Scope → geography
Choose one business and one target market. “Expand internationally” is too broad to reveal what capability transfers, what must be rebuilt and who pays for the change.
Which advantages cross a border, and how much a multinational should standardise or adapt
Corporate strategy has three dimensions: which stages of the value chain to own, which products and services to offer, and where in the world to compete (Rothaermel, 2024, p. 298). Sessions 9 and 10 examined scope and ownership routes. Today takes geography. A global strategy is the part of corporate strategy that seeks advantage against foreign and domestic rivals around the world (p. 378), in a world the textbook’s indicators put at no more than 10 to 25% globalised (p. 381).
The case calls Amazon a dominant global player with more than 200 million Prime members worldwide (case, pp. 1–2), yet almost every business it describes is American. The textbook adds some of the rest: Amazon opened its first sites outside the US, in Britain and Germany, in 1998, closed its domestic marketplace in China in 2019, and was losing money on retail abroad while AWS paid for the expansion (pp. 295–296, 333). Today you ask which of its advantages travel, which must be rebuilt market by market, and what it should standardise or adapt.
What this session answers
Facts from the Gupta and Rodriguez case (revised July 2024) are marked Case; facts from the textbook’s own Amazon chapter case are marked Textbook; where this page reasons from a framework, the card is marked Analysis. Textbook pages refer to Rothaermel, 6th edition; Ghemawat pages to the September 2001 HBR print (pp. 137–147).
Session 11 · 90 minutes
By the end of this session, you should be able to:
Explore the diagram and story lab · Prepare with the assigned readings
Use the activities to explain your reasoning and revise it against evidence. Formal assessment follows the course outline and instructor guidance.
Recall → connect → carry forward · Sessions 1–10
Sessions 1-10 connect a focused customer promise to purpose, a target gap, external and internal tests, value creation, business positioning and choices about complements, scope and access to capability. Nila Foods is a fictional Indian meal-service business; its nutrition-creator and packaging proposals remain hypotheses. Now consider a separate proposal: serving an overseas office cluster. Recover the logic of the original business before assuming its advantage can travel.
One continuing classroom story. Nila Foods is a fictional Indian meal-service for working adults. Follow its choices from Session 1; later expansion ideas are proposals to test.
Operational effectiveness improves similar activities; strategy requires positioning, trade-offs and fit. State objective, scope and advantage, then compare intended plans with emergent action using evidence.
Nila Foods: Nila proposes preordered weekday meals on clustered routes, declines instant citywide delivery and studies actual customer behaviour.
Purpose and values guide what endures, while a quantified ambition opens a same-date gap from the baseline; closing that gap requires external and internal evidence.
Nila Foods: Nila separated easing meal burdens and honest food-safety disclosure from its growth target, then compared that target with its projected baseline.
Industry boundaries, PESTEL and five forces connect external change to price, cost and investment; complements and possible responses then raise questions about the wider game.
Nila Foods: Nila traced ingredient-price pressure, supplier bargaining, lunch substitutes and easy entry before asking whether a neighbouring seller could also help it.
Value nets and PARTS show how co-opetition changes added value, while uncertainty shapes commitments; credible moves therefore require examining internal strengths.
Nila Foods: Nila considered sharing a collection point with a rival and testing the rules through a limited pilot while demand remained uncertain.
Resources and capabilities support advantage when they improve buyer benefits or relative costs and pass tests against rivals and substitutes; value-chain analysis then checks their economic contribution.
Nila Foods: Nila examined kitchen routines, route know-how and trust, asking which linked activities rivals could imitate and whether it could retain their benefits.
Use the value stick to distinguish value created from value captured. Test shared value against both business and social effects, including burdens shifted elsewhere.
Nila Foods: Nila asks whether demand forecasts and reusable containers reduce waste and cost, including the return and cleaning work.
Porter distinguishes cost leadership, differentiation and focus; Kim and Mauborgne test value innovation; Ghemawat and Pisano examine threats, commitments and capabilities.
Nila Foods: Nila compares dependable delivery and relative cost within its chosen segment. Its value curve and four-actions proposal must demonstrate new demand and viable economics before supporting a blue ocean claim.
Eisenmann, Parker and Van Alstyne test platform participation and pricing; Bower and Christensen distinguish disruptive trajectories from sustaining improvements.
