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Amazon: Earning in India by Learning in China

CASE STUDY, STRATEGY
Institute of Management Technology, Ghaziabad, 13 Pages
AUTHOR(S) : Dr. Ashish Varma – Assistant Professor, Ram Agarwal – MBA Final Year Stueent, Sanchit Agrawal – MBA Final Year Student, Kumar Ashay – MBA Final Year Student, Institute of Management Technology, Ghaziabad

Case Preview

Amazon: Earning in India by Learning in China

In May 2018, Kshitij, Himanshu and Sharad, three students of a top ranked Indian business school based out of the National Capital Region of Delhi, and who were huge admirers of Jeff Bezos, pondered over as to what happened with Amazon.com in China? According to them, Amazon had won the admiration of the entire business world but had failed in China. On the other hand, they observed that Amazon had been successful in India since its entry in 2012. They were keen to probe into the problems that Amazon had faced, the strategy Amazon had implemented and to ascertain as to how the China experience differed from what Amazon experienced in India. The trio was famous in their institution for business strategy games during the business school festivals. They set out to probe as to why Amazon failed in China but was a huge success in India............

Exhibits

Exhibit I: Key Challenges Faced by Online Retailers in China

Exhibit II: Retail e-Commerce Sales in China from 2016 to 2022 ($ Million)

Exhibit III: Market Share of e-Commerce Websites in China in 2016 (% of B2C Sales)

Exhibit IV: e-Commerce Industry Growth Forecast for India ($ billion)

Exhibit V: Major Customized Initiatives of Amazon India

Teaching Note Preview

Amazon: Earning in India by Learning in China

Synopsis

In May 2018, Kshitij, Himanshu and Sharad, three students of a top ranked Indian business school based out of the National Capital Region of Delhi, were probing into the problems faced by Amazon in China. With the aim to expand globally, the US based Amazon.com had entered China in 2004 with the acquisition of Joyo.com, favoring inorganic growth. This strategy proved to be a failure since Amazon could garner only 0.8% market share by 2016.

Amazon had entered the Indian market in 2012 with the launch of Junglee.com by choosing the greenfield expansion route. While Amazon’s strategies in China proved to be a failure, the learnings from its mistakes in China enabled it to win big in India.

The three students also used this opportunity to compare and contrast the two large emerging market economies. They could appreciate the unique characterisitcs of each market and identify strategies that worked and strategies that did not work in each context. The three students were ardent admirers of Jeff Bezos and they were curious to know as to why Amazon failed in China but was a huge success in India? They also were curious to probe whether some of the learnings of the Indian experience of Amazon could be relevant to regain the Chinese market..................

Exhibits

Exhibit (TN)-I: Classroom Discussion Dashboard

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Abstract

In May 2018, Kshitij, Himanshu and Sharad, three students of a top ranked Indian business school based out of the National Capital Region of Delhi, were probing into the problems faced by Amazon in China. With the aim to expand globally, the US-based Amazon.com had entered China in 2004 with the acquisition of Joyo.com, favoring inorganic growth. This strategy proved to be a failure since Amazon could garner only 0.8% market share by 2016. This was for Amazon, a big set-back, since the company had focused on volumes growth rather than profits as a strategic choice.

Amazon had entered the Indian market in 2012 with the launch of Junglee.com by choosing the greenfield expansion route. While Amazon’s strategies in China proved to be a failure, the learnings from its mistakes in China enabled it to win big in India.

The three students also used this opportunity to compare and contrast the two large emerging market economies. They could appreciate the unique characteristics of each market and identify strategies that worked and strategies that did not work in each context. The three students were ardent admirers of Jeff Bezos and they were curious to know as to why Amazon failed in China but was a huge success in India? They also were curious to probe whether some of the learnings of the Indian experience of Amazon could be relevant to regain the Chinese market.


Pedagogical Objectives

After reading and participating in the case discussion, a student should, inter alia, be able to:

  • Assess the reasons for failure of Amazon.com in China by identifying the strategic shortcomings and the executional shortcomings of Amazon.com
  • Compare and contrast the strategic choices of Amazon.com in India vis-a-vis those in China
  • Prepare a plan of action for the future business sustainability of Amazon.com in India
  • Ascertain whether some of the learnings of India could be replicated in China

Case Positioning and Setting

The case works very well in the course “Business Strategy” for MBA or executive MBA students. The case is most effective when used in the very beginning of the course. It is suggested that the instructor should have discussed about corporate vision, strategy formation, implementation and business growth choices. A prior understanding of market entry choices available to a firm is also useful. After the discussion in the class, the instructor may provide a post session assignment to the students. The students can be instructed to come up with the strategies for firms similar to Amazon.com for increasing such firms market share and for sustaining their business in emerging markets.



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