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What competitive advantages would Amazon have over Wal-Mart Stores in doing business outside the United States - Assignment Example

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Increase in consumerism, the buying capacity of the buyers and increase in brand consciousness led to the boom in the retail chain networks around the world. Wal-Mart and Amazon are two of the largest retail chains in USA. …
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What competitive advantages would Amazon have over Wal-Mart Stores in doing business outside the United States

Download file to see previous pages... Wal-Mart is the second largest employer in the world. It is one of the most important organizations in the world. Its annual sales stood at $419 billion in 2010 (Roberts & Berg, 2012, p. 2). Its goods and merchandise products are sold to both the upper income level and lower income group people in US. The chief motto behind Wal Mart’s success is that it offers goods at unbelievingly low prices to it customer. Efficient logistics and inventory and by using the concept of just – in- time Wal-Mart became a world leader in retail market (Roberts & Berg, 2012, p .144). Amazon that was founded in 1995 was honored by Business Week in 2009 with its customer service award. It created a new way of shopping by placing orders over the e internet. Amazon is listed in the fortune 500 companies with revenue more than $19 billion. Customers were highly satisfied with the service and the timely dispatch of its goods (Dunne, Lusch & Carver, 2010, p.529). Amazon began its business b y selling books online. Presently Amazon offers songs sample of songs for the convenience of the retailers to hear it from their computers. It also offers a unique facility known as mass customization where in a previous customer is shown a page of listed books and other goods catering to the customers’ choice and preference (Ander & Stern, 2004, p. 75). Literature review Amazon and Wal-Mart have expanded their network of retail chains outside US recently. Amazon has set up its retail stores in countries like China in 2004 and India lately. It latest venture outside US was in Brazil. It expects to set up a digital book store in the country (Israel, 2012). It wishes to cater to the kindle e- reader and publish books in Portuguese as per the demands of the publishers and industry of Brazil. Amazon’s strategy to launch a digital book store would be a good strategy as far as the infrastructure system in Brazil is concerned. In Brazil, the infrastructure system is poor and the taxes implied are high. The biggest advantage Amazon would have in setting up a digital store in Brazil is that it will help the people in saving money and cut the expenses made on paying high duty taxes. This move is directly with the mission and vision statement of the firm which is to become a leader in low cot strategy. The online retail market in Brazil is expected to grow at 25 percent from 2012 onwards so it provides the golden opportunity for Amazon to penetrate the market now. The strategy adopted by Amazon in Brazil is to sell its popular kindle model at a price lower than its competitors. It has also entered into contracts with publishers to set up a portfolio of 10,000 digital books. Now, this strategy adopted by Amazon can prompt other competitors to set up their base in Brazil too (Israel, 2012). The paper next discusses the case of Wal-Mart next when it tried to set up its stores there in 1995. In 1995, Wal-Mart entered Brazil and opened its chain of retail shops (Dolan, 2004). But it failed to be successful as was reported in the article Latin America: Bumps in Brazil by Kerry. A. Dolan. It had 25 shops and was the sixth largest retailer in Brazil but compared to it the rival firm then Companhia Brasileira de Distribuicao which had 499 shops , Wal mart failed to a large extent because of their failure to increase acquisitions. There were problems with the distribution system too as customers had to wait for long hours to get their products. In March 2004, Wal mart purchased 118 Bompreco stores but it was located in the poorer section of ...Download file to see next pagesRead More
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