Question One
Amazon was established in 1994. It is avowed that this was four years after the creation of the first Internet browser (Wasserman n.p). At the time, approximately 16 million people were able to use the internet (Wasserman n.p). The number improved to 36 million in the subsequent years and continued to surge further (Wasserman n.p). Today, surveys reveal that there are more than 1.7 billion people using the internet (Wasserman n.p). Bezos, founder of Amazon discovered that globalization through technology would be able to banish geography and enable people access seemingly limitless goods and services conveniently at their homes. Further, he established that the Internet would be used by the merchants to mine vast personal information on customers.
Amazon globalized in 1998 at their headquarters in Seattle. The company globalized by opening its online operations. Technology was an important element in globalization because it broke down geographical and trade barriers. Amazon globalized to reach more customers and eliminate barriers of trade. As pointed out, Amazon aspired to reach more people across different countries, now that the Internet had opened boundaries. Bezos wanted to tap in the existing opportunities in regards to customers who could not physically travel to purchase products due to different trading laws and regulations.
Conditions that made globalization possible for Amazon were the presence of internet, availability of Internet browser and the encouraging increase in the number of people using the internet. The trend was encouraging and Amazon was confident that the number of users would continue to increase, so do their customers. Besides, the internet platform had made it possible for business enterprises to mine valuable information about clients that would necessitate constant communication. For a fact, communication is important in any business with sophisticated supply chain. At one point, a seller must communicate with the buyer on the status of shipment or get feedback about delivered products. Technology, specifically Internet was fundamental in promoting globalization of Amazon and its operations, other companies had to wait for different paths of globalization such as trade treaties and free trade to accomplish their business goals.
Question Two
In more broad patterns, globalization opens businesses and companies to more opportunities. That is, companies can diversify on products and services that they offer to customers. In a brief, globalization opens paths for provision of more products and service to customers. Amazon started as a book selling firm, but through globalization, it was able to offer more varied products. It is revealed that today Amazon is the largest online retailer, aiming to sell almost everything yet it only sold books in first three years of operation (D’Onfro n.p). Broadly, globalization helps companies to continue demonstrating significant growth in terms of product offering and global operations. Amazon relies on customers in the United States and those in other countries. These customers continually help and support the company’s local and global endeavors. Amazon aligns to different aspects of globalization such as efficiency in the provision of goods and services to the customers. Harmonization, an aspect of globalization continues to enable trade between Amazon and its clients. This has positively impacted on the growth and success of the company that started from humble beginnings. In fact, globalization has enabled Amazon reach where it is today, we all know about book selling companies that are still stagnating with books permanently displayed in their shelves. Amazingly, Amazon has taken advantage of established competition laws to boost its profitability. These laws are critical in diluting trade barriers and in the process liberalize the market.
Cross-borders activities would have not been possible without globalization. Advocates of globalization believe countries and businesses should be allowed to conduct business without any hindrance (D’Onfro n.p). Harmonization and regulation of business in the market has been fundamental in enhancing operations and boosting profitability of the firm. Global business is considered a risky venture; however, harmonization has considerably reduced the burden associated with costs and legal uncertainties that is characteristic of local standards in global markets. Nonetheless, Amazon conforms to the requirements and principles of globalization in order to access more markets for its diverse products. The company adequately tackles conflicts and jurisdiction issues while globalization necessitates the quest for the company to comply to reduce effects of contradictory decisions that may curtail achievement of business profits. Aspects of globalization have made it possible for Amazon and other business to comply and align their operations to international laws that bind international transactions.
Question Three
Globalization is characterized by local, regional and national forces that considerably shape operations, customers and profits of Amazon. In the past several years, there is a trend that is worrying at the company. Experts reveal that sales in the United States are on the rise while international sales have not been encouraging (Hook n.p). Besides, despite the company impressing investors with profits, one thing has been lingering in their minds: what are Amazon’s international business strategies? It can be remembered that in 2014, approximately 37 percent of sales by the company was attributed to international markets, but the trend has been decelerating in the subsequent years (Hook n.p). After all, globalization may be hurting companies such as Amazon. This is according to views of traditional conservatives who initially supported the idea of globalization (Bedel n.p). To them, globalization was a concept that could open business paths and promote trade between different countries. However, there are certain aspects of globalization that direct impact on businesses. In other words, they shape operations, activities and even profits.
