Essay / Assignment Title: Logistics Plan Development For Amazon’s

International Expansion

Programme title: IT Operations, Supply and Logistics

Name: Ajit Thakur

Year: 2024
CONTENTS

1. Introduction - Optimizing Logistics: Strategic Planning and Development. (pg.4-6)

2. Chapter One -Supply Chain Management and Operations. (pg.7-9)

3. Chapter Two - Proposal Outlining Amazon’s International Expansion (pg.10-13)

4. Chapter Three - Case Study: Amazon’s Industry Analysis and Business Capabilities
(pg.14-17)

5. Chapter Four – Strategic Approaches and Tactical Plans for Execution (pg. 18-19)

6. Conclusion (pg. 20)

7. Bibliography (pg. 21)

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 Statement of compliance with academic ethics and the avoidance of plagiarism

I honestly declare that this dissertation is entirely my own work and none of its part has been copied
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researchers or students. Wherever I have been based on ideas or other people texts I clearly declare it
through the good use of references following academic ethics.

(In the case that is proved that part of the essay does not constitute an original work, but a copy of an
already published essay or from another source, the student will be expelled permanently from the
postgraduate program).

Name and Surname (Capital letters):

AJIT THAKUR

.......................................................................................................................................

Date: .......2024................../.......06.../......17..

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INTRODUCTION ( Optimizing Logistics: Strategic Planning and
Development)

Logistics strategy planning, which takes facility location, facility size, and mode of

transportation into account, is frequently done as a stand-alone mathematical exercise or as a

qualitative summary. Here, it is established as regular procedure to assess the logistics options

concurrently with all other company factors. It is demonstrated that the use of computational

models for simulation and optimization is still crucial to the process. A case study that examines

the logistics of locating, producing, storing, and supplying bulk chemical products across the

entirety of Europe serves as an example of how the approach is used. One of the most important

requirements for success is that the logistics strategy be in line with the business goals.

According to Naumenko, M et al. (2020), The concept, or principle, of the logistics system is

linked to the management of distributing (with sales) and materials (with supply). According to

American scientists, logistics offers a framework for creating plans and assignments that enable

regular material flow management operations. The fact that the integration of operations is not

only given special consideration, but actively executed, is one of the characteristics of the

logistics principle. For instance, in many businesses, managing inventories and transportation

can be categorized as manufacturing and shipping functions, respectively, and choices about the

former are frequently made without taking the latter into account. Both of them need to be

connected in the system of logistics.

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Figure1. Logistics System Functions

These functional domains of logistics are typically employed while developing a logistics

system. Thus, the total of the costs associated with moving the product, storing it, keeping an

inventory, receiving, shipping, and packing items, order processing fees, administrative costs,

etc., is the primary costs of logistics.

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Figure 2. cost of logistics to its functional area

In addition to being a source of expenses, the logistics system has the ability to generate demand

for goods. We can draw in more clients by providing the greatest service or the most affordable

costs by streamlining your logistics system. When a business fails to guarantee the timely

delivery of goods, it loses clients. Customers therefore assert that they place a higher value on

the ability to arrange for a prompt supply than they do on the supplier company's well-known

brand.

It is reasonable to say that logistics plays a major role in the execution of strategies meant to

increase the profitability of marketing and production. One of the primary responsibilities of

logistics is to maximize the coordination of information and materials when they combine, which

can lead to significant progress in streamlining various areas of activity. It can be resolved by

using electronic data processing widely, standardizing technical and material relationships,

organizing work using scientific analytical methods and structuring, and utilizing new

technologies that enable operation automation.

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CHAPTER ONE ( Supply Chain Management and Operations)

Any firm must have operations management, which is the design and management of the

processes that convert inputs or raw materials into final products or services that customers want.

Different resources are used in the transformation processes, including labor, capital, and land.

Buildings of all kinds, machinery, transportation gear, and technological advancements like

computer hardware and software are all considered forms of capital. There are various types of

operations management transformation procedures. An oil refinery's process of turning crude oil

into final products like gasoline and diesel is an illustration of physical change. An example of

locational transformation is a passenger on an airplane traveling from one location to another.