Nila Foods: To extend its offer, Nila asks whether customers and nutrition creators could benefit from one another. An experiment tests complement quality, retained use and cross-side effects; success alone would not establish disruption.
Porter tests attractiveness, entry cost and the better-off mechanism; Campbell, Goold and Alexander ask whether this parent beats alternative owners.
Nila Foods: The ecosystem need not be owned. Nila asks whether owning a packaging supplier would improve meal delivery enough to outweigh capital, coordination and harmful misfit; contracts and specialist owners remain alternatives.
Choose the route that supplies the needed capability after governance, uncertainty, price and integration costs. Ownership and synergy require an evidence-based mechanism.
Nila Foods: Nila compares a packaging contract, an alliance and acquiring a supplier; it tests control needs and integration risks before committing.
Securing packaging capability through a contract, alliance or acquisition would not establish an overseas advantage. Nila must identify which part of its preorder-and-cluster system transfers and which local conditions could break its economics. Use activity-specific CAGE distances, then choose a leading AAA response: adaptation, aggregation or arbitrage. Compare entry routes only after identifying the capability, local knowledge and coordination each route would need.
Tell the story from Nila's original weekday promise to its packaging-capability decision. For a proposed overseas office cluster, which earlier advantage might travel, which CAGE friction could defeat it, and what would justify a particular AAA emphasis and entry route?
Nila's preorders and clustered routes support dependable weekday meals. Purpose and a same-date target gap set direction; five forces test the economics. Co-opetition and uncertainty shape a bounded partner experiment, while internal analysis tests its coordination routines. Activity and social ledgers test value and waste effects; business strategy tests relative value, cost and new demand. Nutrition creators remain a platform hypothesis. Corporate scope tests packaging ownership, and the route decision compares contractual access, alliances and acquisition. None proves that the system works abroad. A proposal might aggregate forecasting tools while adapting menus and delivery windows, if local evidence supports both. Examine relevant cultural, administrative, geographic and economic frictions, including local rules, route density and customer practices. A partner could supply local knowledge, but its incentives and execution need testing. Arbitrage requires its own demonstrated cost or capability mechanism. Expand only if a bounded pilot supports retained demand and viable economics.
Carried forward · Sessions 9 and 10
Session 9 examined vertical integration and diversification; Session 10 compared alliances with acquisitions. Now ask where the advantage can travel. A strong domestic position is a starting point, but customers, institutions, infrastructure and rivals may differ across borders.
Choose one business and one target market. “Expand internationally” is too broad to reveal what capability transfers, what must be rebuilt and who pays for the change.
An alliance may supply local access; acquisition may supply assets and control; internal investment may create a new operation. Apply Session 10’s route comparison after identifying the relevant distance.
Use Session 7’s cost and differentiation logic. Would the same activities still create customer value at an acceptable cost in the proposed market?
Next, Session 12 asks how decision rights, information, structure and culture make the chosen global strategy workable.
Competing globally · Rothaermel (2024), §10.1–10.2, pp. 377–391
The textbook treats going global as a value decision like any other. A firm should expand abroad if doing so raises the value it creates or lowers its costs by more than the extra costs of operating across borders, and the move should reinforce whatever its advantage already rests on: low cost, differentiation or value innovation (pp. 384, 387). Four terms first.
Globalisation · p. 377
Closer integration and exchange between countries, businesses and peoples, made possible by falling trade and investment barriers, better telecommunications and cheaper transport.
Multinational enterprise · p. 378
A company that deploys resources and capabilities to procure, produce and distribute goods and services in at least two countries. The textbook calls it the engine of globalisation.
Foreign direct investment · p. 378
Investment in value-chain activities abroad. Airbus spent more than $1 billion on a plant in Alabama to build jetliners close to its US customers and outside the reach of tariffs.
Global strategy · p. 378
The part of corporate strategy that seeks to gain and sustain competitive advantage against foreign and domestic rivals around the world.
Three reasons to go · pp. 384–387
Three costs of going · pp. 387–391
The world is semi-globalised · p. 381
| Indicator | Cross-border share |
|---|---|
| Voice-calling minutes | 2% |
| People who are first-generation immigrants | 3% |
| Investment that is foreign direct investment | 9% |
| Patents listing at least one foreign inventor | 15% |
| Internet traffic crossing national borders | 18% |
Three stages · pp. 379–381
Retrenchment? · pp. 382–384
The textbook asks whether a “Globalization 3.1” is reversing the trend: the financial and euro crises, Brexit, rising nationalism and a US–China “techno cold war” that may split trade into two blocs and make supply chains deliberately redundant.
