The global business strategy is a term that covers three type of areas namely, multinational, global and international strategies. The three areas are related to some specific strategies that are framed to facilitate an organization to achieve its objective by expanding its business at international level. While developing global business strategy, an organization is required to distinguish between main three forms of global expansion that includes organization’s current international position, capabilities, and available resources. If a company mainly focuses on developing its home market than its steps outside its home and regular market are considers as international strategies (Lasserre, 2017). For better understanding the concept of global business strategies this report is going to describe entry moves of Amazon in India. Amazon is a multinational company having it’s headquartered in Seattle, Washington. It is one of the top ten companies providing online retailing services in almost all the leading nations. The company started its business as a virtual book service provider in it’s headquartered location. AS the time passes, it expands its business into various diversified areas (John B & Parboteeah, 2011).
Furthermore, this reports also describe the global business strategies of Amazon which are used by the company in India, one to most important of its host countries. The data for this purpose has been collected from online sources like official website of Amazon, articles published by the relevant sources of international level. Data has also been collected form some books and recent journal articles to evaluate the strategies of Amazon in the host country. The findings are used to evaluate internal and external environment of the company in India to review the performance of the company. This report summarizes the overall use and impact of global strategies of Amazon in India to establish an understanding and importance of using global business strategies in an effective manner. (Hill, 2011).
Business analysis tools are useful techniques and models that can help an organization to development an understanding about its internal and external business environment and act more strategically to manage the environment. There are more than Dozen tools are available, but some of them are frequently used in comparison to others. These can be summarized as follows:
It is one of the majorly used strategic environment analytical tools. It aims at identifying strength and weaknesses of an organizations in order to deal with existing threats and opportunities. It is used to perform internal as well as external environment analysis of the company. After this analyses the organization become able to:
Results from SWOT analyses gives a management a better insight into its external and internal strategic business environment. But it does not always help in prioritising the results, which often may lead to an inappropriate and improper strategic decision making.
The best way to better use of this tool is to study the customer perception at the time of making strategic decisions and plans. This can be done by importance-performance analyses prior to SWOT analyses (Cerrato, 2009).
It is used to study the external environment of the company. The factors included in PESTLE analyses are Political, Economic, Social, Technological, Legal and Environmental. It also studies the opportunities and threats factors of SWOT analyses in more a precise manner.
Pestle analyses help in strategic decision making that is related to the external environment of the company. It is not helpful to analyse the internal environment of the company. Thus a company cannot take it strategic decisions only on the basis of PEST analyses. Because internal and external environmental factors are related to each other in such a manner that one may affect the working and impact of another (Chetty & Hunt, 2003).
Porter’s framework is a powerful model for analyzing the profitability and attractiveness of current business industry by analyzing five main factors:
It is a classic strategic business environment analytical tool to assess the environmental influences, capabilities, and prosperities in the industry competition. The model simplifies microeconomic theory with the help of above defining above five forces and serves the managers to focus on the external environment of the industry from an angle that is out of reach of SWOT analyses. However, some analyst has an opinion that market conditions are subject to change and this framework deals with the imagination that market conditions remain constant up to some extent (Moon, 2010).
The internal environment of Amazon can be examined with the help of SWOT analyses.
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Strengths · Well-known brand along with a strong customer base in other counties. · Offering diversified products. · Service of free home delivery above minimum purchase. · Working with minimum profit and benefiting from economies of scale. · Build strong relationships with wholesalers, business houses, and customers. · Carrying an experiencing of almost one and half decade in providing online customer services. |
Weakness · Weakness of supply chain management · Low-profit margin · Cost structure |
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Opportunities · Innovative ideas · New products · New technology · New Services · Emerging markets · Increase in use of internet at the global level · Tie-ups with strong players of online retailing service providers. |
Threats · Threats related to online security. · Local retailers offering the products and services at low cost. · Existence of strong competitors. · Threat to enter new global level competitor like Walmart. · Availability of substitute products · Mindsets of Indian people regarding online shopping. |
From the above analyses, it is cleared that internal environment of the company is favorable in terms of expanding its business at the global level. Amazon is having the strengths of its strong brand image, availability of a variety of products, attractive offers, and schemes, the experience of carrying out global business level practices etc. These strengths can be used to staking advantages of the opportunities and dealing with the threats existing in the external environment of the business (Dunning, 1980).
After getting the success in various leading nations, Amazon launches its website WWW.AMAZON.IN on June 5, 2013. It gave a new platform to the Indian merchants to directly sell their products to customers through easy online retailing services. The company established its roots very quickly in India and started earning profit from the initial years of its working. For analyzing the external environment of the Amazon India, Pestle Analysis can be carried out because it provides information about the political, economic, social, technological, legal and environmental factors that are related to the external environment of the business (Howard & Mayo, 1988).
