amazon in emerging markets case study pdf

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Case Study: Strategizing at Amazon When Globalization Comes Under Pressure

• First Online: 10 September 2019

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• Jeremy Ghez 2  

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Amazon’s success depends on the access it enjoys to a single and global market. While this has been true for now, the firm’s CEO wonders whether he and others have taken globalization for granted. The case reviews the evidence and discusses the extent to which globalization could go into reverse mode. It then explores the options a firm like Amazon would have to hedge against this risk. The case has several implications for architects of change. In particular, it shows how important it is for them to consider what they are taking for granted and how much they depend on it. It also shows the importance for actors looking for impact of remaining nimble in a turbulent business environment.

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“The Steam Has Gone out of Globalisation,” The Economist , January 24, 2019, https://www.economist.com/leaders/2019/01/24/the-steam-has-gone-out-of-globalisation .

Martin Sandbu, “Three Reasons Why Globalisation Will Survive Protectionist Rebellions,” Financial Times , March 9, 2017, https://www.ft.com/content/1a4e31ce-0333-11e7-aa5b-6bb07f5c8e12 .

Martin Wolf, “Donald Trump Faces the Reality of World Trade,” Financial Times , November 22, 2016, https://www.ft.com/content/064d51b0-aff4-11e6-9c37-5787335499a0 .

See Wolf; Wen Wang, “Emerging Markets Are Set to Lead Globalisation,” Financial Times , April 10, 2017, https://www.ft.com/content/f60d77a4-1ded-11e7-b7d3-163f5a7f229c .

“Globalisation Has Faltered,” The Economist , January 24, 2019, https://www.economist.com/briefing/2019/01/24/globalisation-has-faltered?fsrc=scn/tw/te/rfd/pe .

Ralf Dreischmeier, Karalee Close, and Philippe Trichet, “The Digital Imperative,” The Boston Consulting Group (blog), March 2, 2015, https://www.bcg.com/publications/2015/digital-imperative.aspx .

Jeff Desjardins, “This Is What Happens in an Internet Minute in 2018,” World Economic Forum (blog), May 16, 2018, https://www.weforum.org/agenda/2018/05/what-happens-in-an-internet-minute-in-2018/ .

New York Times journalist Tom Friedman called this the Dell Theory of Conflict Prevention which he stated this way: “No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain.”

Niall Ferguson, The Ascent of Money: A Financial History of the World , 1 edition (New York London: Penguin Books, 2009).

Graham Allison, “The Thucydides Trap: Are the U.S. and China Headed for War?,” The Atlantic , September 24, 2015, http://www.theatlantic.com/international/archive/2015/09/united-states-china-war-thucydides-trap/406756/ .

“Why Is World Trade Growth Slowing?,” The Economist , October 12, 2016, http://www.economist.com/blogs/economist-explains/2016/10/economist-explains-5 .

Shawn Donnan, “Global Trade Slowdown Worse than Thought,” Financial Times , July 13, 2016, https://www.ft.com/content/97a10864-490b-11e6-8d68-72e9211e86ab .

World Trade Organization, “WTO Downgrades Outlook for Global Trade as Risks Accumulate,” September 27, 2018, https://www.wto.org/english/news_e/pres18_e/pr822_e.htm .

International Monetary Fund, “Global Trade: What’s Behind the Slowdown,” in World Economic Outlook , 2016, 63–87, http://www.imf.org/external/pubs/ft/weo/2016/02/ .

Greg Ip, “Can Globalization Be Salvaged?,” Wall Street Journal , November 2, 2016, sec. Economy, http://www.wsj.com/articles/can-globalization-be-salvaged-1478102789 .

See for instance Claire Jones, “G7 Signs off on Watered-down Free Trade Pledge,” Financial Times , May 13, 2017, https://www.ft.com/content/6cdbdba6-37c9-11e7-821a-6027b8a20f23; Claire Jones and Sam Fleming, “G20 Drops Vow to Resist All Forms of Protectionism,” Financial Times , March 18, 2017, https://www.ft.com/content/241cdf2a-0be9-11e7-a88c-50ba212dce4d .

Jinping Xi, “Speech to Davos” (January 17, 2017), https://www.weforum.org/agenda/2017/01/full-text-of-xi-jinping-keynote-at-the-world-economic-forum/ .

Allison, “The Thucydides Trap.”

“Globalisation Has Faltered.”

You can find a summary of the debate here: Lorenzo Bini Smaghi, “How Far Will the Pendulum Swing against Globalisation?,” Financial Times (blog), November 15, 2016, https://www.ft.com/content/0c777dda-bed4-326e-b130-2ab08079e5a9 .

Branko Milanovic, “Why the Global 1% and the Asian Middle Class Have Gained the Most from Globalization,” Harvard Business Review (blog), May 13, 2016, https://hbr.org/2016/05/why-the-global-1-and-the-asian-middle-class-have-gained-the-most-from-globalization .

Dani Rodrik, “There Is No Need to Fret about Deglobalisation,” Financial Times , October 4, 2016, https://www.ft.com/content/d9a28a08-895c-11e6-8cb7-e7ada1d123b1 .

Kim Hart, “Dave McClure’s Investment Strategy for the Trump Era,” Axios , March 16, 2017, https://www.axios.com/dave-mcclures-investment-strategy-for-the-trump-era-2316191240.html .

Gilles Sengès, “Carlos Diaz: «Le Mur de Trump, C’est La Silicon Valley Qui L’a Construit»,” L’Opinion , November 13, 2016, http://www.lopinion.fr/edition/international/carlos-diaz-mur-trump-c-est-silicon-valley-qui-l-a-construit-114167 .