At the same time, there was a lot of development in the field of information technology. The

development of email, corporate software, and the Internet eliminated the need for distance as a

factor in executive decision-making. The emergence of companies such as FedEx and UPS,

previously noted, along with advancements in technologies like bar-coding and GPS, enabled

online tracking of shipments. Standardize containers began to be used for an increasing amount

of international freight, and container terminals began processing ships faster. Another notable

development in the 1990s was the widespread use of aviation for international logistics. This

significantly reduced lead times and was extremely helpful in situations when the product was

fragile or customer demand was unpredictable. Consequently, these modifications expedited the

production outsourcing process even further.

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Large multinational corporations were persuaded, more so than at any other point in time, that

they were not required to have a significant presence in every facet of the production value chain

by the end of the century. It made more financial sense to limit operations to higher-end tasks

like marketing and design and to outsource the majority of manufacturing to nations with

cheaper labor costs. Apple served as a symbol for this movement by completely outsourcing its

manufacturing to companies such as Foxconn. As these companies outsourced more and more,

managing their supply chains became more difficult as they had to coordinate with multiple

vendors and logistical companies for the manufacturing, distribution, and procurement of goods.

According to Avittathur, B. and Ghosh, D.(2020), The term "supply chain management" (SCM)

has many definitions. It is important to consider that the supply chain management (SCM)

difficulties differ significantly among industries and business models when creating a universal

definition. The supply chain management (SCM) obstacles encountered by the automotive sector

diverge significantly from those encountered by the clothing sector. Unilever is a business-to-

consumer (B2C) company, therefore its supply chain management (SCM) difficulties are very

different from those of GE Renewable Energy or the aerospace company Airbus which are

examples of business-to-business (B2B) companies. The efficient and effective synchronization

of material and information flows throughout manufacturers, distributors, suppliers, and

customers is a common element among the various definitions of supply chain management

(SCM). This coordination enables a wide range of items to be delivered rapidly while

maintaining the lowest feasible costs.

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Figure 3. Manufacturing firm B2C supply firm

Over the past 20 years, SCM has undergone significant change. If the rapid assembled-to-order

(customized) distribution system offered by Dell was the talk of the early 2000s, the rest of the

decade saw the world take notice of Walmart's high variety and efficient supply chain. With their

quick and adaptable supply networks, a number of multinational companies have dominated this

decade, including Apple, Amazon, and Zara. A significant number of businesses still view

supply chain management (SCM) as a significant challenge and a factor that gives them a

significant competitive advantage, even in light of the widespread dissemination of factors that

lead to SCM excellence during the past 20 years (Srinivasan, 2020).

Strategic Overview:

Outstanding businesses outperform their peers in the industry in terms of efficacy and efficiency.

They make constant investments in management and technological advancements to raise the

efficiency-effectiveness frontier. Excellent companies compete on operations, and they are

usually leaders in the industry in the areas of price, reliability, flexibility, and delivery—the four

components of an operations strategy.

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CHAPTER TWO (Proposal Outlining Amazon’s International
Expansion)

Amazon Inc. is a "giant" in US e-commerce. Because of its wide range of products, the company

can cater to a wide range of clientele. Amazon provides its clients with a one-stop shop where

they can purchase everything from groceries to gadgets to clothing. Amazon has a publishing

branch of its own. An online resource for independent publishers and writers is Amazon Kindle

Direct Publishing. The warehouses are dispersed geographically across every nation to enable

speedier and more affordable delivery of the goods. The corporation can easily meet the needs of

its clients thanks to its global network of customer care centers. It also provides free shipping

alternatives on a global scale. Due to all of these advantages, clients have a better online

purchasing experience, which increases customer loyalty.