Liability of foreignness in practice · Strategy Highlight 10.1, p. 388
Entry. Facing a saturated US market, Walmart bought the 21-store Wertkauf chain and 74 hypermarkets from Spar in 1998 and ran the US playbook: greeters, cheer, bagging at the checkout.
Friction. Employees resisted the transplanted values; the first boss, sent from Arkansas, spoke no German and made English the in-house language. Without its US scale and distribution, and under stricter labour laws, Walmart’s prices landed in the middle of the market.
Exit. Discounters Aldi and Lidl were already there, and Metro started a price war. Walmart left in 2006 and sold its stores to Metro. The advantage was real at home and did not survive the distance.
Where to compete · Ghemawat (2001); Rothaermel (2024), pp. 391–395
Ghemawat’s argument is that companies routinely overrate foreign markets because their tools count only the size of the prize. Country portfolio analysis ranks markets by GDP, consumer wealth and propensity to consume, and so ignores the costs and risks of getting there, most of which come from distance (p. 138). Distance has four dimensions, and each hurts different industries.
The cautionary tale · pp. 137–144
Star TV launched in 1991 to beam television by satellite to the richest 5% of Asia. English was most target viewers’ second language, so it planned to use cheap English-language programming, and satellites would let it sidestep geography. News Corporation bought out the founders for $825 million between 1993 and 1995 (p. 137). Losses from 1996 to 1999 came to about $500 million (p. 138).
Cultural mistake: evidence from Europe showed mass audiences in large countries prefer local programming, so China and India would need heavy investment in localisation (p. 142). Administrative mistake: soon after Rupert Murdoch called satellite TV a threat to totalitarian regimes, China banned reception of foreign satellite services (p. 144).
“Distance still matters, and companies must explicitly and thoroughly account for it when they make decisions about global expansion.”
“TV is hardly cement.”
Ghemawat reports a gravity-model study by economists Jeffrey Frankel and Andrew Rose. A 1% rise in a country’s wealth or size raises its trade by only about 0.7 to 0.8%; the distance variables move it far more (p. 138; restated in Rothaermel, pp. 391–392).
20%
Trade between countries 5,000 miles apart, as a share of what it would be at 1,000 miles
+200%
Common language
+330%
Common regional trading bloc
+340%
Common currency
+900%
Former colony–colonizer link
Summarised in this page’s words from Ghemawat (pp. 140–147) and the textbook’s adaptation (Exhibit 10.6, p. 392). Read the right-hand line of each card against Amazon’s businesses.
C · Cultural · pp. 140–142
Grows with different languages, ethnicities, religions and social norms, and the absence of ties between peoples. Trade between countries that share a language is about three times that between countries that do not.
Hits hardest products with heavy linguistic content (television), products tied to national or religious identity (food: Hindus do not eat beef), and features that vary with taste, as with the small cars and appliances Japanese buyers prefer.
A · Administrative · pp. 140, 142–144
Grows with no shared currency, trading bloc or colonial history; political hostility; and weak legal and financial institutions. Most often the barrier is the target government itself: tariffs, quotas, limits on FDI, favours for local firms.
Hits hardest industries a government protects: large employers, national champions, anything vital to national security, staples, “entitlements” such as health care, natural resources, and businesses with large sunk local investments.
G · Geographic · pp. 140, 144–145
Grows with physical remoteness, but also a country’s size, access to the sea, topography, climate and time zones, and the quality of its roads, power and communications.
Hits hardest goods with a low value-to-weight ratio (cement), fragile or perishable goods (glass, fruit), and services that need close connectivity or local supervision. Even capital flows thin out with distance.
E · Economic · pp. 140, 145–147
Grows with differences in consumer income and in the cost and quality of natural, financial and human resources, infrastructure and information.
Hits hardest firms that win by replicating one model at scale: they should go where economies look like home. Wal-Mart in Canada was virtually a carbon copy of the US business; in India it would be a very different one. Firms that win by arbitrage go looking for difference.
Distance changes the ranking · Ghemawat, p. 147
Tricon Restaurants International, which ran Pizza Hut, Taco Bell and KFC outside the US, had to choose where to invest scarce cash. On country portfolio analysis, Mexico ranked 16th of 20 fast-food markets. Adjusting for geographic distance from Dallas lifted it to sixth; adding the common border and the trade agreement put it second, after Canada. Tricon’s president called Mexico one of its top two or three priorities.