“The Steam Has Gone out of Globalisation.”

Laura Stevens and Sarah Nassauer, “Amazon Fights Wal-Mart for Low-Income Shoppers,” Wall Street Journal , June 6, 2017, https://www.wsj.com/articles/amazon-fights-wal-mart-for-low-income-shoppers-1496732400 .

Louise Lucas, “Alibaba Kicks off Ambitious Plan for Frontier-Free Global Trade,” Financial Times , March 22, 2017, https://www.ft.com/content/590d815a-0ec6-11e7-a88c-50ba212dce4d .

Elizabeth Weise, “Alibaba Launches Program to Help 1 Million U.S. Businesses Sell to China,” USA Today , April 25, 2017, https://www.usatoday.com/story/tech/news/2017/04/25/alibaba-launches-program-help-1-million-us-businesses-sell-china/100827290/ .

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Ghez, J. (2019). Case Study: Strategizing at Amazon When Globalization Comes Under Pressure. In: Architects of Change. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-20684-0_8

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How Amazon Adapted Its Business Model to India

• Vijay Govindarajan
• Anita Warren

Mom-and-pop store owners are partners, not competitors.

When Amazon decided to enter the Indian e-commerce market, it was clear from the outset that something would have to give. That something was the very business model that had made Amazon an internet powerhouse in the U.S.

• Vijay Govindarajan is the Coxe Distinguished Professor at Dartmouth College’s Tuck School of Business, an executive fellow at Harvard Business School, and faculty partner at the Silicon Valley incubator Mach 49. He is a New York Times and Wall Street Journal bestselling author. His latest book is Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future . His Harvard Business Review articles “ Engineering Reverse Innovations ” and “ Stop the Innovation Wars ” won McKinsey Awards for best article published in HBR. His HBR articles “ How GE Is Disrupting Itself ” and “ The CEO’s Role in Business Model Reinvention ” are HBR all-time top-50 bestsellers. Follow him on LinkedIn . vgovindarajan
• AW Anita Warren is a business writer and marketing consultant in New Hampshire.

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Amazon in Emerging Markets Case Solution & Answer

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Amazon in Emerging Markets Case Solution

Introduction:.

In 1994, Amazon was incorporated and had evolved from a small vendor of online books to other products in almost 22 countries. However, it started its business expansion internationally by 1998. In 2013, sites of Amazon in Japan, UK and Germany accounted for about 85 percent of total revenues internationally i.e. about $30.0 billion. During 2012 and 2013, Amazon grew at the rate of 14 percent in the net sales.

Success of Amazon in China:

Eventually, Amazon had been successful in China but there was a need of investment, make efforts and put forth time. It had also been successful in positioning itself in top five websites of e-commerce in China by 2014. The entrance of Amazon in China was by acquisition of with almost 5.2 million users and projected revenues of about $15 million in 2004. Therefore, it had put-forth its offerings of products to a fold of thirty-two. With slow growth in China, Amazon came to be known as Amazon Joyo or amazon.cu by 2007. There had been a fierce competition due to the presence of strong competitor Alibaba who had the control over the entire market of e-commerce.

The contents of Amazon were limited due to laws of China and it was to be operated by the organization i.e. owned by China to act in accordance with the local laws of China. Although, Amazon had been initially successful in leading e-commerce industry in China and experienced many obstructions they need to adjust. However, they are generating revenues and their growth will continue. From the first venture of Amazon in the international markets i.e. China, India, and Latin America, the lessons learned by Amazon included leadership with their language and market knowledge with the need to follow up the business plan in accordance with business laws.

Regardless of Amazon’s efforts,the risks of investment taken by Amazon were followed through the responses that were highly aggressive from existing websites of e-commerce. It also learned to operate in overcrowded obstructed traffic. The adaptation of traffic by Amazon through establishment of fifteen centers of fulfillment. Problems related to payment were cash payment and via credit card.

Choices of entrance strategies by Amazon:

Amazon, in the emerging markets had made Significant and sensible choices as their entrance strategies. In India, although, Amazon had made big investment from the beginning to reach potential shares of market.Certainly, Amazon instaured a competitive strategy of market as there were a large number of firms. The practice of competitive strategy by Amazon was by the release of next-day delivery which was followed through other organizations. In India, the entrance of Amazon was late as there were many organizations growing to gain a competitive advantage.

The market of e-commerce in China is the largest throughout the world. While, about 80 percent of the shares of market were controlled by Alibaba in 2013 through launch of Taobao and Tmall. The entrance of Amazon in Chinese market took place in 2004 through acquisition of Joyo to run its business. The entrance strategy of Amazon was not an aggressive one in China rather it chose to slow growth. Regardless of its efforts and investment,the refund to client was not expected by Amazon i.e. the product price was undercut by 5 in comparison to its competitors. However, Amazon grew at the rate of 3. Percent by 2012 but it was expected to grow and avail opportunities in China.

The joining of Brazil with China and India as one of the biggest emerging market having a huge population involved in the use of  mobile devices in order to make payments again and again. Although, there were many tax codes, laws of labor and other rules and regulations which restrict the entrance of organizations in the international market with unfinished roads complicating the product delivery. Amazon entered in Latin America in 2012 with the launch of Kindle application by 2014. This was after prolonged negotiations with the publishers of Brazil who wanted to control the price as a threat of Amazon’s strategy of aggressive discounting. Amazon, therefore, managed to remain in competition through earning contracts with no less than thirty publishers in English and Portuguese books.Free shipping of products was also offered as a strategic move in order to expect future in Brazil. (Linsenmaier, 2018)………..

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