Amazon and Global Business Case Solution

0
204

Question One

According to the Hofstede cultural dimensions ranking, and Amazon’s operations in the United States, United Kingdom, China and Australia, the results are a portrayal of the subject countries’ cross –cultural communications analysis framework (The Hofstede Center, 2013). The option of the four countries can be used as a description of the major continents where the firm has interests and conducts active operations. The exclusion of Africa is to be considered non-vital in the course of trying to understand the main issue of cross-cultural communications from Amazon’s perspective since the concept of digital trade on the continent is relatively new and irregular. However, this should not be taken to mean that the company is absent in Africa. Amazon runs successful offices and has profitable operations in parts of eastern, northern, and western Africa, South Africa.

From a Hofstede rating viewpoint, we find that the system uses five dimensions to examine cross-cultural communications. These are; Individualism (IDV), The power Index (PDI), Masculinity (MAS), The Uncertainty Avoidance Index (UAI), and Long Terms Orientation (LTO). IDV means the extent to which the society is willing to recognize individual and collective achievement. According to our choice of countries, China scored just 15, while United States scored 91. These examples show how the U.S. society is strengthening achievements regardless of whether they are individual or out of collective effort. The second dimension, PDI, refers to a society’s general degree of equality, or inequality. In this dimension, Asian countries such as China score very high because of a high degree of inequality in the otherwise communist state. On the other hand, due to a level playing field and access to the capital resources, the largely capitalist Western states score low on this dimension. The third dimension, MAS, refers to the degree to which a society is ready and willing to accept the traditional male model that exudes power, achievement and control. Here we find that the western and eastern ratings are relatively equal, with the exception of the United Kingdom.

Amazon and Global Business Case Solution

The fourth dimension refers to the level of tolerance within society for confusion and ambiguity. The Western countries score highly, due to their egalitarian orientation, according to the ranking of our four nations. The East, however, is more superstitious and wishes to be more in control of its future results. Finally, with the LTO, or a society’s willingness to overcome obstacles with time, we see that China scored very highly, while the Western countries scored so low. That means Westerners are not empowered to influence their actions as their Eastern counterparts are doing. Chinese delays in closing deals are a good example of this intolerance to the times.

Among the ways that a United States manager can modify his behavior to communicate better with foreign associates, especially those from Asia, is to adopt a cultural integration strategy. This would include attempts to learn language signs, communication methods and structures, as well as cultural practices from the other nations. Additionally, the U.S. manager could also identify differences that could lead to a clash between them.  The Western communications style, for example, employs the liberal use of jokes while the Eastern one is more respectful.  Such destructive communication skills might need to be toned down. There might also be a need to change the environment in which he communicates as this has a profound effect on the results. For example, Europeans might be comfortable with an informal setup, whereas Asians prefer more formal set-up. As is the case, the communication dynamics usable in these two settings would have to change in order to keep the new associates happy.

Question Two

Amazon’s global reach has seen it start operations in some countries with security issues. Most of these countries are the victims of political and social instability but from a business and investment viewpoint they are all dangerous. A good example of such countries is Colombia. While the country is relatively safe from a political perspective, the risks associated with doing business in the country are real (Bureau of Western Hemisphere Affairs, 2013). Other regions of the world have been subject to political unrest. Some parts of Asia such as Kazakhstan and Pakistan are also politically unsafe. In these countries, there is a rich history of politically motivated, ethnic war which puts Amazon and its subsidiaries at a greater risk than is permissible. African operations too are subject to the problems that make Amazon operations in the region a difficult affair. Areas of Central Africa such as Nigeria and Niger are currently experiencing a lot of political unrest, as is most of the Central African regions of Congo and DRC.

From an economic perspective, Amazon operations are also under constant threat due to the risk of market collapse and economic meltdown (Standard and Poor’s.com, 2014). The market crash of 2007 presents a good example with many regions in the Western and Central Europe suffering almost irreparable damage to their economies. Spain and Greece are two European examples which make Amazon operations a tricky affair in Europe. In addition, Asian regions of Vietnam, Mynmar, and Cambodia also face the constant risk of inflation due to political tensions and internal wrangles that undermine development and a widespread shunning of Western influence. Africa too has its own fair share of countries that offer Amazon and its operations in the area a considerable amount of economic risk. Before recently, due to political wrangles, Libya, Egypt and Uganda had been under extreme economic pressure. The resulting economic conditions weren’t conducive to working in foreign companies.