The textbook adds · pp. 393–395
Cultural distance can be scored with Hofstede’s dimensions: measured from the US, Australia scores 0.02, the UK 0.09 and Canada 0.12, against Russia’s 4.42. Language and culture are why internet companies such as Amazon and Google run country-specific sites, and why they are often outflanked by native providers: Alibaba and Baidu in China, Ozon and Yandex in Russia. And distance is partly firm-specific: a cadre of cosmopolitan managers shrinks it.
Activity 1 · CAGE distance scorer
DonePick a market you know, ideally your own, and one of Amazon’s businesses. Score each dimension of distance from the United States from 0 (none) to 4 (very large), using the prompts. The page supplies no country data: the judgement is yours, and the point is to see that the same market is near for one business and far for another, as Ghemawat argues (p. 138).
2 · Which Amazon business is going?
3 · Score each distance (0–4)
Your distance profile · analysis
Distance that bites for this business
0%
Move the sliders to score each dimension.
The sensitivity weights are this page’s reading of Ghemawat’s industry examples, not data. Argue with them in class.
Once you know where: how to enter · Rothaermel (2024), pp. 395–396
Least investment, least control
Exporting
Make at home, sell abroad. One of the oldest forms, often a test of whether a market is ready.
Contract-based
Licensing & franchising
Long-term contracts that rent out a product, trademark or service format.
Shared ownership
Equity alliances & joint ventures
Shared risk and local knowledge; some hosts require a joint venture before a foreign firm may operate.
Most investment, most control
Subsidiary: acquisition or greenfield
Full ownership, as with Tesla’s Shanghai factory. Best protection against loss of reputation and of intellectual property.
Analysis · where Amazon sits
The textbook reads the continuum as a stage model of growing commitment, and says it does not fit firms born global, such as internet companies (p. 395). A website reaches every country on day one. But the textbook also says Amazon’s global presence rests on country-specific sites and local logistics services (p. 298), and warehouses and delivery fleets cannot be exported. So which of Amazon’s businesses can enter from the left of the continuum, and which must start on the far right?
How to compete · Rothaermel (2024), §10.4, pp. 396–403
Every multinational feels two opposing pressures. Integrating and standardising across countries cuts cost and reinforces a cost-leadership strategy; responding to each country raises differentiation and usually cost as well. The two trade off, just as low cost and differentiation do inside one business (p. 396). The course outline calls the tension global integration versus national differentiation; the academic literature calls the tool built on it the integration–responsiveness framework (Prahalad & Doz, 1987); the textbook renames it the cost-responsiveness framework for ease (p. 397 and note 68). All three describe the same grid.
The pull to integrate · p. 396
Many executives assume consumer needs are converging, an idea the textbook traces to Theodore Levitt. If they are, one product made at global scale wins on cost. Toyota sells the Prius in more than 90 countries, and most vehicles are now built on global platforms, modified, sometimes only cosmetically, for local tastes and standards. But Ford learned by lack of sales that buyers would not accept one near-identical car, the Mondeo, everywhere.
The pull to adapt · p. 396
National differences persist because institutions and cultures differ. Walmart sells live snakes, eels and toads for cooking in China; IKEA sells kimchi refrigerators and metal chopsticks in South Korea; McDonald’s uses chicken and fish instead of beef in India and offers a teriyaki burger in Japan, while its fast-food model stays the same. Responsiveness costs money, sometimes more than the scale economies it gives up.