The goal of Amazon Inc. is to increase their market share in developing nations. To sustain its

position as a worldwide 'giant' in e-commerce retail, Amazon must stay ahead of and match its

rising global competitors. In "less developed" nations, online shopping, or "e-tailing," is growing

more and more significant. Moreover, the internet is becoming more accessible to those from

"lower classes," which implies that they could eventually become Amazon consumers. Amazon

is already a legitimately renowned e-tail titan. Since Amazon already has a sizable market share

in many wealthy Western nations, we suggest that they concentrate their expansion efforts on the

developing BRIC nations (Brazil, Russia, India, and China).

Despite being the world's largest and fastest-growing e-commerce retail market, China's

dominance over the business makes expanding market share all but impossible. Despite

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operating in China for eleven years, Amazon Inc. has only managed to secure a meager 2.7%

market share during that time.

When compared to the other BRIC nations, Russia and India both exhibit notable disadvantages.

For example, Russia lags well behind in key growth metrics, and India has prohibitions on

foreign retail. Brazil is the nation with the greatest potential and long-term opportunities as a

result. In addition to being a market that is growing quickly, Brazil can serve as an entry point to

the other developing South American nations. Additionally, Amazon is already present in Brazil

thanks to its Kindle books, which implies that Amazon can still has some hold on Brazilian

Customers.

Business Capabilities Amazon: Objectives:

We can identify some of Amazon's most important both quantitative and qualitative business

competencies according to this internal investigation for further expansion internationally.

Additionally, the competencies that must be acquired in order to join the Brazilian market are

noted.

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Local or indigenous understanding of Brazilian clients constitutes one of the company's qualities

that Amazon needs to build in order to access the Brazilian market. Local knowledge is specific

to a society or culture. Gaining understanding of Brazilian social mores and corporate culture is

essential to preventing miscommunications that could destroy commercial negotiations and

professional relationships. Purchasing a foreign competitor along with its workforce's knowledge

base is an alternate operating mode to acquire local knowledge quickly in overseas marketplaces.

In order to gain traction in the Brazilian market, Amazon must also enhance its commercial

capabilities, namely in the areas of distribution and logistics. An alliance might be able to help

international marketers who don't have the necessary distribution to reach foreign markets, for

instance. Excellent shipping, warehousing, and customs clearing skills can be major competitive

advantages and brand builders in Brazil. One of the main issues with Brazil's explosive economic

expansion is the efficient distribution.

To join the Brazilian market, Amazon must also improve the business competence of

establishing local contacts in Brazil. Building solid personal ties is essential to success in Brazil's

corporate culture as it serves as the foundation for fruitful business collaborations. It is

challenging for American businesses to participate in federal or state public sector procurement

processes without a Brazilian partnership or physical presence in Brazil. Brazil is renowned for

its extensive bureaucracy, intricate tax and regulation structure, stringent labor laws, import

tariffs, and protectionism.

Brazil is not home to Amazon's physical logistics or distribution network. There are no actual

Amazon sales; the Kindle Store is the only business that the corporation has brought to Brazil.

To sell its goods, Amazon must establish a logistics and distribution network. Given that

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Amazon is already present in Brazil, it follows that it has local connections there. It's probable

that those connections won't be enough to support the growth of the services and goods offered

(from the Kindle to a wide range of products). As previously noted, when extending services and

products on the Brazilian market, one may choose to take a quicker route by looking for a

suitable local cooperative partner.

Amazon has established itself as an affordable substitute for physical retailers selling identical

goods . Amazon has demonstrated a special skill in mitigating supplier pricing pressures while

securing a substantial portion of consumer purchases through the utilization of economies of

scale. The company will need to keep improving its highly competitive offers in order to give

customers the greatest experience possible, as it confronts fierce rivals against both online and

retail-based businesses like Wal-Mart and overstock.com.

Brazil's e-commerce industry is only getting started. Amazon can profit from a rising market

rather than stealing shares from other e-commerce businesses in more developed nations. To

capitalize on this expanding market, Amazon must enhance its commercial capabilities. Local

relationships, local expertise, and an effective Brazilian distribution network and logistics

comprise the business skills.