Question Three

Amazon operates its online business with diverse judicial systems in many countries. With regards to the parameters given, that is countries that use the common law, and those that use the civil law, we find that Amazon has professional relationships with all. Because countries using the common law system are those under British rule, we consider their High Courts to be very powerful entities. That means that rulings by the High Court within their boundaries are only overturned by legislation that makes trade agreements binding. In addition, their freedom of expression makes for better business relations with each other and an easier entry by foreign companies like Amazon. On the other hand, the countries using the civil law system are mostly those using the communist economic systems, such as China and Russia. This results in oppressive business environments which have unfair terms of trade for companies from capitalist countries such as Amazon based in the US. Which results in such companies having difficult business environments.

Question Four

Amazon has procured insurance services from the Overseas Private Investment Company for its operations in some politically risky nations, especially in Asia and Africa. However, it has been reluctant in furthering the same over the recent years mainly due to its business model in many overseas markets that does not necessarily rely on a tangible platform. The company’s online presence enables it to evade the actual risks other physically present foreign companies have to contend with.

Question Five

Amazon owns the intellectual property rights to its proprietary e-book reading service and devices under the Kindle brand. In addition, under the Digital Rights Management Scheme (DRM), the formats its Kindle e-book reader supports, such as KF4, are primarily under its protection. While these intellectual property rights do not necessarily expire, their success is getting eroded by the emergence of more modern methods of reading online publications. However, Amazon is keen to recoup on the lost revenue by remaining competitive in other aspects of its online-based businesses, and has recently introduced same-day delivery to its online market place.

Question Six

According to Transparency international, in 2014, Finland, New Zealand, and Denmark scored 89, 91 and 92 on the Corruptions Perceptions Index. These are the highest scores in the same index, and indicate a low latency of corruption in the indicated countries. Nigeria and Equatorial Guinea on the other hand ranked very low on the same scale. In addition, the Equatorial Guinea  country went on to exemplify its high affinity when in 2013, its second vice president Teodorin Nguema Obiang, son the president was brought to the limelight for corruption alongside the Minster of defense (Lazuta, 2014). Allegedly, the country lost more than 30million US dollars in this corruption case that is still underway. On the other hand, in Nigeria, the former governor of one of its oil-rich states jumped bail and fled out of London. Mr. Diepreye Alamieyeseigha is reported to have done so in full view of the current government which President Jonathan Good-luck is head. Surprisingly, the president once served under the fleeing fugitive, a scenario that raises many eyebrows (Nossiter, 2013). The United States might face a large array of risks in the two countries since local officials might try to cut corners by introducing corrupt deals to United States workers. Though Amazon rarely has physical presence in such countries, the probability for online platforms to be used to corrupt its officials is still a threat.

Question Seven

Amazon’s strategy in terms of penetrating foreign markets is heavily reliant on the existence of an already thriving online commerce potential. In addition, we find that Amazon has the habit of riding into its new foreign market on the back of an already existing, but struggling local e-commerce company which is assists put back on track and then takes over as a strategic partner. This has been the case in many affluent Asian markets such as Hong Kong and Japan. From a risk-return tradeoff perspective, Amazon often carries out its due diligence in target markets based on two main parameters. These are; the economic development among the middle class, and internet infrastructure and the government’s control over the same. This is a good strategy since any prudent business organization has to carry out its due diligence before investing in any new markets (Thorpe, 2011). The fact that Amazon is an online-based company does not exempt it from doing that.

Question Eight

Amazon has an exit strategy in place for every entry one. This is in line with the afore-mentioned due diligence that sees a business plan its entry based on some investigation of the dynamics of the subject country and its likelihood of profiting from entry. In addition, the same is done in case the organization feels unsure of the likelihood of profiting from operating in certain markets. The recent spate of violence, economic collapse, and terrorism has forced many companies to exit the countries suffering these unfortunate circumstances since its own interests come first.

Question Nine

Just like any other global player in existence today, Amazon has tried to be a good corporate citizen from the global perspective. There are very few ethical issues that are attached to this global brand mainly because of its strict policy on ethics and corporate responsibility. In addition, as an online-based entity, there are advantages to this from an ethical perspective since operations are better monitored. In addition to a good ethical operation, Amazon has in place some strategies in place with regards to the concept of corporate social responsibility. The company always donates a fraction of online sales to charitable organizations and disaster victim funds when they are created. In addition, the mother company has put in place some off-line philanthropic operations in the form of support for cancer research and other common, but chronic illnesses.

