneficial for the companies to establish regional head
quarter here. The competitive advantages of global cities like infrastructure and support help the
company in achieving the objectives of the business with lesser barriers in the process (Baaij et
al. 2015).

4GLOBAL BUSINESS AND SUSTAINABILITY
Skilled labour: One of the features of a global city is the population of educated and skilled
population in the city (Beaverstock and Smith 1996). Multinational organisations look forward to
develop a diversified work environment and appoint local people in order to better understand
the market as well as deal with the issues in the international land better (Beaverstock and Smith
1996). Therefore, there is a demand for skilled labour while expanding. Hence the global cities
are beneficial for the companies; the human resource department can get their candidates of
choice form the city and set up a healthy work environment aligned with the objectives of the
business (Beaverstock and Smith 1996).
Divers customers: In a global city the companies will find a diverse customer base as well
which will help the company to understand the trends of that particular market better. This in
turn will help the company in developing products and services which will better serve the
customers (Kunisch et al. 2015).
Better options of financing: there are companies whose revenues are not enough to support the
expansion in that case the companies would want financial support from third parties, as
economically sound regions of the country the global cities will also provide the companies with
better financial opportunities (Baaij et al. 2015).
Role and function of MNE headquarters
The role of the head quarter of an MNE is to co-ordinate with the other branches of
logistics and operations in the region. The regional offices report to their proceedings, issue and
grievances to the HQ in order to account for the amount that has been spent and the revenue that
has been gathered. Usually the regions higher management officers are a part of the HQ and any
issues or barriers in the process of business are reported to the HQ (Kunisch et al. 2015).

5GLOBAL BUSINESS AND SUSTAINABILITY
The functions of the HQ are to monitor the operations and functions of the other offices
whose responsibility is under that particular HQ. There are information processing departments
in the HQ which helps the company to monitor the functions of the business at regional levels as
well. The HQ operates depending on the structure of the organisation and the culture (Baaij et al.
2015).
According to Kunisch et al. (2015), the operations of the organisation take place mostly
in the HQ, for example for a manufacturing organisation the administrative functions of the
business are held in the HQs. Other management departments like the finance team and the
marketing team etc are usually placed at the HQ here the process of the business is determined
management strategies are undertaken and policies are made.
It is the function of the HQ to control and support the functions of the other branches. Fro
example if there is a problem in a certain branch, the branch manager can choose to ask the
managers form the HQ to intervene to handle the situation.
Some organisations have the training facilities in the head quarters, any person before
joining the organisation in the regional offices as well have to go through training especially for
job position that requires special skills.
Research and development areas are also one of the segments of the business which is
situated in the HQ. For example for Amazon, the company has its research and development
wing in Seattle where the HQ is situated. This plays an important role in developing the products
and services and keeping up with the trends of the industry.

6GLOBAL BUSINESS AND SUSTAINABILITY
Factors that affect the choice of multination organisations headquarters
Institutional factors that impact the decision of developing HQ are as follows:
The business environment of the city, if there are a number of organisations established
in the city, this would ensure that the area has skill, infrastructure as well as connectivity the
three basic economic requirements that the company needs to expands the business (Barner-
Rasmussen et al. 2007). The density of the similar industry in the city can be derived to be one of
the significant variables for a company to decide upon the location to establish the HQ (Baaij et
al. 2015). Center of the region is also another factor that is considered by the management while
developing the location for HQ. This point is associated with the previous factor that has been
discussed. The centrality of the region helps in developing better communication and
transportation
According to Baaij et al. (2015), political stability in the region is very important; this
would ensure that the company has a clear route of transportation, establishment of the offices
and other assets etc. the relation with the host country and the country of origin is also important
in case of expansion. Political stability would also ensure that there are policies and regulations
in the government that would support the business and would help the company to achieve the
objectives of the business. While setting up operations in an international market it is important
for the company to check the political stability as it would ensure ease of operation as well as
support from the government and other authoritative officials when necessary.
The potential proximity to the people whom the company serves is also a significant
institutional factor that impacts the decision of the management in expansion. Proximity to
regional as well as national market is important for the company to establish in a new country
and thus it is also important to set up The HQ in an area which is at close proximity (Baaij et al.

