LSME504: International Business - Amazon Case Study Analysis

This case study analyzes how various macro-economic factors influence Amazon's international business operations. It delves into the impact of socio-economic cultures, including customer preferences, language, religion, and education levels, across different countries. The study also examines the role of technological advancements, such as the Amazon Virtual Dash Button and Amazon Fresh, and the potential threats like cybersecurity. Furthermore, it explores the political environment's influence, emphasizing government stability, tariffs, and cyber-security bills. Finally, the case study investigates Amazon's ecological considerations, focusing on sustainability efforts like reducing carbon emissions and supporting social causes. The analysis provides a comprehensive overview of the challenges and opportunities Amazon faces in the global market, highlighting the interplay of these factors in shaping its international business strategies and decisions.

INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
Socio-economic culture affecting Amazon in international business ........................................4
Technological developments affecting Amazon.........................................................................5
Political environment affecting Amazon ...................................................................................6
Ecological considerations taken by Amazon..............................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................8

INTRODUCTION
The study is how the various macro-economic factors affect the organisation. These macro-
economic factors can be political, economic, social,technological, environmental and legal
factors. The organisation taken here for case study is Amazon. Amazon is an American multi-
national technological company based at Seattle, Washington. The core business of it being e-
commerce the company also focuses on cloud computing, digital streaming and artificial
intelligence. The study focuses on socio-economic cultures affecting Amazon in international
business. The technological aspects affecting the Amazon in international business are also
described. The political factors which affect Amazon in international business decisions in the
way they operate in markets have been illustrated. Lastly, the ecological considerations taken by
the company affecting the business decisions internationally.
Socio-economic culture affecting Amazon in international business
The multinational company operates in various countries and therefore, there are various socio-
economic factors which influence the company. The factors can be described as:
1. Culture
2. Language
3. Religion
4. Level of education
5. Customer preferences regarding buying habits
6. Attitude of service in developing countries.
First, if we talk about customer preferences then there has been seen an increasing trend in which
customers have the tendency to buy online. A large segment of youth have been becoming a
segment in online buying as is seen in case of developed and developing countries. This is a
good trend for e-commerce as well as Amazon. Amazon in September 2019, registered 150.6
million mobile users on Amazon. Amazon considers this as its strength. There is a wide range of
diversified products like books, shoes, grocery etc. which can be brought online (Nelson-Nuñez,
2019).
Talking of the attitude of service in developing countries increase in consumerism has
been seen in the past decades where rights of consumer has been given priority for protection.

This can be seen as an opportunity for the company as Amazon can do due diligence on the
products the company is selling. This will ensure that the right quality of the product reaches the
customer. The customer queries if addressed in a technical and timely manner will help in
customer satisfaction and receiving good feedback for the company. These things can help
Amazon in building of a customer relationship for a long term (Revelo-Rebolledo, 2019).
The culture is another factor influencing a business as people follow different belief
system, religions, have different social setup etc. These factors influence the buying behaviour
and pattern of people in different countries. For instance, people in India generally tend to buy in
bulk which they think would go complementary with their home. They would buy things like
carpets, cushions in one go. The same is not true with western countries where people generally
do not like to accumulate things at once and buy as they feel the need. Also, a country having
many festivals would usually experience peak in sales during the season. There would be online
traffic there compared to the countries who have few festivals. Thus, these factors decide how
the company Amazon is going to make the strategy. A country experiencing fewer festivals will
be given more discounts on purchases to lure customers towards making purchase.
Another factor influencing business of the company is the level of education. The
countries where there is an education hub like UK will be experiencing higher sales in books as
there will be students who have enrolled in courses from different countries and there will be a
high search for online material. The countries where education is less widespread will have to be
focused more by Amazon to boost their online segment of book sales. It can be done by giving
branded books at discounts. Also, there can be a research done on people preferring fiction or
non-fiction books (Nelson-Nuñez, 2019).
Technological developments affecting Amazon
The technological sphere in e-commerce has made it grow by leaps and bounds. Same has been
true for Amazon. With increase in internet accessibility over the past decade in developing
countries, the market has grown like anything for Amazon. The company has benefited in the
way that more and more customers have been going online. The new mobile phones already have
apps installed in them which motivate customers to use it and make a purchase. The influx of
internet in common man's life can be seen as an opportunity for the company.
Other technical advancements which Amazon has seen are:

a) Amazon Virtual Dash Button: It is a single function controller of a small size which can be
kept by Amazon prime members at their homes. Each button corresponds to a household
necessity by brand name. The user could make reorders of a certain product purchased. The
company benefited from the service by selling them and receiving orders when ever customer
wanted to make a re-purchase thus aligning the customer with the company.
b) Amazon Fresh: The online grocery shopping dates back to the previous two decades but the
company Amazon has made the most of the sales. In certain geographic markets, Amazon Fresh
subsidiary allows users to place grocery orders from the company's expansive inventory of fresh
produce, brand name packaged goods and Amazon ready to eat meals. This factor is again an
opportunity for the business. However, the company delivery staff have to be on alert to make
timely delivery. There has to be an inventory maintained to accommodate a large number of
orders. An opportunity always comes with a responsibility (Revelo-Rebolledo, 2019).
The threat in technological factor is of cyber-security. Activities like using fake websites
and hacking of system pose threat over online transactions and may hamper online business.
This may lead to discouragement of customers in buying online products. Company has to make
its website free from hackers activities and invest in cyber security to make the customer
experience a safe and smooth one. Company also has to assure its customers that their money
will be in safe hands and they will not bear loss by online purchase. Amazon has to send
messages regarding safety of website and advising customers not to share their personal details
with anyone. Company also has to give guidelines on how to check the authenticity of the
website (Marathe and Gawade, 2020).
Political environment affecting Amazon
As Amazon operates in a number of countries, it is but likely that its operations can be affected
by the political environment existing in the country. The stability of the government in a country
can certainly influence the company business. This can become an opportunity if there is stable
government for two sessions around which is near a decade. Company can thus set up long term
policy for business if government is stable. If a country faces mid change in government then the
instability will reflect on the corporate structure too. Every government has a different take on
the corporate. There are some who extend help in the form of environmental clearances, less of
red tap-ism and reduced tax rates. But there can be a government which thinks that more

expansion of multi-nationals can also harm a nation's domestic economy. They can impose
higher tariffs to save the domestic players, charge more taxes , reduce investment by Foreign
Institutional Investors.
Being a global company its goods come from different parts of the world which attracts
tariffs and taxes. Amazon is also affected by cyber-security bills. This can be seen as a threat for
the company's revenue as it would have to part with the money to safeguard its transactions.
Trade relations and political relations with other countries can pose both as an
opportunity as well as a threat for the company. If political relations of a country is good with
other nations, it is likely that trade can also spread accordingly. Tariffs imposed will be lower
and there will be support of the host government in form of taxes. Company can also think of
expanding its operations by opening branches which can support the government also as that will
increase employment in the country thus fulfilling the government objective and developing a
long-term relation with the country (Marathe and Gawade, 2020).
Ecological considerations taken by Amazon
In today's scenario, people along with governments of a country prefer companies who match
sustainability with their progress. Companies take up social responsibility which serves as an
opportunity to serve the society as well as mother nature. Companies can take up projects which
can do welfare for the society like assisting in increase of green cover by plantation of saplings,
donations for social causes, contribution to the public hospitals to make facilities better,
education of under privileged children. Companies not only can make a moral image of
themselves but also garner public support. Governments also support these acts of social
responsibility undertaken and give tax rebates to such companies (D'Agostino, 2018).
The next factor is cutting down of green house emissions and reducing carbon content.
However, e-commerce companies do not have much to do with these unless they have
diversified their business in manufacturing. But since logistics are involved here where there is a
shipment of goods along with product delivery, it adds up to the carbon content released in air.
Amazon is looking forward to half its shipment by 2030. Amazon has around 100 million prime
members whose orders received takes time of delivery of around 1 to 2 days. This thus adds up
to the carbon content which Amazon has to bring down. This is a challenge or opportunity for
the company to bring down the carbon content and make its image as a sustainable one.

Taking up sponsorships of environmental or social events can also help boost company's image
of taking responsibility for social issues. The company made a $3 million gift to the new Center
for Science and Innovation of Seattle University. This funding will help the school achieve its
objective to increase access to computer science and STEM education for women and under
represented minorities.
CONCLUSION
To sum up, it can be said that macro-economic factors go a long way in helping company
determine its business policy. It becomes all the more relevant when company has presence
globally. The political, economical, social ,cultural, technological and environmental factors
provide a 36 degree sphere in decision-making for the policy. The company has to be alert on all
the factors which sometimes come as an opportunity, sometimes pose a challenge or a threat and
sometimes can be the strength of the company which can be worked upon to achieve benefits.

REFERENCES
Books and Journals
Nelson-Nuñez, J., 2019. Substitution or Facilitation: Service-Delivery NGOs and Political
Engagement in the Peruvian Amazon. Comparative Political Studies. 52(3). pp.445-
477.
Revelo-Rebolledo, J., 2019. The Political Economy Of Amazon Deforestation: Subnational
Development And The Uneven Reach Of The Colombian State.
Onyusheva, I. and Seenalasataporn, T., 2018. Strategic Analysis of Global E-Commerce And
Diversification Technology: The Case Of Amazon. Com INC. The EUrASEANs:
journal on global socio-economic dynamics. (1 (8)). pp.48-63.
Marathe, D.A. and Gawade, G., 2020. Literature review on customer perception about online
shopping with reference to Amazon in India. Juni Khyat Journal. 10(7). pp.372-384.
D'Agostino, J.L., 2018. The Impact of E-commerce on Brands: An Analysis of Amazon and a
Plan for the Future (Doctoral dissertation, University of Oregon).
Çitilci, T. and Akbalık, M., 2020. The Importance of PESTEL Analysis for Environmental
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Goel, P. and et.al., 2020. Customer Experiences, Expectations and Satisfaction Level Towards
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Pasific. 3(1). pp.89-101.