International Business: Amazon Expansion Report Analysis

This report delves into the intricacies of international business, examining the issues faced by companies during global expansion, the importance of assessing the global context, and various market entry methods. It explores the reasons behind internationalization, supported by relevant theories, and assesses the impact of multinational corporations. The report also analyzes data on country markets, using Amazon as a case study to illustrate practical applications of international business strategies. Topics include international company structure, foreign rules and regulations, cultural differences, and political risks. Methods of entry such as exporting, licensing, strategic acquisitions, and foreign direct investment are examined. The report concludes with an overview of key strategies and considerations for successful international business ventures.

International Business

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
Issues faced by companies which make International expansion..........................................2
Assess the global context in which the business will function internationally......................3
Methods of entry.....................................................................................................................5
Reasons why the business wants to internationalise with some theories...............................6
Impact of Multinationals........................................................................................................7
Assess data on country markets..............................................................................................9
CONCLUSION..............................................................................................................................11
References:.....................................................................................................................................12
Books and Journals...............................................................................................................12
1

INTRODUCTION
International business in simple words refers to that business which is expanding its business
across the country which means in different country(Atmaca, Erek and Ekren, 2019).
Globalisation is the key factor in which the business can become more independent and develop
the image in the integrated global economy. When any business wants to grow the business at a
global market then the scope and size of the particular business also increases. The global
economy is determined by the multinational companies which are from all over the countries.
The main of every business to reach to the global market is to make the business expand and
grow and on the other hand they have the major responsibility to adopt their business with the
global outlook which could be able to achieve success in that particular market. Amazon is a
multinational technology company which work in e-commerce business and provides every type
of products which the consumer wants. It was established on 1994 and the headquarter is in
Washington, US. This report will cover issues faced by business who are involved in
International Business, how the business has to function, methods of entry, why companies
decide to make international expansion and some theories, impact of multinationals and data on
country markets.
MAIN BODY
Issues faced by companies which make International expansion
Expanding the business internationally means that the business will now interact with other
customers and the markets which has different needs and demands(Mcheik, Al-Akl and
Abdelnoor, 2018). Expanding the business internationally is not that easy because the business
who wants to make the expansion needs to conduct the proper research and for that it requires
huge investment which needs to be made. Expanding the business internationally will be done by
the companies only when they are getting success in the home country. Amazon had developed
the business in many countries and is making expansion in the international markets
successfully. Now the company wants to make the expansion in ‘Thailand” for which the
company is conducting research but some issues are faced by the business for taking the business
internationally which are discussed below-
 International company structure- The company knows the rules and regulations which
has to be followed in the home country for the business. For that the company has to
2

follow the structure which will be best for them and yes suitable for the employees to
work in that particular work structure. The business must understand the business
structure which they have to follow and will they be able to follow that business structure
in the new country depends on them. Amazon has developed and expanded the business
in different countries and with that they have developed the idea as to how the business
structure needs to be followed.
 Foreign rules and regulations- Every business owner is comfortable in their home
country in which they have started their business because they already know the rules and
policies which has to be followed. But for the expansion of the business internationally it
becomes important that the business owner must understand the rules and regulations of
the foreign country in which they have to start the business(Ornellas, Spolander and
Engelbrecht, 2018). This is because they would not able to plan the activities or the
business idea before knowing the rules that are being followed in the foreign country.
Amazon first identifies the rules in any country in which they are making the expansion
and now they will be conducting the research of the rules of Thailand.
 Cultural differences- The main issue which is faced by every business for making the
expansion in the international market is that of different culture. The cultural difference is
the main problem which has to be considered by every business because any products or
service they launched in the new market but is it not being purchased by the consumers as
it might not work with their culture.
 Political risks- The political factor are also the major issue which is faced by the
business who are making the international expansion. In the stable political factors it is
easy for the business to start and operate their business because the rules which will be
followed in the country will also be stable (Nusantara and et. al., 2020). But in the
unstable economy which makes it difficult for the business to run it in the country
because of the changing rules and policies of the government.
Assess the global context in which the business will function internationally
For expanding the business globally it becomes very important that the business must assess the
global markets and the similar business which has expanded the business in the international
markets. This is important because conducting research before expanding the business in the
3