7GLOBAL BUSINESS AND SUSTAINABILITY
2015). However, Barner-Rasmussen et al. (2007), states that the objectives of the business, the
goal etc is also major reasons for the company to choose a particular location. For example: a
fishery company might choose to set up the HQ near the port region in order to be closer to their
potential target market as well as the industry. Connectivity and communication by the regional
offices and centers of operation is also very important to keep up with the changes in the industry
and the needs and requirements of the customers .
All the above points add up to the competitive advantage that the company expect from
the expansion decision. The companies usually focus on global cities for expansion as there are
all these facilities that are discussed above are most likely to exist in a global city.
Sustainability policies and strategies of Amazon in UK
Corporate social responsibility is one of the contemporary trends in the international
business market. The connect of triple bottom line, which derived the CSR theory challenges the
traditional business model where the focus on the business was solely on the benefit of the
business and other business related objectives. In the contemporary business environment the
companies are not only focusing on the ways in which the company will benefit but is also
focusing the resource and capabilities towards the community as well as the environment.
Amazon Inc is an American Multinational company which has a number of areas that
they focus in their sustainability approach. The company focuses on the conservation of the
environment by using smart packaging initiative, responsible sourcing of products and services
as well as establishes using alternative power generation methods in the UK. The area of focus
that the company has chosen to act upon in the UK is specific to the issues that might arise from
its operations in the UK. Hence it can be said that the company has focused approach of

8GLOBAL BUSINESS AND SUSTAINABILITY
sustainability. Specific on the issues and the need of the hour the organisation decides the
activities that are necessary to take. For example: As the establishment and the main HQ of the
company is in Seattle which is in North America, the company has a more number of
sustainability approaches such as circular economy and the company also has a separate Amazon
Web Services sustainability approach as well. The Cloud services itself is a sustainable approach
yet the company is trying to achieve 100% renewable energy usage for our global infrastructure.
Therefore this approach of sustainability can be categorized in the global approach.
As Amazon is an organisation that operates in the e-commerce department, packaging
has been one of the major challenges that the company has faced the cost as well as the
sustainability approach in the process aligning with quality of the services. As the company lists
a plethora of products there are chances for the products to wreck or get damaged on the process.
This has been one of the major barriers in the process of business in the initial days of the
company. However, Amazon has come a long way and packaging has been the center of focus
and the approach of solving the issue is dealt by keeping focusing on sustainability approach.
The global approach of the company is to provide the customers with the best experience, in UK
Amazon focuses on the innovation of sustainable packaging that satiates the requirements of the
customers as well as eliminates wastes, reduces damage. In UK Amazon has developed the
Frustration-Free packing program which has following stages: design, testing, certification. The
design guideline is described in the certification program which includes: Tier 1 (FFP) and Tier 2
(SIOC): Ready to ship, and Tier 3: Prep-Free Packaging (Aboutamazon.co.uk 2018)s. On the
other hand in the process of testing the company has established a network called the APASS.
This program lists partner organisations and labs which can help in the process of designing, and
supplying the packaging process aligning with the guidelines stated by the Amazon’s Packaging