The grid · redrawn from Exhibit 10.8, p. 397
Global standardisation
High cost pressure, low local pressure
Lenovo, Infosys, Siemens Energy
Transnational
High on both
ABB, Bertelsmann, P&G
International
Low on both
Harley-Davidson, Rolex, Starbucks
Multidomestic
Low cost pressure, high local pressure
Nestlé, Philips, Bridgestone
Pressure for local responsiveness →
| Strategy | How it works | What it gains | What it risks |
|---|---|---|---|
| Internationalpp. 397–398 | Sells the same product abroad as at home, leveraging home-based competencies through exporting, licensing or franchising. Often the first step; suits strong brands and differentiators. | Scale from a larger market; cheap to implement. | Little local responsiveness; exposure to exchange rates; IP in the product can be copied. Fewer markets now fit it. |
| Multidomesticp. 398 | Maximises local responsiveness so customers see a local firm. Common in consumer products and food, and in large, idiosyncratic markets such as Japan or Saudi Arabia. | Highest responsiveness and differentiation; less exchange-rate exposure. | Duplicated functions in every country; little scale or cross-country learning; tacit know-how exposed. |
| Global standardisationpp. 398–399 | Puts each activity wherever best-in-class capability is cheapest and sells a standard product; often organised as a network. Business strategy: cost leadership. | Economies of scale and location; lowest attainable cost. | No local responsiveness; price becomes the weapon; a “race to the bottom” as wages rise. |
| Transnationalpp. 399–402 | Combines local responsiveness with the lowest attainable cost, and adds global learning, usually through a global matrix structure. “Think globally, act locally.” Business strategy: blue ocean. | Economies of scale, location, experience and learning. | The matrix is costly and hard to run; functions are duplicated; managers must work across cultures. High failure rate. |
Swipe the table sideways to see every column.
Two streaming strategies · Strategy Highlight 10.2, pp. 400–401
Netflix, transnational. It spent over $1 billion on Korean films from 2016, $500 million of it in 2021, and introduced 80 Korean films and series in five years, treating each as an experiment. Squid Game was made for Korea, dubbed into 13 languages, and more than 95% of its viewers were outside Korea. The textbook links the fit to Netflix’s presence in 190 countries.
Disney, international. It spends heavily on a few productions and exports them; Avengers: Endgame cost about $400 million, more than 20 times a season of Squid Game. Each hit becomes a franchise of sequels, parks and merchandise. Even Jeff Bezos publicly praised Netflix’s internationalisation strategy as hard to do.
Case In 2023 Amazon spent over $19 billion on TV and music content, including licensing, against $13 billion by Netflix (case, p. 2). The case does not say how that money splits between global and local titles.
Positions move · pp. 401–403
Google launched YouTube Red in the US and then only in culturally close Australia and New Zealand (international); relaunched it as YouTube Premium in 17 countries, including culturally distant ones (multidomestic); and aims to use its recommendation engine to go transnational.
The hypothesis to test
The earlier global-strategy notes argue that Amazon is transnational: it standardises its technology backbone and brand promise and localises what customers touch. Test that business by business in the next activity. One company can sit in more than one quadrant.
Activity 2 · integration–responsiveness placer
DoneFor each business, read what the case and textbook say, then judge the two pressures it faces when it crosses a border. The grid names the strategy your judgement implies. Only then compare with one reading, which is this page’s analysis, not a fact from the case. Disagreeing with it is fine if you can say which pressure you weigh differently.
Pressure for cost reductions
Pressure for local responsiveness
Choose both pressures to see the strategy they imply.
Prompts · analysis
One reading · analysis, not a case fact
Decision studio · original application of AAA
For one proposed Amazon move, choose the activity that receives priority. These examples are our hypothetical proposals, not descriptions of Amazon’s actual decisions. CAGE diagnoses the obstacle; AAA helps you design a response.
| Emphasis | Hypothetical proposal | Trade-off to defend |
|---|---|---|
| Adaptation | For a new video market, commission a limited set of locally relevant titles and test discovery in the local language. | Additional local work must produce enough viewing, retention or willingness to pay to justify its cost. |
| Aggregation | Reuse a common commerce platform for a cluster of markets with similar needs. | A common service can reduce duplication, but exceptions may accumulate until the promised scale benefit disappears. |
| Arbitrage | Locate a support activity where the required skills are available at favourable total cost. | Test coordination, quality, time-zone and continuity costs; the wage gap alone does not establish value. |
There is no automatic best strategy. Feedback challenges the reasoning; market evidence must decide.
Advantage in an international context · Rothaermel (2024), §10.5, pp. 404–407 · Porter (1990)
If firms can source anything from anywhere, location should stop mattering. The textbook calls that the death-of-distance hypothesis and finds it more hype than reality: leading firms in an industry cluster in particular countries, such as software and biotech in the US, chips in Taiwan, cars in Germany and business-process outsourcing in India (p. 404). Firms from a country that leads an industry tend to be its strongest global competitors. Porter’s answer to why is the diamond. Magretta’s summary of it: comparative advantage credits cheap labour or natural resources, while Porter credits productivity and innovation, which arise where the local environment is most forward-looking, dynamic and challenging (Magretta, 2012, pp. 214–215).
