The Globalization of Amazon

Topics: Amazon.com, Amazon Kindle, Electronic commerce Pages: 14 (4880 words) Published: July 17, 2013
Globalization of Amazon.com
Zheng, Li # 5263512
Yitong, Fu # 5263587
Xuanyu, Hou # 5263629
Gupta, Radheshyam # 5072517
Jiagen, Hao # 5287701
Hang, Xu # 5129804

MBAB 5P22 Section 01
April 1, 2013

* Introduction
Amazon.com, Inc. was founded by Jeff Bezos out of his own garage in July 1994 under the name of Cadabra. It went online in as Amazon.com in 1995. Since that time it has never looked back and is now the world's largest online retailer. It is an American multinational electronic commerce company with headquarters in Seattle, Washington, United States. With a total revenue of US$ 61.09 billion, it has a total of 88,400 employees as of December, 2012. At first it started as an online bookstore, but soon it diversified itself selling DVDs, CDs, MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry. It also produces consumer electronics mainly the Amazon Kindle e-book reader and the Kindle Fire tablet computer . It is a major provider of cloud computing services. It has its presence in many countries. Amazon has separate retail websites for many countries such as US, Canada, UK, France, Germany, Italy, Spain, Brazil, Japan, and China, with international shipping to certain other countries for some of its products. Next, in this paper, we try to use the “strategy tripod” to analyze the complex drivers for Amazon.com going globalization. * Industry-based View

Rivalry
Rivalry among competing firms is high. Amazon’s Marketplace (Amazon Auctions) directly competes with auction web sites like eBay, Ubid.com, and Yahoo!Auctions, and also indirectly compete against traditional brick-and-mortal stores, like Wal-Mart and BestBuy. A new form of competition arose with Google, Apple and other pure Internet corporations when the company announced to enhance the provision of Internet content service. These competitors all have their own unique marketing mix that makes them hardly beaten. For example, ‘Everyday Low Price” strategy creates the Business Empire of Wal-Mart across all the states in America. Only relying on the virtual website platform compels Amazon to pay huge costs to retain their dominant marketplace. Facing the huge pressure from domestic market, it is not smart to tit-for-tat by the price war and huge promotion activities. Amazon had to enter foreign market ahead of competitors at home and make their online retail shops everywhere to offset losses from the lack of physical stores.

Bargaining Power of Buyers
The bargaining power of buyers is high. Amazon’s customers have the option of buying the products and services they desire on the hundreds of thousands of other retail web sites on the internet. If Amazon does not offer low enough prices to satisfy the customer then the customer will search the internet until they find that low price. Finally, by expanding the business to global market where customers have less control over prices, Amazon could easily cultivate customers` preferences and loyalty with less price sensitivities.

Bargaining Power of Suppliers
The power of suppliers is low. Suppliers have a low power in the sense that much of Amazon’s own inventory could be obtained from numerous suppliers across the country or even across the globe. Amazon is a large buyer of products as its goal is to “offer everything to everyone”. And they decide what specifically goes on their web site and can utilize their influence over smaller suppliers. In this way, Amazon could get lower-price offers from suppliers. This competitive advantage pushes Amazon to the globe because no matter where you come from and how much incomes you have, price is always the first thing that could attract customers. In addition, Amazon`s suppliers including wholesalers, manufacturers and publishers are throughout every corner of the world to pursue “sell anything”, the suppliers overseas really expect that Amazon could branch out to their regions or integrate backward with...


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