global markets helps in effective planning and formulating the strategies. The competition in the
market is hug and every business wants to expand the business in the global market for getting
the success and good goodwill in the market. For that every business has to function in
accordance with the global context and according to the competition which is prevailing in the
market. Amazon also functions in particular way to make the expansion of the business which it
will be making in the Thailand. Some of the ways have been explained below in context with
Amazon as how the business should function internationally-
 Make a plan- Every business who wants to make the global expansion of its business
needs a plan as similar to the one which the company has made for its parent company.
The company has to consider the different plans which includes the political, economic,
cultural and many other which will help them in knowing the things about the market and
also about the country(Setiadi and Dwikardana, 2019). To identify the business structure
which the company is going to follow in the other country. No business just starts the
business without making any plan for the global expansion of the business. Amazon will
also be going to plan the activities and the work which has to be done in the country.
 Understand the other culture- The company must identify the culture which the other
country is having as this would be helpful in bringing out the product and services. Every
country has their different culture and for brining success in the business it is important to
understand the culture of the country (Mlouka and Hefaiedh, 2019). For instance-
Amazon will be expanding the business in Thailand and the culture which the people of
the country adopt is different from that in US. The products and services which will be
provided by Amazon in its application must be used by them in their daily life only that
will be the factor with which the people of the country will place the orders.
 Establishing go- to- market strategy- For adopting such strategy it is important that
business must understand the key factors of the market as this would be helpful in
identification of the strategy which has to be followed. The business must know the sales
model and the sales methodology which they will be adopting and a good marketing plan
which will be helpful in identifying the brand easily.
 Finding the right partners and team- The business cannot work solely for making the
expansion but they require some strong company with whom they can make the
partnership and achieve huge profit. But with that finding the right partners and the team
4

is important as they will be the one with whom the business will be going to operate in
the new market.
Methods of entry
For making the expansion in the international markets the business cannot just start the business
without adopting any entry method. There are different modes of entry into the market which is
chosen by the business owner according to their suitability. There are different market entry
modes which have been explained below in context with Amazon-
 Exporting- One of the most common and adoptable method in which the business can
make the entry in the foreign market. Exporting means the direct sale of goods and
services in the other county which might involve some mediator or the other company
which is dealing with the same business(de Oliveira and Rottig, 2018). This method is
considered to be the most cost-effective method without any sought of confusion. If the
product of the business is in demand that the business owner can also supply the goods
directly to the importer and can earn good profits. Amazon cannot use this strategy as the
main business of the company is to provide the products and services on the online basis
and this can be considered to be fastest for making expansion.
 Licensing- Licensing means to get the license of the other company which is already
operating the market and the license which is achieved by the business is to use the
intellectual property which includes the trademark, patents and many others. For getting
the license some amount of fees has to be paid and the validity of that license is made for
the particular time period (Hamada, 2018). The main benefit of using this method is that
it is not costly and as the license which is acquired by the business of other company has
already established its goodwill in the market so it becomes very easy for making the
expansion in the market with that name.
 Strategic acquisitions- Acquisitions means to purchase the company which is similar to
the business of other country. Strategic acquisitions means to take the whole property of
the company which is existing in that market where the business wants to make the
expansion. Generally those companies are acquired which deals in same products and
services and after taking the rights of the company the business can be benefitted from
many things which involves the infrastructure, experience and skills of the people who
5

works and the team of the company(Ciravena, and et. al., 2019). The main benefits is
that the company does not have to start form the beginning but they will be getting
everything ready to start the business. But it requires huge investment to be made and
might result in clashes between the employees and the culture.
 Foreign direct investment- It means to make the investment in the other country using
nay method of merger and acquisition, joint venture and any other mode. The main aim
of making the foreign direct investment in the other country for starting the business is
might be there are certain import limits for the company or to avoid some taxation or
duties.
Reasons why the business wants to internationalise with some theories
Some of the reasons have been explained which determines the reason that why the business
wants to make the international expansion in other countries.
 Increase revenue potential- The companies who have the main aim to grow and expand
their business would like to make the international presence. It is basically been made
because they have strong and good plans and with the development of business across the
country they would be able to gather more people. With the expansion of business in
another country and gaining many people or customers for the business then the business
will definitely be able to earn more revenue which Amazon have created.
 Entry to new markets- Every business wants the business and the name must be known
and should become famous in every country and to become successful in the global
markets. The companies who gets the idea of expanding the business globally are the
ones who have become successful in their home country and now wants to make the
expansion in other country (Dibrell and Memili, 2019). When the companies will make
global expansion they will be able to capture new markets and new customer and if
successful they will become the most renowned business. Amazon has started its business
from very small and now have created the goodwill in many countries because of the
good planning and strategy.
 Diversification- While making expansion in the global markets the companies can make
the diversification of the products and services which they are using in the home country.
6