Factor conditions · pp. 404–405
Natural, human and other resources, plus capital markets, institutions, research universities and infrastructure. Natural resources matter less than you might think: several resource-rich countries host no world-leading firms, while resource-poor ones such as Denmark, Israel, Japan, Singapore and Switzerland build world-class human capital instead.
Demand conditions · p. 405
Sophisticated home customers who hold firms to a high standard. Dense cities, humid summers and costly energy made Japanese buyers demand small, quiet, efficient air conditioners; a sparse, remote population without landlines made Finns demand tough handsets, and Nokia became an early leader.
Competitive intensity · pp. 405–406
Firms that fight hard at home outperform rivals that do not. German carmakers face fierce domestic rivals, demanding drivers and a no-speed-limit autobahn, and most sit within easy driving distance of one another. Tesla chose Germany for its first European factory to be part of that crucible.
Related & supporting industries · p. 406
World-class suppliers and complementors nearby. Switzerland carried an early lead in industrial chemicals into pharmaceuticals; Toyota’s success rested largely on a tight network of Japanese suppliers, an advantage that faded when rapid growth forced it to add suppliers abroad that could not match the quality.
Clusters · p. 407
The diamond explains why world-class firms gather in regional clusters: computing in Silicon Valley, medical devices around Chicago, biotech around Boston, carmakers in southern Germany, fashion in northern Italy, IT in Bangalore. Porter: “Paradoxically, the enduring competitive advantages in a global economy lie increasingly in local things—knowledge, relationships, and motivation that distant rivals cannot match” (as quoted in Rothaermel, 2024, p. 407).
Activity 3 · diamond builder
DoneEach statement comes from the textbook’s treatment of the diamond. Choose the determinant it illustrates; the explanation appears with the answer.
0 correct of 0 answered (8 statements)
Analysis · now build Amazon’s home diamond
Factor. The textbook puts the leading software and tech companies in the US (p. 404). Which US factors, such as talent, capital markets and universities, did Amazon draw on that a rival elsewhere could not?
Demand. Prime members spend more than four times what others spend, and membership kept growing through three price rises, to $139 a year in the US by 2022 (case, pp. 1–2). Were US shoppers demanding in a way that sharpened Amazon’s speed and convenience?
Rivalry. At home Amazon faces Walmart, which is sharpening its low-cost position against it and against Aldi and Lidl (p. 389). Did that fight prepare Amazon for Alibaba, JD.com and Flipkart, or are local champions a different problem?
Related. Amazon’s delivery network now competes with UPS and FedEx (p. 297), and the textbook calls AWS a backward vertical integration move (p. 301). Which of these supports can Amazon take abroad, and which must it rebuild?
The case · Gupta & Rodriguez (2024), with the textbook’s Amazon chapter case
The case was written to ask whether Amazon should keep entering seemingly unrelated businesses or focus on a few (pp. 1, 4). It says very little about countries. So this section keeps three things apart: what the case reports, what the textbook’s own Amazon case adds, and what follows from the frameworks, which is analysis for you to test.
This table is reasoning from Ghemawat and the textbook, not fact from the case. Each row is a claim to argue with; the last column is the placement it implies on the grid.
| Business | Can be the same everywhere | Must be local | Distance that bites | Implied position |
|---|---|---|---|---|
| AWS | The service itself: compute, storage, AI models sold to firms on the same terms. | Possibly where data sits, if customers or governments insist. | Administrative; some geographic, where speed and connectivity matter. | Global standardisation |
| Store & marketplace | Platform software, seller tools, the fulfilment model, the brand. | Site, language, assortment, payment, warehouses, delivery: the textbook’s country sites and local logistics. | Geographic and economic; cultural in assortment. | Transnational |
| Prime membership | The idea of a paid bundle of speed and services. | Price and which benefits exist in each country; the case reports only US prices. | Economic. | Transnational: one concept, local terms |
| Prime Video | Streaming technology and globally popular titles. | Language, local titles, content rights. | Cultural, then administrative. | Transnational, or international if it relies on exports |
| Echo & Alexa | The device. | The voice service: language, accents, local requests and skills. | Cultural. | Hardware standardised, language localised |
| Advertising | Ad technology. | The purchase data it runs on, which exists only where the store has customers. | Follows the store. | Travels only behind retail |
| Whole Foods | Little beyond the brand. | Almost everything: food, suppliers, stores. | Cultural and geographic. | Multidomestic, if it travels at all |
Swipe the table sideways to see every column.
