The Globalization Strategy of Amazon: Analysis of Challenges and Trends

Globalization Technique of Amazon

Feature An Appropriate Critical Issue With Sufficient Currency, Substance And Relevance To This Course And Its Learning Outcomes (Properly Justified) To Merit Analysis And Debate ?

Feature And Make Substantial Reference To a Range Of Theories And Concepts Considered In This Module. Simple Summary Of The Newspaper Article Is Not Acceptable. ?

Engage In a Critical Debate Which Evinces Insight Into a Contextual Awareness Of The Topic And Consider The Implications Or Application Of The Issues The Essay Raises For Management, Businesses, Government And / Or Workers. This Needs To Be Backed By Evidence And Argument And Not Be Simply Prescriptive. ?

The company has a global reach and is serving many other companies that also have a global reach, as it is a cloud based system and has facial recognition system it can be used from anywhere. The company has its branches throughout the world and has to follow the rules of all the countries regarding their facial recognition software.

Globalization of the business has been a sheer necessity for any organization that aims at the growth of the business. This not only helps a company to profit financially but also helps in gaining a strong brand image. the following article draws relation with the conflict and challenges that the company of Amazon has faced in making their cloud based project a global one. Drawing reference from the news, the company will analyse the globalization strategy of Amazon and how what are the trends of the IT companies for their growths. In the light of these discussion, the essay will seek to find a solution for the US issue.

In the modern world, E-commerce is a dynamic market where cut-throat competition is the norm. Firms operating in this market are always adapting to new challenges. Customer satisfaction and service are the two most important factors driving this competition. 

The online book selling service was inaugurated by Amazon. The Economist in 2000 stated that the Amazon brand name was becoming identical with e-commerce and was one of the few internet based companies who were recognised around the world. One of the main reasons behind Amazon’s success is their exceptional customer service. The Amazon model states that warehouses and pricy inventories are quickly becoming obsolete. All that is needed by a modern day retailer is a website capable greeting and handling the customer orders. Other third parties are tasked with stocking up the inventory.

Globalization Strategy

Formulating and successfully implementing a business strategy is one of the most important factors behind gaining competitive advantages over competitors. But Jeff Bezos, the founder of Amazon realised that those are not the only factors, but the process through which competitive positions are maintained or created are also essential behind improving business performance.

Innovation focused on the needs of the customer was the main strategy implemented by Amazon. According to the arguments provided by Pearson and Robinson (2000) “some firms find it profitable to make innovation their grand strategy”. Bezos by striving towards introducing new technologies, in order to improve customer satisfaction and experience, put stress on continuous innovation. The reason behind such action was the expectation of customers to receive new products and continuous changes for good. To Bezos, innovation was the key ingredient to achieve success against competitors. Pearson and Robinson  argued that “most growth oriented firms appreciate the need to be innovative”. Bob de Wit and Ronley  stated “innovation requires brooding, tinkering, experimentation, testing and patience, as new ideas grow and take shape”

Diversification was another strategic part behind the success story of Amazon. Diversification was implemented in both fronts, namely product diversification and business diversification. Customers are always in the need of new products, Bezos understood this and intermittently introduced new products in the platform. This helped Amazon gather a loyal customer base, which has now spread in the millions across the globe. Pearson and Robinson (2000) said “firms seeks balance in their portfolios between current business with cyclical sales and acquired business with counter cyclical sales between high-cash/ low opportunity and low-cash/high opportunity businesses or between debt-free and highly leveraged business”. Bezos’ business strategy, finding growth and opportunity in new sectors like games, jewelry, toys, beauty and health was in agreement with Pearson and Robinson’s argument. The popularity he has seen is evidence towards his successful business diversification. According to Johnson and Scholes “firms which diversify by building on their core business do better than those who diversify in an unrelated way”.

Human resource plays a very important role in the success of a business. According to Pearson and Robinson (2000) “a firm’s ability to attract and hold capable employees is essential to its success”. Over the years, Bezos focused more and more on increasing the strength of the management team by appointing senior directors and managers. A firm’s performance has a significant relationship business and HR strategies. Amazon has found the perfect blend among the two, which helps in achieving high performance and thereby helping in the success of the e-commerce site.

Innovation

Intelligent acquisitions form another piece in the puzzle of business strategy followed by Bezos. As Pearson and Robinson (2000) said “the acquisitions of one or more similar firms eliminate competitors and provide the acquiring firm with access to new markets”. 

In accordance with Pearson and Robinson’s statement, Bezos expanded his operations in the European markets through acquisitions of various European firms. Various web based companies, which offered variety of services to its customer base, were acquired by Amazon. Arguably this strategic thinking led Bezos to win in competitive situations and establish Amazon as the top most e-commerce site in the world.

