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The internationalization of amazon

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Elena Alexie

on 4 April 2016

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Transcript of The internationalization of amazon

The internationalization path of Amazon
The Internet made it possible to banish geographical boundaries, allowing anyone with an Internet connection to use the service directly from the comfort of their homes.
The dotcom boom in the United States and its expansion globally facilitated Amazon’s internationalization process
E-commerce company

The Uppsala Model
The Uppsala Model describes foreign market entry as a learning process
Initial commitment of resources to a foreign market
This leads to an increase in local market knowledge
Continuation of this cycle until sufficient market knowledge gained for expansion
Implication that companies start their overseas expansion in a nearby market as an attempt to minimize the psychic distance.

Geographical aspect and psychic distance

Expansion generally occurs first in countries which are geographically close and culturally similar.
However this was not the case for Amazon.
Amazon's expansion into France and Japan in 2000.
Expansion into Canada thereafter, in 2002
This was despite Canada being closer geographically and in terms of psychic distance

The internationalization of amazon
In terms of traditional foreign market entry, Amazon did not follow the Uppsala Model.
Amazon's internationalisation strategy was to directly acquire companies in foreign markets without local market knowledge
Germany, UK, China etc
Initially, Amazon expanded into Canada and operated there without a single Canadian employee

Market Entry
USA: Liberal Market Economy
Free Enterprise System
Private property
Freedom of choice
Motivation of self interest
Limited government
Low degree of government intervention
Competitive market

Institutional setting
Institutional influences
Dot com bubble
Rise of many companies online
Free market
Cost competition
Radical innovation
Business practices
Anticompetitive practices
Weak labour protection
Hanschke, H. (2015). Strikes at Amazon German warehouses up to Christmas. [online] Reuters. Available at: http://www.reuters.com/article/us-amazon-com-germany-idUSKBN0U40SY20151221 [Accessed 17 Mar. 2016].

Satariano, A. (2014). Amazon Worker Issues Mount Amid Labor Department Scrutiny. [online] Bloomberg.com. Available at: http://www.bloomberg.com/news/articles/2014-06-14/amazon-worker-issues-mount-amid-labor-department-scrutiny [Accessed 17 Mar. 2016].

Singh, N. (2011) Localization strategies for global e-business, Cambridge, Cambridge University Press

Zohari, T. (2012) ‘The Uppsala internationalization model and its limitation in the new era |’, Business, Digit Pro, [online] Available from: http://www.digitpro.co.uk/2012/06/21/the-uppsala-internationalization-model-and-its-limitation-in-the-new-era/ (Accessed 14 March 2016).

Thomas, D. and London (n.d.) ‘Amazon steps up European expansion plans’, Financial Times, [online] Available from: http://www.ft.com/cms/s/0/97acb886-c039-11e5-846f-79b0e3d20eaf.html#axzz42KOhjMD4 (Accessed 14 March 2016).

Set up in 1994
Online Book Retailer
Expansion of Range
Incorporated as a Company
Multinational Operations
Warehouses and Customer Service Centers all over the World
Sales Revenue Model

Home Country Culture
Investment in UK
Strengthening Delivery Networks
Full transcript