The advertising row rests on the textbook’s point that Google knows what people search for, while Amazon knows what each customer views and buys (Rothaermel, 2024, p. 334). The Prime row borrows the professor’s description of Prime as a “flexible anchor”: one global promise whose local terms can differ.
Start from what the sources say Amazon does well. Bezos built a virtual store offering low prices, vast selection and convenience, with unlimited inventory and low fixed costs (case, p. 1). Amazon pioneered recommendations drawn from similar customers’ purchases and built an ad network on its customer data (p. 2). Its fulfilment centres and delivery vans have made it a logistics company that competes with UPS and FedEx (Rothaermel, 2024, p. 297), and it knows what each customer views and buys (p. 334).
Now apply the chapter. Software and know-how are codified and travel cheaply. Warehouses, delivery fleets and supplier relationships are tied to a place and have to be built again, which is why the textbook ties Amazon’s presence abroad to local logistics. Customer data and trust are earned customer by customer, so a new country starts near zero. And a marketplace connects buyers and sellers who can trade with each other: how many of those connections cross a border?
Contrast · the company the earlier deck used
In 1989 furniture retailing was still a fragmented national industry, with preferences that varied by region (Bartlett & Nanda, 1990, p. 1). IKEA went the other way: 12,000 of its 20,000-plus products formed a core common to stores worldwide (p. 6), store layouts were standardised to the centimetre (p. 7), and design, purchasing and distribution stayed central (p. 8). Yet a manager asked whether to adapt for the US, where customers wanted shelves with space for a TV set while European shelves were built for books (p. 11).
Analysis IKEA’s product is the same in every country and the store is a copy. Amazon’s “product” in each country is a local assortment, delivered by a local network, on a shared platform. Which is easier to take across a border?
Open questions for class · what none of the sources tells you
How big is Amazon abroad? Neither the case nor its exhibits split revenue or profit by country. What would you need to know before calling it a global firm rather than a US firm with foreign branches?
Why China and India differ. It closed its domestic marketplace in one market led by native platforms and doubled down on another with a strong native rival. Which CAGE dimensions, or which entry choices, would explain the difference?
What Prime promises where. The case gives Prime’s prices only for the US. Should Prime cost the same everywhere? And if a benefit such as two-hour delivery runs only in some US cities, what is a member elsewhere paying for?
Who pays for distance? If AWS profits fund money-losing retail abroad, is that the internal capital market doing its job, or a subsidy for expansion whose costs exceed its value? Revisit Session 9’s diversification logic.
Go deeper
Neither deck was built for this session. Both follow the textbook’s chapter 10 with IKEA as the case rather than Amazon, and both add many examples from outside the course readings. Their figures were not all checked against this session’s sources; use this page for the readings’ facts and the decks for practice.
For class
Come with a position on each and the page of the case or reading that supports it. Where the sources are silent, say what you would need to find out.
01
The case calls Amazon a dominant global player, yet nearly every business it describes is American, and the textbook says Amazon lost money on retail abroad. Is Amazon a global company or a US company with foreign branches? What evidence would settle it?
02
Amazon closed its domestic marketplace in China in 2019, where Alibaba and JD.com dominate, but invests billions in India against Flipkart. Use CAGE and the textbook’s point that natives often outflank global internet firms to argue why the two might turn out differently.
03
Prime is one brand with more than 200 million members worldwide, yet the case reports only US prices and US-only benefits such as two-hour delivery in some cities. Is Prime an act of global integration, of national differentiation, or both? Say which parts you would standardise and which you would let each country set.
04
Amazon outspent Netflix on content in 2023. Should Prime Video copy Netflix’s transnational bets on local productions or Disney’s international export of blockbusters? What does “TV is hardly cement” imply for the choice?
05
AWS looks like Amazon’s most standardised business. Which administrative or geographic pressures could still force it to localise, and would they change its strategy on the grid or only its entry mode?
06
Build Amazon’s US diamond. Which corner explains its advantage best, and does that advantage travel? If Porter is right that lasting advantage is local, what does that predict for Amazon against local champions?
Knowledge check
Answer before you look. Each answer explains itself, and the explanation matters more than the score.