Bezos also incorporated joint ventures in his business strategy. Bartlett et al. (2004) said “multinationals used joint ventures extensively as a way not only to navigate through bureaucratic processes but also to learn about new markets”. Joint ventures with already established e-commerce and other web based services helped expand Amazon to new markets and provided the site with unexplored customer bases. In this matter Bartlett et al. (2004) said the executives mainly targets for growth in the markets and “they tend quite naturally to focus on the size of the opportunity and the challenges that lie ahead”. Arguably an opportunity for growing his business pushed Bezos towards undertaking joint ventures.

Globalisation has boosted the opportunity for the business organisation. With a proper strategic plan and technology, a business organisation can grab the benefits of globalisation. The concept of international trade has changed due to globalisation. In the globalised world, any business organisation with adequate capital can enter virtually in any market. The authority of a business organisation can take advantage of the emerging market, low labour cost, and other opportunities. According to the UN Secretary-General’s 2017 report, the nature of production, outsourcing, and mechanisation are changing and creating income inequality. For sustainable development, the use of AI and information system can be used (UN DESA 2017).

Globalisation has created several opportunities for the IT industry. With the use of technology, IT companies are not only ruling the international market but also supporting international trade. To support the global business, the way the officials of the IT companies are exploiting the technology will be discussed. IT companies are developing technologies to ensure smooth communication throughout the world. For example, the employees and client of a multination company can belong from throughout the world. An appropriate communication system developed by the IT Company can help a business organisation to ensure smooth business operation. Besides that, cloud computing is essential in the 21^st century.Cloud Computing is storing data and accessing data and programs by the internet instead of the hard drive. It is the use of Software and Hardware to deliver a service through the internet. Cloud Computing allows users to access data and programs by the internet throughout the world. For example, Gmail of Google is a cloud computing service provider. The use of cloud computing has changed the business operation style of business organisation. It can be said that IT companies are developing this type of technological innovations to manage globalisation. Improving cloud computing and managing the data is important for the IT Company.To deal with globalisation IT companies are researching in machine learning big data and Open Stack architecture. To maintain these systems, software, IT companies have to conduct in-depth research. So that they can offer the most beneficial product to the business organisation. It will help the business organisation to achieve competitive advantage. To ensure smooth business operation, the authority of business organisations are taking support from the IT companies. So it can be said that in the 21^st century, the relevance and significance of IT companies are flourishing.

Diversification

Researchers of IT companies are developing new technologies, software to ensure smooth business operation. It will not only help the IT Company to enhance its market share but also help other business organisation to control their business efficiently. Software innovation is the procedure of developing useful software systems to enhance efficiency (Roseand Furneaux2016). The aim of the IT companies is to innovate new software which can be useful to boost efficiency. The innovation of software relies on users and experts. Software development companies have different innovation styles. To fulfil the future need, software development companies develop new software, technologies. So it can see that to ensure its relevance in global market IT companies are developing and offering new software, system and technologies like big data, cloud computing and others. It can help a business organisation to monitor closely the business operation, ensure smooth business operation. The improvement of AI can be beneficial for the business organisation. It will help a company to rely on the machine rather than human beings. It can help a company to boost production, reduce production cost and other disruptions. So it is proved that the IT companies are emphasising on the diverse area to produce relevant software, system and technologies.

Amazon has transformed the retail industry. By developing cloud computing in 2006, this organisation is gaining competitive advantages. The company is in the technological segment and is serving the other companies with its cloud based service and facial recognition software. The company is known for having one of the best facial recognition systems and that is used by many law enforcement people throughout the world. The company is growing in these departments and is providing their clients with the best possible solution through technology.

To get the benefits of globalisation, this organisation has utilised its technological innovation. The R&D of this company has done a brilliant job to help this company to gain a competitive advantage. Besides at the authority of Amazon utilizes AI and machine learning. The approach of Amazon towards AI is known as the flywheel. This tool is developed to boost the efficiency of the store rotational energy. Flywheel maintains the energy and distributes the energy to other machinery areas (Morgan 2018). The flywheel approach of this organisation is a keystone to managing the globalisation of this organisation. This approach helps Amazon to connect the company. In this approach, the innovation of one area's machine learning to other teams of the Amazon. Necessary information is spread worldwide departments of Amazon through AI. To deliver a cohesive consumer experience, the authority of this organisation uses AI (Morgan 2018). This organisation is successful to encourage Innovation and promote growth throughout the company.