Question Ten

Amazon’s mission statement is centered around its dedication to being the planet’s most customer-centric company where people can easily find and access online commerce solutions  The company has largely been adherent to this mission statement and over the last almost two decades has been one of the most influential in e-commerce. Amazon’s actions have reflected a commitment to aligning itself with its most important partner who is the client. The development of such innovative devices such as the Kindle and Kindle Fire demonstrate this commitment by way of trying to extend the customer’s access and use of its products. Not only can the customer buy e-books, he can also read them using the company’s proprietary reader.  In addition, the company has tried to expand its operations and range of merchandise available online in order to make things easier for its customers once again demonstrating their commitment.

Question Eleven

With regard to strategy formulation, Amazon can be categorized as shareholder model due to its loyal commitment to the shareholders whose interests it protects. There are many shareholders within the company’s ranks and these are the main beneficiaries the company prioritizes. However, Amazon should not be considered careless in terms of stakeholder welfare. Thought the company prioritizes with a bias towards its shareholders, it has visible risen to the occasion many times in the past to cater to the welfare of its stakeholders (Moody’s.com, 2014). A good example of Amazon’s dedication to the society as part of its stakeholder group lies in its corporate social responsibility record.

Question Twelve

Amazon is already a stateless corporation due to the extent of its reach globally. The company’s international operations have seen it spread its wings to more than one hundred countries which make it a global or stateless corporation (Scherer & Pallazzo, 2008). There are many advantages to being a stateless company, and Amazon has successfully manipulated these to emerge among the top in the global e-commerce industry.

Question Thirteen

Amazon’s organizational structure is a matrix or hybrid one. This means it is a combination of both the functional and divisional organizational structures. The functional structure is comprised of groups that serve the same purpose while the divisional one is made of those that handle similar products of market segments (Writing, 2012). Amazon uses a mix of both organizational structures to ensure its global operations are smooth and effectively working.

Question Fourteen

Amazon benefits from a hybrid organizational structure since the business is global and has many segments within its operational capacity. The use of either functional or divisional organizational systems alone could be problematic due to the scale or operations and diversity of company products. Therefore, a system that caters well to the complexities of handling each of these individual structures would be better (Kolbaia, 2013). In any case, the company’s current business performance is a clear indication of a good organizational structure given the size and scale of its operations.

References
  • Bureau of Western Hemisphere Affairs. (2013). Colombia. Retrieved from http://www.state.gov/r/pa/ei/bgn/35754.htm
  • Kolbaia, G. (2013). Amazon.com Organizational Structure ( Flowchart) | Creately. Retrieved from http://creately.com/diagram/example/haguvble1/Amazon.com+Organizational+Structure
  • Lazuta, J. (2014, October). US Seizes More Than $30M From Guinean Official. Retrieved from http://www.voanews.com/content/us-seizes-property-from-guinea-vice-president-in-corruption-case/2481179.html
  • Moody’s. (2014, September). Retrieved from Moody’s.com
  • Nossiter, A. (2013, March). U.S. Embassy Criticizes Pardons in Nigeria Corruption Cases – NYTimes.com. Retrieved from http://www.nytimes.com/2013/03/16/world/africa/us-embassy-criticizes-pardons-in-nigeria-corruption-cases.html?_r=0
  • Scherer, A. G., & Palazzo, G. (2008). CORPORATE CITIZENSHIP IN A GLOBALIZED WORLD: INTRODUCTION TO THE HANDBOOK OF RESEARCH ON GLOBAL CORPORATE CITIZENSHIP.
  • Standard and Poor’s. (2014). S&P | Ratings Retailing| Americas. Retrieved from http://www.standardandpoors.com/ratings/retailing/ratings-list/en/us/?subSectorCode=17§orId=1221186658319&subSectorId=1221187347304
  • The Hofstede Center. (2013). United States – Geert Hofstede. Retrieved from http://geert-hofstede.com/united-states.html
  • Thorpe, W. (2011). A Look At Amazon.com. Retrieved from http://www.valueline.com/Stocks/Highlight.aspx?id=10395
  • Writing, A. (2012). Different Types of Organizational Structure | Chron.com. Retrieved from http://smallbusiness.chron.com/different-types-organizational-structure-723.html

LEAVE A REPLY

Please enter your comment!
Please enter your name here