9GLOBAL BUSINESS AND SUSTAINABILITY
Certification (Aboutamazon.co.uk 2018). The company has recently celebrated the 10th
anniversary of the program and claims to have eliminated 181,000 tons of packaging and 307
million boxes. The company claims that the packagings are 100 percent recyclable
(Aboutamazon.co.uk 2018).
The company has been planning and developing the new solar power technology in the
UK facility in order to boost the sustainability approach by conserving energy
(Aboutamazon.co.uk 2018). The company has planned to install up to 20MW of solar plus
storage systems on the rooftops of the fulfillment centre across the UK. Amazon is also focusing
on developing strategic relations and break out deals which would ensure that there is 100%
renewable electricity in the UK buildings which are owned by the company. The solar panels
will help the company also in contributing towards the carbon emission issue faced by the
company as this installation is expected to reduce the carbon footprint by 6,000 tonnes of CO2
per year (Aboutamazon.co.uk 2018).
This is a parrot of the global initiative announced by the company to ensure energy
conservation approach by 2020 (Aboutamazon.co.uk 2018). The time period that has been set is
covering 18 months starting from October 2018. The company has announced the installation of
the solar panels in 50 fulfillment centers around the world. This activity is aligned with the
vision of the UK government as well as the agenda of the government is also to reduce the
emission of harmful gasses while improving the economic conditions of the country. Minister
for Energy and Clean Growth has recognized the efforts of organisations like Amazon and has
been observed corroborating that the government would encourage and support the companies
who are willing to invest in the climate change act and deal with the threats of the climate change
(Aboutamazon.co.uk 2018). Along with the installation of the solar panel the company has also

10GLOBAL BUSINESS AND SUSTAINABILITY
initiated the installation of the battery systems at several fulfillment centers (Aboutamazon.co.uk
2018). This approach helps the company to manage the demand for energy better and in a more
efficient way. This has also helped the management in controlling the frequency and load
management programs in coordination with local distribution network operations and the
National Grid (Aboutamazon.co.uk 2018).
Conclusion
As it is seen London is one of the largest cities in the world and a hub for multiple
cultures and ethnicity. Economically too it is an industrialized city helping a number of
businesses to grow parallel to the ones running in the society. Being a business in UK one has to
deliver on multiple levels to satisfy their customers and make the product or service according to
their needs. Amazon one of the largest service providers around the world and focuses on ideal
ways in which the products and services could be given keeping mind the sustainable
development of the organization. Apart from the policies focused towards the business
development. Installations of the solar panels in the business facilities in UK along with the strict
guidelines of packaging help the company in maintaining environmental sustainability. The
sustainable development and the ethical processes help in the proper development and
implementation of cost-effective policies which in the long term help in the business expansion
across UK. The provision of the products from the responsible sources of distributors who take
the responsibility of their products and services help in marinating the reputation of the
organization. Therefore through responsible and ethical practices Amazon has set its foothold in
UK and improving it.

11GLOBAL BUSINESS AND SUSTAINABILITY
Reference list:
Aboutamazon.co.uk 2018. Sustainability. [online] Aboutamazon.co.uk. Available at:
https://www.aboutamazon.co.uk/sustainability [Accessed 10 Nov. 2018].
Baaij, M.G., Mom, T.J., Van den Bosch, F.A. and Volberda, H.W., 2015. Why do multinational
corporations relocate core parts of their corporate headquarters abroad?. Long Range Planning,
48(1), pp.46-58.
Barner-Rasmussen, W., Piekkari, R. and Bjorkman, I., 2007. Mobility of headquarters in
multinational corporations. European Journal of International Management, 1(3), pp.260-274.
Beaverstock, J.V. and Smith, J., 1996. Lending jobs to global cities: skilled international labour
migration, investment banking and the City of London. Urban studies, 33(8), pp.1377-1394.
Ciabuschi, F., Dellestrand, H. and Holm, U., 2012. The role of headquarters in the contemporary
MNC. Journal of International Management, 18(3), pp.213-223.
Krätke, S., 2017. ‘Global media cities’: major nodes of globalising culture and media industries.
In The Globalizing Cities Reader (pp. 378-384). Routledge.
Kunisch, S., Menz, M. and Ambos, B., 2015. Changes at corporate headquarters: Review,
integration and future research. International Journal of Management Reviews, 17(3), pp.356-
381.
Sassen, S., 2002. Locating cities on global circuits. Environment and urbanization, 14(1), pp.13-
30.