Expanding the business in the global markets will help them to make the diversification
because in the home country there will be some limit for the diversification.
Theories of Internationalisation-
 Monopolistic advantage theory- This theory was given by S.H. Hymer and has said the
reason as to how the Multinational corporations (MNCs) are able to compete with the
local firms in the international market (Cooke and et. al., 2018). This theory explains the
reason that why companies wants to operate their business in the international market.
But the author has also said that in comparison with local business the MNCs are at loss
because they are not having the knowledge of the local markets and the consumers which
is already known by the local business. This theory has also explained that Multinational
corporation’s likes to make the Foreign Direct Investment in the markets so that they can
have the retention of the resources and can gain the monopoly in the market.
 Product life cycle theory- This theory was given by Raymond Vernon who was a
Harvard Business School professor and explains that when the business wants to make
the international expansion at that time they also introduce the products. But the products
which they launch have a certain life cycle after which these products demands decline in
the market. The stages by which the product passes is the introduction of the new product
which has been started in the market, maturity stage at which many people have used the
products and the sales is at decreasing rate, and the last is the Standardized product stage
as the product demand in the market stabilizes and the sales chart declines with the
profits of the company also stars declining.
Impact of Multinationals
Multinational companies are those companies which are having the business assets or are
conducting the business in one country or might be more than one country other than the home
country(Mittelman and Dow, 2018).The development of the international business is in both the
home and the host country which has been explained below-
Impact in Home country- Increase in government revenue- The main benefit which the development of MNCs
have on the home country is that they help in increasing the revenue of the government. It
is because they are doing the business in other country also and are helping in brining the
7

revenue and current of the other country which at the other side is also helping to bring
foreign exchange. Amazon helps to provide such benefits in the home country which
provides benefit to the company and for the government. Good international relations- When the company of the home country starts the
business in other country then it helps in building good relations between the two
countries(Liu and et. al., 2021). This is because the company is brining revenue to both
the countries and if the host country is not helping the company for establishing the
business then it might not be good for development of relations of both the countries. Use of technology- It is a well known fact that the Multinational corporations uses the
technology immensely for the production of goods and services. This helps in bringing
more technology in the country and the products which are delivered to people are also of
low cost and with that the consumers can also make the purchases at lower prices. The
country which makes the use of technology is considered to be the developed country and
also increases the goodwill in the market.
Impact in Host country-
The host country is impacted with the development of MNCs in many ways-
 Provides employment- The MNC which is developed in the host country will require
people for the work and effective. In this way, the people of the country who are
unemployed will get the benefit of having the job (Gupta and et. al., 2018). The main
factor which is faced by every country is the issue of unemployment and the government
of the country is also providing some benefit to the companies for establishing there
company which Amazon is doing. Increases the GDP- The GDP of the country is the measurement of the income, revenue,
production, employment and by many other factors. The companies which establishes its
business in the other country not only helps in providing the benefit to the home country
but also helps in increasing the GDP to the host country. In present time, government of
the country are providing some benefits to the companies of other country to establish
their business.
 Provides varieties of products- People are satisfied when they are getting the products
and services in many different options. With the development of MNC they will also
provide variety of products at might be less prices(Burley, 2018). Amazon provides the
8

product online in which the delivery of the products is made online. When the consumers
will get many options in just one application then they will also be happy and satisfied in
Thailand.
Assess data on country markets
The people in Thailand are of different culture which is based on different areas including the
Central Thai having the variety in language and culture, Southern Thai, the Isan and many
others. The country is following the smart economic policies because of which it is making good
progress. The markets of the Thailand is assessed and evaluated on the following ways-
 Market size- The GDP of the country is 16.316 trillion which is considered to be good
economy and now has been considered to be the Asia 8th largest and biggest economy. It
has made the growth of 3.1% in the year 2019 and it is the biggest destination for the
country United states for the export procedure (Ballor, 2019). Thus, Amazon can start the
business here as the economy is growing and not having any instability which can create
problem to the company.
 Trends in the market- The major market trends in the Thailand are about the tourists by
which the country earns good amount of revenue. On the other hand, the population of
the country is 69.8 million and the rise in the income of the people is increasing the
demand of the people for the products. They are making the purchase which helps in
making them more richer because of which making the orders online will also help the
people in getting the products at a very reasonable prices.
9