See it · explain it · test it
A border is not one uniform obstacle. The same market may be easy for software distribution but difficult for furniture delivery. Work through a concrete value chain before treating a large population as an attractive opportunity.
A learning loop begins with a particular business and market, diagnoses CAGE distances, chooses an AAA response, designs an operating model and tests whether the advantage travels.
Hypothetical · original teaching scenario
Nila Solar, a fictional Indian maker of solar monitoring devices, considers Kenya. Its electronics design can be reused, but the team has no evidence yet about installer training, payment habits or repair turnaround. Copying the Indian offer may save engineering cost while creating a service bottleneck. These are proposed research questions, not claims about Kenyan customers or regulations.
Student task: identify one CAGE friction, choose an AAA response and specify a customer or cost test before committing.
If the sensor software is standardised but installation is local, is the whole strategy aggregation or a mix? Explain the activities separately.
Give a claim, supporting evidence, a trade-off and one observation that could change your view.
Global example · IKEA India launch, 2018
IKEA’s own announcement dated its first Indian store in Hyderabad to 9 August 2018. That provides a concrete cross-border event; it does not prove that a Swedish operating model can simply be copied. IKEA’s launch announcement.
Teaching inference: examine household use, customer budgets and delivery requirements. Decide what might need adaptation and what could remain common; gather evidence before claiming IKEA actually made your proposed choices.
Which evidence would justify a shared product design with a locally different delivery service? Distinguish a hypothesis from a documented IKEA practice.
Give a claim, supporting evidence, a trade-off and one observation that could change your view.
Indian example · Tata Tea–Tetley, 2000
Tata’s historical account identifies Tata Tea’s acquisition of the British Tetley business in 2000 as a major step in its overseas expansion. The route matters: acquiring an established business differs from building a new brand and distribution network from scratch. Tata’s worldwide history.
Teaching inference: an acquisition may supply market-facing assets, but it cannot automatically remove integration costs or prove that synergies will appear. Compare ownership benefits with coordination demands.
What capability would you inspect before recommending acquisition over an alliance? Name a benefit, a cost and a possible disconfirming observation.
Give a claim, supporting evidence, a trade-off and one observation that could change your view.
Local resource names are shown so you can find the assigned material. PDF page numbers refer to the supplied files; access licensed originals through your library or assigned course pack.
Source file: Distance Still Matters.pdf
PDF pp. 4–9 (article pp. 3–8): identify which distances matter for your product, then explain the effect on costs, demand or coordination. Distance is broader than kilometres.
Source file: Managing Diffrences.pdf
PDF pp. 4–5 and 9–11 (article pp. 3–4 and 8–10): distinguish the three responses, compare their organisational demands and explain why pursuing all three strongly can strain managerial capacity.
Source file: Amazon in 2024.pdf
Case pp. 1–4: choose one business. Identify a documented capability, then separately state what you infer about its transfer to one foreign market. The July 2024 revision remains the assigned historical case.
Use your assigned course pack · Assigned preparation
The local folder numbering predates the current V0.3 sequence. This map follows the content of the readings and the canonical Session 11 topic. The existing required readings remain in place.
Choose an answer, inspect the explanation and try again. These checks assess the reasoning in the stated scenarios, not the quality of an entire real company.
0 / 4 correct
Preparation
Gupta, S., & Rodriguez, M. L. (2024). Amazon in 2024. HBS 9-514-025, revised 16 July 2024. Use your assigned course pack. Case figures on this page refer to that historical period.
Ghemawat, P. (2001). Distance Still Matters: The Hard Reality of Global Expansion. Harvard Business Review.
Ghemawat, P. (2007). Managing Differences: The Central Challenge of Global Strategy. Harvard Business Review.
This page offers original teaching explanations and exercises alongside brief attributed reading guides. Read the assigned articles through the library or course pack. Exercises are learning aids, not forecasts or reports of Amazon decisions.
Rothaermel, F. T. (2024), Strategic Management, 6th ed., chapter 10 and the Amazon chapter case; Porter, M. E. (1990), “The Competitive Advantage of Nations”; Bartlett, C. A., & Nanda, A. (1990), Ingvar Kamprad and IKEA; Magretta, J. (2012), Understanding Michael Porter. These are supplementary. Historical textbook figures and case figures refer to different periods. Student-generated CAGE weights and grid placements are illustrative analysis.