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CHAPTER THREE (Case Study: Amazon’s Industry analysis and
Business Capabilities)

In this chapter, suggestions for Amazon Inc. will be developed based on the results of the

industry study and the company's capabilities.

We have examined a variety of strategic options for Amazon to consider in great detail. When

the opportunity to enter the market for mobile phones was first offered to us, we took it upon

ourselves to do a thorough investigation, which revealed that the market is extremely adverse to

Amazon. Primarily because the marketplace is incredibly mature, highly developed, and the level

of competition is at the highest level ever. Several large firms with years of expertise and a well-

established brand reputation dominate the market, while Amazon would have to start from zero

in order to develop all of the necessary competencies (Amazon, 2019).

We have discovered that, in spite of multiple efforts, Amazon has not yet succeeded in taking

hold of some geographic markets. The main lesson here is that while Amazon recognizes the

potential in some of these financial markets, it hasn't been unable to devise a viable strategy to

seize these chances for itself.

Although there has long been discussion about China's ascent, more recently, there has also been

speculation about a rising e-commerce business in China. We do not discount the enormous

development potential that the Chinese market offers to any online retailer, but we equally do not

downplay how challenging it can be to enter that specific market and establish a solid presence.

It's important to note that Alibaba's success serves as a powerful barrier to entry into China.

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Alibaba's current goal is to expand its local success overseas by entering the Western markets.

However, China itself is a member of the BRIC nations, which have enormous growth potential

as well.

From a strategic standpoint, rather than diversifying into other industries, it would be

considerably more prudent for Amazon to grow their core company into nations where market

penetration isn't yet established. This would guarantee the success of Amazon's main business,

establish the company's standing as one of the major global players, and lessen the possibility

that Alibaba or another player would emerge from one of these nations unopposed.

BRIC Countries:

The aforementioned BRIC nations were examined and rated with respect to market size, level of

competition, potential for growth, and other institutional aspects. Brazil was seen to be the most

desirable nation for Amazon to grow in. Given Amazon's aspirations to expand its operations

worldwide, we think that having an office in Brazil may serve as a springboard and foothold for

the entire southern American region. The following are the causes of this:

1. According to estimates of 71.8 million users in 2014 and a steady growth rate for the

following years, the market has a very high critical mass.

2. By offering Kindle Books, Amazon has already begun to progressively enter the market.

3. The proximity to the US can be seen as a huge benefit in terms of logistics and distribution

expenses.

Amazon Inc. needs to strengthen its business competencies as outlined in the preceding section if

it hopes to successfully join the Brazilian market. These skills have to do with distribution,

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logistics, market awareness, and local relationships. We have examined several strategies for

breaking into the Brazilian market, including joint ventures, acquisitions, and strategic alliances.

Alliance with Brazilian Market

A joint venture is an additional potential strategy for breaking into a new market. A joint venture

must evaluate which partner is the greatest fit and follow tight criteria for relationship

management. Although joint ventures are easily categorized as less hazardous than acquisitions,

they nevertheless experience failure. An analysis conducted by joint ventures revealed that many

of them struggle with inadequate planning to address future changes in risk, parent executive

involvement drops, and the process is plagued by a lack of discipline (Amazon, 2019).

The joint venture is something we are thinking about, but it won't really benefit Amazon much.

Repositioning and rebranding will be necessary for the joint venture. This is unacceptable for the

Brazilian company as well as for Amazon. The explanation is that they already have a following

of loyal customers and well-known brands in Brazil. Both parties will incur additional expenses

as a result of the joint venture. Amazon and B2W Digital forming an agreement is by far the

most desirable alternative. This is predicated on B2W's extensive website network throughout

Latin America, as well as its competitive advantages in technological development and logistics

networks. Because B2W has given voice to the ambition to grow internationally and eventually

penetrate the US market, the cooperation will be advantageous to both parties. Amazon's

strengths are complementary to B2W's, and they might aid one another in expanding

internationally. It just so happens that the very qualities that Amazon lacks in Brazil, it possesses

in American and other Western countries, and that B2W also lacks in those same regions.