 Consumer Behaviour- The main behaviour which the Amazon might get affected is the
decisions of the people for not making any online purchase (Fatehi and Choi, 2019). The
other service which the Amazon deals is in the Amazon Prime, Alexa there main and the
famous product which the users are buying. For the products which have to be purchased
online for that the company needs to make the marketing advertisements which can help
in attracting the people.
 Growth rate of the market- The market and the economy of Thailand is increasing as
the demand and the market which has been predicted during the year 2021-2025 is about
USD 55.21 billion. The growth of the market is the important factor which is considered
by every company before making the establishment of the business. Amazon can make
good deal if they start the business here only the recognition of the factors which
includes the likes and dislike of the people has to be determined. With this ways the
company can achieve the success and good revenue from the country.
10

CONCLUSION
From the above report it can be concluded that for the companies who want to expand its
business not just in the home country but also in different country would like to make the
International expansion. This is because entering in the new market at the initial stage might be
difficult for the company but in the end they will achieve success if the business gets success.
The companies can make the growth but with that if any idea which the company have come up
is innovative and unique then at that case the business is likely to get success.
11

References:
Books and Journals
Atmaca, A.U., Erek, A. and Ekren, O., 2019. Impact of the mixing theories on the performance
of ejector expansion refrigeration cycles for environmentally-friendly
refrigerants. International Journal of Refrigeration. 97. pp.211-225.
Ballor, G.A., 2019. From the “American Challenge” to European expansion: Transatlantic
economic relations from the 1950s to the 1970s. Relations internationals. (4). pp.43-57.
Burley, J., 2018. Forestry research in India; evolution, expansion and future
challenges. International Forestry Review. 20(1). pp.144-146.
Ciravegna, L. and et. al., 2019. The timing of internationalization–Drivers and
outcomes. Journal of Business Research. 105. pp.322-332.
Cooke, F.L. and et. al., 2018. Acquiring global footprints: Internationalization strategy of
Chinese multinational enterprises and human resource implications. Journal of Business
Research. 93.pp.184-201.
de Oliveira, R.T. and Rottig, D., 2018. Chinese acquisitions of developed market firms: home
semi-formal institutions and a supportive partnering approach. Journal of Business
Research. 93.pp.230-241.
Dibrell, C. and Memili, E., 2019. A brief history and a look to the future of family business
heterogeneity: An introduction. In The Palgrave handbook of heterogeneity among family
firms (pp. 1-15). Palgrave Macmillan, Cham.
Fatehi, K. and Choi, J., 2019. Managerial Leadership and Motivation in an International Context.
In International Business Management (pp. 145-189). Springer, Cham.
Gupta, P. and et. al., 2018. Intracerebroventricular Aβ-induced neuroinflammation alters
peripheral immune responses in rats. Journal of Molecular Neuroscience. 66(4). pp.572-
586.
Hamada, M., 2018. Impact of Foreign Bank Entry on SME Credit in the Indonesian Banking
Sector. Journal of Southeast Asian Economies. 35(1). pp.50-78.
Liu, X. and et. al., 2021. Clinical outcomes of frozen-thawed embryo transfer in natural cycles
with spontaneous or induced ovulation: a retrospective cohort study from 1937
cycles. Reproductive Sciences. 28(3). pp.794-800.
Mcheik, S., Al-Akl, N.S. and Abdelnoor, A.M., 2018. The effect of denatured flagellin on toll-
like receptor-5 (TLR-5) in mice. Endocrine, Metabolic & Immune Disorders-Drug
Targets (Formerly Current Drug Targets-Immune, Endocrine & Metabolic
Disorders). 18(4). pp.412-416.
Mittelman, R. and Dow, D., 2018. Biases in Charitable Giving to International Humanitarian
Aid: The Role of Psychic Distance. Journal of Macromarketing. 38(4).pp.383-399.
Mlouka, M.B. and Hefaiedh, R., 2019. CSR, employee commitment, and survival during crisis
period: the case of Tunisia. In Responsible Organizations in the Global Context (pp. 51-
76). Palgrave Macmillan, Cham.
Nusantara, D.B. and et. al., 2020, December. Analysis of Performance Index in Transmission
Expansion Planning of Sulawesi's Electricity System. In 2020 3rd International Seminar
on Research of Information Technology and Intelligent Systems (ISRITI) (pp. 423-427).
IEEE.
Ornellas, A., Spolander, G. and Engelbrecht, L.K., 2018. The global social work definition:
Ontology, implications and challenges. Journal of Social Work. 18(2). pp.222-240.
12

Setiadi, S. and Dwikardana, S., 2019, July. Critical study of business models of music education
in the context of hyper-competition. In Global Competitiveness: Business
Transformation in the Digital Era: Proceedings of the First Economics and Business
Competitiveness International Conference (EBCICON 2018), September 21-22, 2018,
Bali, Indonesia (p. 62). Routledge.
13