The first article that we shall be considering for discussion is on the topic of globalization. It is widely perceived that globalization is a major phenomenon that drives our economy, marketplace and the society today. However some economic theorists believe that the globalization and its effects to our economy and society is still very much limited and the corporations are largely missing out on its advantages of growth opportunities and the opportunity to recruit the best global talent. In the article titled “Globaloney: Why We May Not Be as Global as We Think” on The Wall Street Journal, Pankaj Ghemawat, noted economist and global strategist argues that the perceptions of a globalized world are far greater than the data predicts. Ghemawat begins with pointing out the example of Facebook where how very few of the friends of an individual on Facebook are outside his/her country of residence. Prof. Ghemawat in his defense of the opinion cites three examples indicating that even the corporations and governments thought to be the most global in nature have very limited areas of influence in terms of the global connectedness.
Prof Ghemawat makes uses of an index called the DHL Global connected index which measures the global activity of a company or an organization in terms of trade, capital, people and information flows. Such data is put on geographical maps to indicate intensity of global activity of the organization being studied. Three groups considered to be vastly global: HSBC Bank, Country of England and BMW are studied. It is found that HSBC drives the bulk of its revenue from UK, with its origin country Hong Kong and colonial ties with US making the two next regions of maximum revenue.
The bilateral trade figures of UK indicate that the bulk of UK’s trade is with the Europe and the figures in North and South America are significantly less, as to what is generally perceived. Prof Ghemawat says that the UK has among all countries, the broadest pattern of trade, thus indicating that the figures of other countries are far more skewed than that of UK. Then Prof Ghemawat cites the case of BMW as having quite an even spread of sales across the globe, but its workforce comprises of as much as 80% being from Europe. Prof Ghemawat believes that factors like language and geographical distance are significant in deciding the extent to which a corporation turns global, with countries and companies still preferring proximity and common language over the other factors for trade and economic ties. Prof Ghemawat argues that this lack of globalization should be seen as opportunity for the policy makers to do better. He cites Chinese efforts to learn English and the scope of investment in Indian Infrastructure sector as positive indicators to increasing Global activity among corporations and policy makers.
Amazon is currently the largest e-retailer in the world, with 25 worldwide fulfillment centers and an affiliated retailer network. To stay ahead of the competition, Amazon under the leadership of founder and CEO Jeff Bezos, has introduced many new services and diversified Amazon’s product offerings by entering into partnerships with existing retailers and acquiring a few businesses. Diversification of product line and enhancing its media offerings through key acquisitions has been the underlying driving force of the company. Bezos believes that it is the innovation in the products and services that shall keep them ahead of the rest, rather than just more types of products on the shelf. The company has not lost focus of its traditional roots of book selling and made many key purchases like BookSurge to continue being the leading book seller in the world. The Amazon Kindle and the efforts to rule the digital book business is also a testimonial to Amazon’s innovation.
Amazon is does not shy away from competition and even sells media content and services that can be accessed from rival devices and gadgets from rival companies. This is a very practical and effective strategy and enables Amazon to have its present felt across all platforms.
The buying of Zappos for a whopping $900 million is to have a more effective and stronger presence in the clothing, shoes and accessories segment. Zappos has excellent recognized brand and through this acquisition, Amazon can leverage its position to be a major player in clothing and accessories online retail sector. In my opinion, the price of $900 million is worth such a deal, as Amazon was traditionally a media and books retailer. Thus for an effective and wider acceptance in clothing retail, it would need the help of a stronger brand like Zappos.
The initiatives of Amazon to remain the largest e-retailer are many and well thought out. The innovations in media and books segment shall help in keeping competitors like Apple and Barnes and Noble at bay, while diversification strategies like Zappos acquisition should help Amazon in being recognized as a complete online retail giant.