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Amazon's home market's strong logistics and distribution chain are advantages it cannot easily

replicate in Brazil. Through B2W, it could be able to use local relationships and knowledge.

We also want to stress how crucial the alliance's design is. Successful alliances are seen to

possess the following essential qualities:

1. Clearly defined obligations and rights

2. Equitable input from each partner

3. Stressing the possibility of collaborative value creation

4. Maintaining and safeguarding fundamental skills

5. Consensus on specific, attainable goals

6. Putting a plan into action with defined deadlines

The two businesses should set up an understanding and coordination structure, specify the

resource combinations needed for the alliance, offer senior management assistance, and last yet

not least, conduct ongoing performance reviews of the alliance in order to ensure proper

implementation.

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CHAPTER FOUR (Strategic Approaches and Tactical Plans for
Expansion)

Implementation Plan:

The recommended plan of action for Amazon consists of several phases that don't necessarily

need to be finished in a year.

Initiation Phase:

Making interaction with the alliance's strategic partner to express interest in a relationship is the

first step. Amazon ought to designate a group to oversee this relationship right away. Clarity

regarding Amazon's goals and objectives for the strategic alliance is crucial. It goes without

saying that these will need to be contrasted with B2W's desires. We plan to take between two and

three months to complete this step, giving the two businesses enough time to build a solid basis.

Development Phase:

Upon establishing unambiguous goals, objectives, guidelines, and a timetable for tracking and

assessing the strategic alliance's advancement, it becomes evident precisely what has to be done.

After that, Amazon will be able to begin allocating and mobilizing its internal resources in order

to launch, grow, and maintain the strategic relationship. Knowledge-sharing and competence-

gaining should be the focal points of the strategic alliance; this is accomplished by controlling

and forming procedures that will promote these two goals rather than merely connecting

individuals at B2W. This phase, which should last no more than five to six months, allows for

the sharing of expertise and the implementation of supplementary measures.

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Sustaining Phase:

Amazon will have started collaborating with B2W in a fairly practical manner throughout the

sustaining phase. Naturally, there may be some aspects that need to be slightly altered or

improved. Therefore, contemplation of the procedures and collaborative outcomes signals the

beginning of this phase. The two processes in this phase are reviewing, which ought to take

approximately a month, and collectively looking at changes, which may similarly be completed

in a month.

CONCLUSION

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Both sides will benefit from the establishment of this role since it will manage knowledge

transfer, standardize differences, and coordinate growth. Because it will ensure a good culture

and working manner fit among the two organizations, it is also thought that the strategic alliance

role will reduce the likelihood of alliance failure. It will largely demonstrate the parties'

commitment to one another and address the legal power structure by means of well-defined roles

and duties as well as efficient control.

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BIBLIOGRAPHY

1. Rushton, A. and Saw, R., 1992. A methodology for logistics strategy planning. The

International Journal of Logistics Management, 3(1), pp.46-62.

2. Naumenko, M., Valiavska, N., Saiensus, M., Ptashchenko, O., Nikitiuk, V. and Saliuk,

A., 2020. Optimization model of the enterprise logistics system using information

technologies. International Journal of Management, 11(5).

3. Avittathur, B. and Ghosh, D., 2020. Excellence in supply chain management. Routledge.

4. Srinivasan, B. 2018. Americana: A 400-year History of American Capitalism. Penguin.

5. Amazon. (2019). Amazon Annual Report.

6. Chakrabarti, Rajesh, and Barry Scholnick. (2002)"International expansion of e‐retailers:

Where the Amazon flows." Thunderbird International Business Review 44.1pg. 85-104.

7. Alassaf, Deemah, et al.(2020) "Amazon: Industrial/International Corporation and

Dynamics." Innovation Management in the Intelligent World: Cases and Tools: 67-80.

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APPENDIX (if necessary)

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