BUSN313 Domestic Company. Business & Marketing Coursework

Amazon
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Institution
Amazon
Amazon.com Inc. is an American multinational company with its headquarters located in Seattle, Washington. The company has enjoyed considerable success in its domestic market over the years. Yet, it continues to struggle with its overseas market, especially in Asia. In an article published by the CNBC, Kharpal (2019) revealed that Amazon had to shut down its China marketplace business because of the high competition it faced from Chinese Alibaba and JD.com, who are e-commerce giants that have experienced enormous success in the Chinese market. In fact, Amazon sales in the Chinese market are so small that they are never broken down in Amazon’s financial report (Weise, 2019), despite the company’s presence in China since 2004. However, Amazon continues to serve the Chinese through cross-border sales. This reveals that withdrawing completely form China is a difficult decision, which is why Amazon still wants to serve its customers in China even after closing their China domestic shopping business.
Withdrawal from a foreign market or downsizing is a difficult decision because many forces are at play. One of the forces is the desire to grow. According to de Kluyver (2010), companies operating in local mature industries have limited opportunities for growth in the local market. As such, operating in a foreign market is the only feasible opportunity they have for growth. Downsizing or closing down business in a foreign country is the opposite of growth. A company such as Amazon has operated in the US for decades and the market there is quite mature. Thus, expanding its operations to foreign markets such as China has been its growth strategy and closing down business there would mean that they are giving up on their expansion strategy. However, when the expansion does not provide the necessary growth in terms of sales, revenues and market share, companies can decide to downsize or close down their operation in the country. Another force is the need to meet customers’ needs, especially in a niche market. The world has become a global village where customers expect to be served from wherever they are (de Kluyver, 2010). Thus, companies must also expand their operations so that they can reach their customers. Closing down foreign operations or downsizing means that the company will no longer be able to reach those customers it served in the foreign market. For instance, Amazon’s customers in the Chinese market will only be able to access limited imported products following the closure of their Chinese marketplace business (Weise, 2019). However, if the customers in the foreign market are not receiving the company positively or are already being served better by their local companies, it might be time to close shop and move on to other markets.
Sometimes, companies choose to continue their operations in foreign markets despite experiencing...