2022* UNIT 5 International Business- Assignment 1 DISTINCTION
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Unit 5 - International Business
Instelling
PEARSON (PEARSON)
Level 3 Btec Business Unit 5- International business. This document contains P1 to P4, M1, M2 and D1. This assignment was moderated by Pearsons in May 2022 and was given a Distinction. This Assignment is really well-structured, with easy-to-read subheadings and relevant referencing. Using this Ass...
P1: explain why two businesses operate in contrasting international markets.
AMAZON (uk) -INTRODUCTION
Amazon plc is a multinational e-commerce company which also offers additional
services such as streaming known as amazon prime and grocery deliveries-
Amazon fresh. It was founded in Washington, United States by Jeff Bezos. They
operate in 13 country-specific sites and offer their Prime video services to 9
countries. As of 2020 they have 1,298,000 employees generating a revenue of over
$386 billion ‘revealing that Amazon dominates UK ecommerce (30.1%), accounting
for $30bn in sales in 2019’1 according to reports.
Amazon’s business activity is mainly based around marketing as they aim to ‘be
Earth's most customer centric company’2 by providing a variety of products for
sale on their website using the internet and technology. In addition to this they
also provide other services to gain customer loyalty and retain these customers
within amazon across all the countries which they operate in.
Reasons for conducting business internationally.
By amazon expanding internationally to the UK they have access to a wide
variety of opportunities. Expanding to the UK allows amazon to have a new
revenue potential. This is because by expanding to another country amazon
gains access to a whole new audience resulting in millions of potential new
customers and ultimately leading to more sales and revenue. Reports suggest
that ‘The UK is ranked as one of the best locations for businesses looking to
expand internationally.3’ With a population of 67.1 million in the uk and higher
exchange rate between the pound and dollar amazon are guaranteed to make a
good return on their investments in the UK. Amazon's revenue share report in
2020 states ‘The UK witnessed the highest growth in revenue with an increase of
1 alara basul. (2019). Amazon dominates 30% of UK ecommerce market in 2019. Available:
https://www.uktech.news/need-to-know-2/amazon-dominates-30-of-uk-ecommerce-
market-in-2019-20191213. Last accessed 16/09/2021.
2 About Amazon Staff. (2021). our mission. Available: https://www.aboutamazon.co.uk/uk-
investment/our-mission. Last accessed 16/09/2021.
3 admin. (2020). Expanding into the UK. Available: https://goodwille.com/expanding-into-
the-uk/. Last accessed 16/09/2021.
,51.2% on a year-on-year basis. UK’s contribution to the total revenue in 2020
increased to 6.9% from 6.2% in 20194’ suggesting that the UK has been a
significant part of amazon's revenue stream due to its annual growth which
ultimately increases amazon's overall market share.
Another reason for amazon expanding internationally is that they have a greater
scope of investment opportunities. By expanding into the uk they could attract
investments and benefit from opportunities of incentives from the government
for doing business in the uk. Amazon has helped build the e-commerce
infrastructure in the uk by delivering a variety of services and creating jobs for
thousands of people. ‘By the end of 2020, in the UK we will employ over 55,000
people, with 10,000 new permanent roles’5 Amazon has reported to have hit this
target which they set in order to help the economy and aid in providing more
jobs for the unemployed. In addition to investing in providing jobs, since 2010 they
have invested over £23billion in uk operations’,6 which in return would allow them
to gain recognition for their brand. Furthermore this works in amazon's favour as
they would not only get investments from shares from people in the uk but could
potentially attract new employees with unique skill sets to work in more intricate
aspects of amazon.
Another reason for amazon's expansion into the uk is that they gain access to a
larger pool of talent. Gaining international talent means amazon can localize
their business operations to better suit the uk. ‘Amazon was named one of the
top UK companies for both attracting and retaining talent, according to
LinkedIn’s 2018 Top Attractors list.’7 This implies that amazon employees can find
success in the uk as they have a local workforce with cultural knowledge and
professional skills in order to serve the uk customer base eventually leading to
more sales in amazon's non- domestic country of operation and more profits
retained by the business.
Expanding internationally into the uk also gives amazon greater brand exposure.
Amazon have successfully established their business in the uk by attracting new
customers and gaining greater credibility. According to the guardian ‘Almost 90%
of UK shoppers use amazon and 40% have access to its Prime subscription
service’8 which accentuates the reason why amazon decided to expand into the
uk. A greater customer base also means that amazon would get economies of
4 Bhavya Zaveri. (2021). Amazon’s Revenue By Region (2013 – 2021).Available:
https://businessquant.com/amazon-revenue-by-region. Last accessed 16/09/2021.
5 about amazon staff. (2021). Investing in the UK since 1998. Available:
https://www.aboutamazon.co.uk/uk-investment/investing-in-the-uk-since-1998. Last
accessed 18/09/2021.
6 about amazon staff. (2021). Investing in the UK since 1998. Available:
https://www.aboutamazon.co.uk/uk-investment/investing-in-the-uk-since-1998. Last
accessed 18/09/2021.
7 about amazon staff. (2021). Compensation and benefits. Available:
https://www.aboutamazon.co.uk/uk-investment/investing-in-the-uk-since-1998. Last
accessed 18/09/2021.
, scale which means they could save money on buying raw materials and products
as they would buy a larger amount. ‘With these economies of density and scale,
Amazon saved "between $0.17 and $0.47 for every 100 mile reduction in the
distance of shipping goods worth $30,’9
Choice of markets in which to operate
5th * The uk has the 5th largest economy in the uk which
largest economy indicates that consumers have the spending power to
purchase amazon's products and services which could be good for them to
expand in the uk
No. 1 * Amazon could find talented employees to fill in
corporate
attracting global talent jobs in the business to work in the direction of the
company's business goals.
4th * High stock exchange ranking would mean that there
are
largest stock exchange a large number of people who would buy amazon stock
and raise capital for them to invest into their business further
75% * A good employment rate will improve business and
employment rate10 consumer confidence which will encourage higher
growth in the long-term.
Factors influencing the choice of market
One of the main factors restricting the business operations of amazon in the uk
is political factors such as brexit. The UK 's withdrawal from the EU means that
trading has been harder in the uk. ‘There could be a need to set up additional
8 sarah butler. (2019). Almost 90% of UK shoppers use Amazon, research reveals.
Available: https://www.theguardian.com/business/2019/mar/07/almost-90-of-uk-shoppers-
use-amazon-research-reveals. Last accessed 17/09/2021.
9 cora lewis . (2017). How Amazon Halved Its Shipping Costs In A Decade. Available:
https://www.buzzfeednews.com/article/coralewis/how-amazon-halved-its-shipping-costs-in-
a-decade. Last accessed 17/09/2021.
10 govuk. (2021). Why choose the UK. Available:
https://www.great.gov.uk/international/content/about-uk/why-choose-uk/. Last accessed
18/09/2021.
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