First aspect is competition. Globalization increases competition as more businesses and countries seek to invest in international markets. For example, Amazon faces competition from countries such as India and China through enterprises such as Alibaba and E-Bay among others. Alibaba runs operations that appear to be similar to Amazon the difference has been strategies implemented by the firms. As a matter of fact, Alibaba is slowly gaining entry in developing countries that were formerly controlled by Amazon. The kind of competition witnessed has shaped operations of Amazon. The company seems to retreat to its local market by implementing strategies such as Amazon Prime. Competition ensures that customers have more choices compared to in the past. Furthermore, local, regional, national and international contexts make it difficult for Amazon to enjoy and control its market. Second, globalization necessitates the ability of businesses and countries to share and transfer technological developments. However, to some extent, this force has been detrimental to countries and businesses that cannot keep up with growth of sophisticated technologies. For instance, the technology transferred by Amazon has been replicated by small businesses in the different countries. Therefore, business enterprises are locally offering products that were initially offered by Amazon thereby negatively impacting on growth. Final force is the global shift to international strategies by businesses. Today, even small businesses are thinking about global audience in all aspects of their operations. The monopoly of information and knowledge previously enjoyed by Amazon has been diluted courtesy of free markets. Perhaps, this explains why Amazon’s United States sales are soaring while internationally diminishing.
Question Four
Globalization has supported many entities to conduct business across the globe. The Amazon effect has been critical in disrupting the retail markets across borders. Therefore, Amazon has completely changed the way people shop both online and physically in stores. There have been broad economic impacts in regards to the globalization and specifically Amazon. In United States alone, Amazon account for 43 cents per dollar that the population spends online irrespective of industry or business location (CNBC n.p). Economically, Amazon has impacted on wage growth and inflation. Fundamentally, with unemployment rate standing at 4.2 percent in the United States, wage growth has potentially increased raising costs incurred by companies that are then passed to customers. When this occurs, prices of products increase and so does inflation. For that, Amazon’s globalization has reduced unemployment by creating opportunities and thus promoting wage growth and inflation.
Socially, Amazon’s globalization has changed the social life and traditional aspects of conducting business. Further, people who have gained employment directly have considerably improved their living standards and social lives. Transfer of cultural information and ideals due to immigration has changed the cultural settings permanently. Amazon has supported the growth of new ideals, values and beliefs in the countries that conduct business. People travelling to other countries to work for Amazon have carried with them rich cultural histories. Unfortunately, Amazon has grown to be a world’s leading retailer equated to a multinational corporation. Multinationals have directly or indirectly been involved in political decisions in developing countries. These multinationals have their own interests that they want served. Therefore they have influenced election of leaders changing the democratic landscapes in such settings. Even so, the bottom line of the company has been to enhance buying experience and promote a level of convenience.
Work Cited
Bedel Evan. The Amazon effect: How big is the economic impact? Inside Indiana Business,
2017. Available at: www.insideindianabusiness.com/story/36769299/the-amazon-effect-how-big-is-the-economic-impact. Retrieved May 30, 2018.
CNBC. Amazon joins free trade zone in China: Report. CNBC, 2014. Available at:
www.cnbc.com/2014/08/20/amazon-joins-free-trade-zone-in-china-report.html. Retrieved May 30, 2018.
D’Onfro Jillian. The biggest mystery about Amazon’s business right now. Business Insider,
2015. Available at: www.businessinsider.com/amazon-international-growth-2015-2?IR=T. Retrieved May 30, 2018.
Hook Leslie. Amazon’s Prime challenge is international growth. Financial Times, 2016.
Available at: www.ft.com/content/6486476a-e122-11e5-8d9b-e88a2a889797. Retrieved May 30, 2018.
Wasserman Steve. The Amazon effect. The Nation, 2012. Available at:
www.thenation.com/article/amazon-effect/. Retrieved May 30, 2018.