As India is one of the largest democracies in the world, the political environment of the company is largely affected by the government policies, the interest of politicians, and government regulations. Similarly, the political environment is also affected by the applicability of various taxes including income tax, goods, and services tax, state tax, octroi and utilities that are to taken care by local government or bodies. Encouragement by the government for free business and privatization also influences the working and practices of Amazon in India (Lolan, et al., 2008).
After the introduction of Industrial Reform Policies in 1991. The economic environment in India is almost stable. According to the policy, a decrease in providing industrial license, liberalization of international capital, Increasing in FDI and formation of FIBP has facilitated in the continuous improvement of Indian economic environment. In 2013, at the time of entrance of the company in India, the GDP of India was registered as $5.07 trillion. This was further improved by 5% in 2014.
These factors are related to the changes in trends and beliefs that can impact on the environment of an organization. India has more than 1.2 billion people and following thousands of beliefs and customs. Their earnings and their beliefs, both are responsible to decide their shopping trends. In India, availability of goods and services by local vendors at the cheaper rate is also a factor that largely affected the sale of Amazon in its starting years of establishment. But education and changing preferences of the citizens are affecting positively the business of Amazon (Hutzschenreuter, et al., 2011).
Technological Factor:
Technology directly influences product development and result in the introduction of new and effective cost-cutting processes. India has the facility of 3G and 4G data technology which facilities several online products and services provided by online and virtual retailers. This benefitted the company a lot. Furthermore, India is also characterized by strongest IT sectors in the world by continuously promoting software upgrades and related technological advancements. Such advancements created a win-win situation for the company as the company works in virtual retailing which is completely based on the technological advancements (Das, 1997).
Recently in the past years, there were a number of legal changes introduced in India including recycling of products, increase in minimum wages, removal of discrimination based on disabilities, women empowerment etc. It affected the business form the point of view of providing jobs to employees. On the other hand, environmental factors include impacts on the air quality due to urbanization and industrialization which may also result in health issues and diseases. As a result, the company is bound to carry out it’s manufacturing process that may not result in creating a polluted environment and creating noise (Dunning, 1995).
On the basis of PESTLE analysis of Amazon India, it is clear that external environment of the company totally depends upon the various factors which are beyond the control of the business. The business can only try to reduce the impact of the adverse effect of the changes in above-mentioned factors. Above analyses shows that economic and technological factors support the functions of Amazon in Indian economy but at the same time, social and environmental factors need to be considered in a tricky manner in order to run its business effectively. Amazon is working very effectively which shows that it has considered all its external environmental factors and framed its global business strategy accordingly.
References
Cerrato, D., 2009. Does Innovation Lead to Global Orientation? Empirical Evidence form a Smaple of Various Italian Firms. Eurppena Management Journal, 27(5), pp. 305-315.
Chetty, S. & Hunt, C. C., 2003. Explosive International Growth and Problems of Success amongst Small to Medium-Sized Firms. International Small Business Growth and Problems of Success amongst Small to Medium-Sized Firms, 21(1), pp. 5-27.
Das, R., 1997. Defending against MNC offensives: strategy of the large domestic firm in a newly liberalizing economy. Management Decision, 35(8), pp. 605-618.
Dunning, J. H., 1980. Toward an Eclectic Theory of International Production: Some Empirical Tests. Journal of International Business Studies, 11(1), pp. 9-31.
Dunning, J. H., 1995. Reappraising the Eclectic Paradigm in an Age of Alliance Capitalism. Journal of International Business Studies, 26(3), pp. 461-491.
Engau, C. & Hoffmann, V. H., 2011. Strategizing in an Unpredictable Climate: Exploring Corporate Strategies to Cope with Regulatory Uncertainty. Long Range Planning, 44(1), pp. 42-63.
Hill, C. W. L., 2011. International business: Competing in the global marketplace. In: 8th, ed. New York City: McGraw-Hill, p. 408.
Howard, D. G. & Mayo, M. A., 1988. DEVELOPING A DEFENSIVE PRODUCT MANAGEMENT PHILOSOPHY FOR THIRD WORLD MARKETS. International Marketing Review, 5(1), pp. 31-40.
Hutzschenreuter, T., Voll, J. C. & Verbeke, A., 2011. The Impact of Added Cultural Distance and Cultural Diversity on International Expansion Patterns: A Penrosean Perspective. Journal of Management Studies, 48(2), pp. 305-329.
John B, C. & Parboteeah, P., 2011. Strategic international management – International edition. In: 5th, ed. South western: Cengage Learning.
Lasserre, P., 2017. Global Strategic Management. In: Basingstoke: Macmillan International Higher Education, p. 510.
Lolan, P., Zhang, J. & Liu, C., 2008. The global business revolution, the cascade effect, and the challenge for firms from developing countries. Cambridge Journal of Economics, 32(1), pp. 29-47.
Moon, H. C., 2010. Global Business Strategy: Asian Perspective. Singapore: World Scientific Publishing Company.
Motohashi, K., 2015. Global Business Strategy: Multinational Corporations Venturing into Emerging Markets. New York City: Springer.
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