Human Resource Strategy

This organisation is successful to launch cutting-edge technology to assist the employees. By taking the help of Technologies employees of this organisation to enhance productivity. SLAM procedure is followed by this company which contains scan, label, apply and manifest (UK About Amazon 2020). This Revolutionary innovation is beneficial for the consumer because it boosts the pace of packing process with accurate deliveries. Besides that, this organisation has launched Amazon Robotics to support the logistics of the company. So it can be said that to ensure its smooth business operations throughout the world the organisation is successful to invent cutting-edge technology, which can assist the employees.

The technological innovation of this organisation has to certain goals which are to differentiate this organisation from its competitors and ensure smooth business operation as much as possible. This organisation has started a drone delivery trial in the UK. In future, it will help this organisation to peace up the delivery system of Amazon. At present this organisation is one of the most powerful Technology business organisation in this world who offers software, communication system, and devices. Successful implementation of these technological innovations will ensure customer satisfaction, the efficiency of the employee and productivity of the company. By taking certain innovative decisions, and successfully implementing technologies in the business operation this company is managing its global operation. It can be said that to deal with the impact of globalisation, the authority of Amazon relies on technological innovation.

This organisation is successful to maintain its cloud computing for the global business. There are three top companies in the world of cloud computing which are Amazon Web Services, Microsoft Azure and Google cloud platform. This organisation offers a Cloud Computing platform named Amazon Web Services, which is a combination of IaaS, PaaS and Saas offerings. To manage its online retail business, in 2006 the authority of Amazon launched Amazon Web service. For AWS customers, this organisation offers a highly reliable infrastructure to its cloud computing. So it can be said that the cloud computing of Amazon is not only beneficial for the organisation but also the AWS consumers. However, this organisation is facing certain problems due to the decision of Donald Trump, the president of the USA. The President of this country is not supportive of cloud computing. It can be a problem for this organisation. The authority of this company relies on cloud computing for its global business operation. So it can be said that the authority of Amazon has to find a solution to manage the disruption.

Acquisitions

Recently the company lost a deal from the US law enforcement. This deal was finally awarded to Microsoft, a competitor of Amazon. Trump, the current US President does not have good relations with Jeff Bezos. This bad blood between the two results in Amazon losing out on deals with the government of USA. In some countries, the facial recognition software used by the company has been declared illegal, due to privacy issues. This has been another pressing issue the company has to be dealing with right now.

Conclusion

Though Amazon is currently a world leader in e-commerce, and have a strong foothold in the market, they are still some threats and weaknesses that pop up from time to time. (EfthymiosConstantinides, 2014). Riolli-saltzman and Luthan said ”e-commerce companies can be successful if they combine future orientation with organizational adaptability and flexibility”. Following Kippenberge’s argument strategy formulation is determined by time or circumstances, Amazon needs to constantly update its business strategies since no best form of business strategy exists. 

A major concern for customers buying from online retailers is trust. One way Amazon can build up customer’s trust is to provide various means of communication like post, telephones etc. Amazon mainly focuses on providing low cost services and products and building up a loyal customer base, something which is in stark contradiction with business strategy of WalMart, who strives to have as many suppliers as possible. 

In order to strengthen the brand name of Amazon, as well as build up a larger loyal customer base, they need to develop and implement improved marketing strategies. Amazon could possibly focus on building up specialized software to help in continuing innovation.

References

Levy, A., 2016. Amazon's Global Expansion Is Intensifying. [online] CNBC. Available at: <https://www.cnbc.com/2016/12/14/amazon-.html> [Accessed 10 April 2020].

Morgan, B., 2018. How Amazon Has Reorganized Around Artificial Intelligence And Machine Learning. [online] Forbes. Available at: <https://www.forbes.com/sites/blakemorgan/2018/07/16/how-amazon-has-re-organized-around-artificial-intelligence-and-machine-learning/#4bd2b0d17361> [Accessed 10 April 2020].

Rose, J. and Furneaux, B., 2016. Innovation drivers and outputs for software firms: literature review and concept development. Advances in Software Engineering, 2016.

UK About Amazon, 2020. Technology At Work. [online] UK About Amazon. Available at: <https://www.aboutamazon.co.uk/innovation/technology-at-work> [Accessed 10 April 2020].

UN DESA, 2017. New Globalization Report: Three Mega-Trends Expected To Impact Our Future | UN DESA | United Nations Department Of Economic And Social Affairs. [online] UN DESA | United Nations Department of Economic and Social Affairs. Available at: <https://www.un.org/development/desa/en/news/intergovernmental-coordination/new-globalization-report.html> [Accessed 10 April 2020].

https://www.bbc.com/news/business-50728082

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