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In: Business and Management

Submitted By arvindkmr
Words 323
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International Management (Fall Semester)
Individual Case Write Up 1: Amazon Goes Global

1. Why did Amazon choose the United Kingdom as its first entry location? Why not other countries such as Canada and Austrlia?
With the emergence of a global marketplace, Amazon has since ridden on the waves of the opportunities that comes with globalisation. After more than a decade of expansion, Amazon’s international operations accounted for about 43 per cent of its revenue, bringing in $26.28 billion in 2012. This shows the significance of targeting the international markets. However, entry into foreign market does not come without risks and costs that resulted from barriers created by distance. The CAGE Framework of distance by Ghemawat explained distance as 4 main attributes – Cultural, Administrative, Geographic, Economic.1 To address these risks and costs, it is crucial to first assess the extent and type of differences between the USA market and the United Kingdom market. Amazon’s entry into United Kingdom (UK) can be attributed to minimal distance and various similarities, which allowed Amazon to significantly reduce risks and costs.

Primarily, the UK market has a lot of similarities to the US market in terms of cultural, administrative and economic distance. UK has the second most number of native English speakers (60 million), after US (231 million), and is also the place where English was first spoken. Since books were the primary products sold by Amazon, the similarity in language made it extremely ideal for Amazon to target the UK market.

Moreover, the GDP Per Capita of US and UK were not significantly different, with US having a GDP Per Capita of $32,949 and UK’s GDP Per Capita being $26,144 in 1998. Gini Index, unemployment rates and inflation rates of UK and US also showed minimal differences.2 These depicts the similarities between UK and US in…...

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